Deck 10: Globalization of Business: Good or Bad

Question 1

What are the key features of globalization, and has its onward march been a smooth one?

Answer 1

Definition of globalization and explanation in terms of:
$\bullet$ International trade;
$\bullet$ Global production chains and investment;
$\bullet$ Migration;
$\bullet$ Communication flows;
$\bullet$ Cultural flows;
$\bullet$ Technological change.
Description of growth of globalization in the following periods:
$\bullet$ Imperialism;
$\bullet$ Inter-war period;
$\bullet$ Post-1945 world order;
$\bullet$ Current post-2008 situation.

Question 2

To what extent is there support for the view that globalization is a force for the general good of humanity, and what are the conditions that it is argued need to occur for this to happen?

Answer 2

$\bullet$ Outline of neoclassical school in terms of 'globalization is good'.
$\bullet$ Explanation of benefits of trade in terms of comparative advantage and other benefits of trade, economies of scale, and competition.
$\bullet$ Outline and explanation of Washington Consensus set of policies.

Question 3

Why are structuralist and radical critics sceptical about certain aspects of globalization, and how do they feel globalization could be structured to ensure its benefits are more evenly spread?

Answer 3

$\bullet$ Radical/Marxist views: imperialism, legacy of colonialism, inequality within and between countries, trade system favours rich countries.
$\bullet$ Structuralist writers: late industrialization, need for social and political institutions, augmented Washington Consensus, Prebisch-Singer hypothesis.

Question 4

In what ways does globalization call for the development of a global ethical framework with which to assess its impact?

Question 5

Explain what is meant by 'the law of comparative advantage' and discuss the problems that coffee and cotton producers in the developing world might face in relation to their external trading position.

Question 6

The meaning of the term an 'international division of labour' means:

A) That international competition will create potential conflicts between people
B) That as a result of outsourcing workers in certain countries will lose their jobs to those in others
C) That developing countries should specialize in labour-intensive industries and developed countries in capital intensive ones
D) That developing countries should seek to protect their workers from foreign competition

Question 7

The economist Amartya Sen used the term 'late industrialization' to describe the nature of industrialization in developing countries. He meant by this that:

A) Developing countries were using outdated techniques.
B) That developing countries realized too late that they needed to compete internationally
C) That developing countries would always lag behind the developed countries
D) That developing countries would need time to catch up to the developed countries and that since they were at a competitive disadvantage might need to develop their industries using a different set of policies than had been adopted by the already industrialized countries

Question 8

The theory of comparative advantage is primarily a theory which shows the benefits of trade as allowing:

A) The potential to exploit economies of scale
B) The sharing of technology across borders
C) The potential to exploit specialization and the division of labour
D) The power of competition to improve domestic industry efficiency

Question 9

Which of the following sets of policies were not on the original list of policies as described by the Washington Consensus?

A) Gradual reduction of controls on exchange rates investment, corporate governance, and targeted poverty reduction
B) Trade liberalization and free movement of exchange rates
C) Openness to foreign direct investment and privatization
D) Reducing burden of taxation to encourage incentives for entrepreneurs

Question 10

Which of the options below is an example of 'outsourcing'?

A) MNCs buying cheap raw materials from abroad
B) The migration of labour from poor to rich countries
C) Locating skilled managers abroad by the HQ of an MNC to supervise local operations
D) The location of production abroad by a company to take advantage of lower labour and other resource costs

Question 11

Which of the following countries is not regarded as being a newly industrialized country?

A) South Korea
B) North Korea
C) Thailand
D) Malaysia

Question 12

Which of the following structural problems potentially face cotton farmers in Africa? Please select all that apply.

A) Power of the multinational buyers
B) Subsidies to US cotton growers
C) Tariffs in the US on foreign cotton
D) Unsuitability of the land for growing cotton

Question 13

Which of the following theories/ideas questions the belief in the ability of free trade to help all trading partners? Please select all that apply.

A) New international division of labour
B) Late industrialization
C) The law of comparative advantage
D) The Prebisch-Singer hypothesis

Question 14

Which of the following supportive mechanisms do structuralist writers such as Rodrik argue is needed if globalization is to help the poorer countries? Please select all that apply.

A) Social safety nets
B) Targeted poverty reduction
C) Corporate governance
D) Free exchange rates

Question 15

The low costs of labour in the developing world have meant that since the end of the Second World War there has been a 'new international division of labour', and the majority of international investment now goes to developing countries.

Question 16

There was a fall in the amount of world trade as a proportion of world income in the period 1919-39.

Question 17

Adam Smith laid the foundations for trade theory with his theory of comparative advantage.

Question 18

Acemoglu and Robinson feel that the great hope for developing countries lies in their ability to exploit their ability to extract valuable raw minerals from the ground.

Question 19

Dependency writers:

A) Tend to argue that when less developed countries deepen their trading links with developed ones the dependent relationship means that, in fact, there will be an underdevelopment of the less developed economies
B) Argue that closer trading links between rich and poor countries will mean that poorer countries will become more prosperous
C) Argue that, in the absence of widespread education and training in poor countries, it is better for educated elites to control trade and commerce
D) Argue that less developed countries should do all they can to attract foreign multinational corporations

Question 20

The Prebisch-Singer hypothesis argues that trade will always lead to one partner being exploited by the other.