Deck 5: The Institutional Dimension

Question 1

What is the meaning of most favoured nation?

A) Most favoured nation is the nation that receives most exports from another economy
B) Most favoured nation is the nation that is allowed to acquire most businesses in another country in any given year.
C) Most favoured nation is rule under the WTO which requires members to lower or remove their trade barriers.
D) Most favoured nation is a title given to the country that wins most trade disputes with the WTO.

Answer 1

B
Explanation: Under the Most favoured nation (MFN) rule, a member state of the WTO has to give all other member states the same trade and investment provision as it negotiated with the 'most favoured nation'.

Question 2

Where do social networks like guanxi and blat fit into institutional theory?

A) Social networks are part of how countries work, hence they are part of the regulative pillar.
B) Social networks do not fit neither into economic nor organisational institutional theory.
C) Social networks cannot be captured by the institutional theory.
D) Social networks are culturally specific; hence they are part of the cultural-cognitive pillar.

Answer 2

D
Explanation: Guanxi, blat, jeithinho and other such networks are culturally specific and have emerged through locally specific customs and traditions. They are therefore fittings into the cultural-cognitive pillar of the organisational institutional theory.

Question 3

What is the purpose and function of export-processing zones (EPZs)?

A) Any business that seeks to export needs to be located in this zone.
B) EPZs are specially created industrial districts to attract foreign investors. They are adding value to goods before re-exported them.
C) Any good has to be processed and readied for export in this zone.
D) EPZs are specially created industrial districts to attract foreign investors. They are engaging in R&D in these zones.

Answer 3

B
Explanation: EPZs are common features in most countries to attract foreign investors. The most well-known EPZs are probably located in China and Mexico. Foreign investors can locate manufacturing facilities in these zones and benefit from local labour while often not being exposed to the same regulations as the rest of the country and/or not being able to trade outside the EPZ.

Question 4

When a government creates 'strategic' or 'pillar' industries, what is the impact on foreign investors?

A) Foreign investors can benefit from preferential treatment if they operate in the same industry sector.
B) Foreign investors can be excluded from investing in these sectors because they are considered core and sensitive to the economy.
C) It is just a label and has not negative or positive impact on foreign investors.
D) The government seeks to develop these sectors and is courting foreign investors.

Question 5

Is the institutional screening of inward FDI is barrier to investment?

A) No, it is not. Sovereign states have the right to know who is investing in their country.
B) Yes, it can be a barrier. Potential investors will take the length of the screening and the potential public scrutiny under considering when assessing if they are welcome or not in the host country.
C) No, it is not. Every country is screening and this is just levelling the playing field.
D) Yes, it is. Countries use screening to cherry-pick the best foreign investor. Smaller investors are discriminated by these processes.

Question 6

What is the term 'institutional distance' describing?

A) Institutional distance is the distance between two governmental agencies.
B) Institutional distance is the distance between the normative and the regulatory pillar of institutional theory.
C) Institutional distance describes the distance between formal and informal institutions.
D) Institutional distance describes the distance between two countries with respect to their regulatory, normative, and cognitive environments.

Question 7

Which countries are full members of Mercosur?

A) Argentina, Brazil, Chile, Colombia, Paraguay, Peru, and Uruguay
B) Argentina, Brazil, Chile, and Uruguay.
C) Argentina, Brazil, Paraguay, and Uruguay.
D) Argentina, Chile, Paraguay, and Uruguay

Question 8

What is the purpose of international investment agreements (IIAs)

A) IIAs are signed between countries and aim to provide investment assurance and protection for foreign firms.
B) IIAs are signed between a country and an MNE. They are unilateral assurances from the country to the MNE.
C) IIAs are signed between a country and an MNE. They are unilateral assurances by the MNE that it will adhere to all local laws.
D) IIAs are a different name for an agreement to invest in another country.

Question 9

What is the objective and activities of UN?

A) The UN is a local organisation with activities limited to trade
B) The UN is an overarching organization with very diverse activities supported through a structure based on various subgroups.
C) The UN is a partnership between the EU and Russia to regulate trade between the two areas
D) The UN is an overarching organisation with activities limited to trade.

Question 10

What are the three pillars of NAFTA (today USMCA)?

A) Regulative, normative, and cultural-cognitive.
B) Canada, Mexico, and the USA.
C) Trade, labour mobility, and environmental protection.
D) Investment, labour mobility, and environmental protection.

Question 11

How are formal institutions expressed? Please select all that apply.

A) Through traditions.
B) Through laws.
C) Through constitutions.
D) Through cultural taboos.

Question 12

What measures do countries use to restrict inward FDI? Please select all that apply.

A) Restriction of free transfer of shares
B) Government consultation required for certain decisions
C) Advertising restrictions
D) Conditions on capital goods necessary to start business

Question 13

Which new organisations are challenging the structure and status of established supranational organisations? Please select all that apply.

A) AIIB and NDB
B) AFDB and ADB
C) ADB and IDB
D) AIIB and ASEAN

Question 14

At what level can informal institutional elements typically be found? Please select all that apply.

A) Supranational.
B) Subnational (provincial).
C) National.
D) Subnational (city).

Question 15

The pillars of the organisational institutional theory are _______ (Please select all that apply)

A) Cultural-cognitive.
B) Societal.
C) Regulative.
D) Normative.

Question 16

Investment policies have become more restrictive recently.

Question 17

Africa has a unified single market similar to the European Union.

Question 18

The normative pillar is gaining its legitimacy from the rule of law.

Question 19

What are informal institutions?

A) Informal institutions are the codified and tangible fabric of societies
B) Informal institutions are the uncodified and intangible fabric of societies
C) Informal institutions are the national and authoritative rules of societies
D) Informal institutions are the classified and intrinsic rules of societies

Question 20

ASEAN has an early attempt by Indonesia, Malaysia, the Philippines, Singapore, and Thailand to establish of a regional supranational institution