GMMCH02.ppt 93KB Jun 05 2011 09:30:25 PM

John Wiley & Sons, Inc c 1998

GLOBAL
ECONOMIC ENVIRONMENT
Chapter Two

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Global Economic Environment
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Overview
1. Intertwined World Economy
2. Economic Environment Within a Nation
3. Role of the General Agreement on Tariffs
and Trade (GATT) and The World Trade

Organization (WTO)
4. US Position on Foreign Direct Investment
and Trade
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Global Economic Environment (cont)
5. Information Technology and The
Changing Nature of Competition
 6. Regional Economic Arrangements
 7. Multinational Corporation
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1. Intertwined World Economy
Ten Big Emerging Markets (BEM’s)

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Chinese Economic Area
CEA (China, HongKong,
Taiwan)
India
South Korea
Mexico
Brazil
Argentina
South Africa

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Poland
Turkey
Assn of Southeast
Asian Nations ASEAN
(Indonesia,Brunei,Mal
aysia,Singapore,
Thailand, Philippines,
Vietnam)

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1. Intertwined World Economy (cont)
Exhibit 2-1 “Top Ten Countries with which
US Traded Merchandise in 1995”
 Foreign Direct Investment

 Portfolio Investment (indirect investment)
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2. Economic Environment Within a
Country
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market economy vs command economy
Exhibit 2-2 “ Interrelationships Between
Control of Economic Activity and
Ownership of Productive Resources”
• Robinson Patman and Sherman Act
• Keiretsus

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Exhibit 2-3 “Telecommunications Hotspots”
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3. Role of GATT and WTO
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GATT
• Most favored nation concept (MFN)
• Uruguay round

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WTO
• Exhibit 2-4 “Summary of the Final Act of the
Uruguay Round of GATT”

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Financial Services in the WTO/GATT
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4. US Position in Foreign Direct
Investment and Trade
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US Direct Investment Overseas
• Exhibit 2-5 “US Direct Investment Abroad”

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Foreign Direct Investment (FDI) in The
United States
• Exhibit 2-6 “FDI Outlays in the US”
• Exhibit 2-7 FDI Stock in the US 1986-1994”

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4. US Position in FDI and Trade (cont)
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Balance of Payments Position
• Exhibit 2-8 “US International Trade in Goods
and Services , Balance of Payments Basis 19811995”
• Exhibit 2-9 “US International Trade in Goods ,
Balance of Payments Basis, 1981-1995”
• Exhibit 2-10 “US International Trade in
Services, Balance of Payments Basis 1981-1995
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5. Information Technology and The
Changing Nature of Competition

Trade Related Intellectual Property
(TRIP’s)
 Information related products
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6. Regional Economic Arrangements
Multination Trading Blocs
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European Union (EU)
North American Free Trade Agreement
(NAFTA)
European Free Trade Area (EFTA)
• EU plus Finland, Sweden, Norway, Iceland,

Austria, Liechtenstein, Switzerland.

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MERCOSUR Southern Cone Free Trade Area
(Brazil, Argentina, Uruguay, Paraquay plus
Chile)
Andean Group in South America
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6. Regional Economic Arrangements
(cont)
Gulf Cooperation Council (GCC) in West
Africa
 South Asian Agreement for Regional
Cooperation (SAARC) India, Pakistan, Sri

Lanka, Bangladesh, Nepal, Maldives,
Bhutan
 ASEAN
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6. Regional Economic Arrangements
(cont)
Free trade areas
 Customs Unions
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• free trade areas plus common external tariffs =
a customs union

Common Markets
 Monetary Union

 Political Union
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7. Multinational Corporations
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“ in 1985, 80% of the non-communist
world’s productive assets would be
controlled by just 200 - 300 companies ”
• Howard Perlmutter, Professor,Wharton School

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