Chapter five think about it questions

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5.1 What is globalization? The term globalization is used to describe economic, political behavioural, technological, and biological migration. It is the movement of goods and services, technology, investment, ideas, and people throughout the world. It is the process of nations and corporations merging into one common culture and marketplace. 5.2 state four positive effects of globalization Outsourcing • other countries present opportunities to access cheaper raw materials and labour. ⿞ Lower Prices • Increased competition causes companies to be more competitive and decrease prices to attract customers. Inflation is kept low. ⿞ Improved human rights • Extensive media coverage of human rights violation in countries that do business internationally has brought world pressure to improve human ⿞ rights. Increased productivity • When countries produce the products in which the they have a comparative advantage in their productivity rises. Increased productivity leads ⿞ to an improved standard of living. Innovation • Open borders allow ideas to flow from one country to another, stimulating creativity. ⿞ Better jobs • Export jobs usually require higher education and a high skill level; therefore, these workers are paid more. ⿞ Increased Capital Flow • Countries actively seek foreign investment in order to provide employment for their citizens. Being connected to foreign countries allow ⿞ companies, especially those in smaller nations, to borrow money form financial institutions in other countries. 5.3 State four negative effects of globalization Lost canadian jobs • Many Canadians have lost their jobs due to outsourcing. The jobs that they find to replace them are often low paying. ⿞ fear of loss jobs • Many Canadians work with the fear that they may soon lose their jobs to countries with cheaper labour. ⿞ Exploitation of cheaper labour • Children, prisoners and the uneducated are forced to work in substandard conditions. ⿞ Increased pollution • Companies have to move their factories to countries with limited pollution regulations so that they can cut costs. ⿞ Unhealthy products • Companies like McDonald’s, Burger King, and KFC are spreading across the world. Many of the products sold by these companies have an ⿞ adverse effect on citizens health. Businesses in other countries do not work under the same strict regulations as canadian companies. As a result, tainted products, such as melamine-contaminated dog and cat food from china, Make their way into the canadian market. Spread of Disease • Diseases such as HIV/AIDS, SARS, and the H1N1 virus are contracted by travellers taken back to their home countries. ⿞ Increase in the Income Gap • the gap between the rich and poor are widening. ⿞ Influence of multinational corporations (MNCs) on governments • Powerful MNCs can manipulate global politics. The annual output of some MNCs is greater than the GDP of some countries. In 2008, only ⿞ twenty-five countries in the world had GDPs that were higher than Walmart Revenues, which were 4.05 trillion. In the first half of 2008,

Walmart spent approximately 3.6 million lobbying the U.S federal government on union matters, cargo, security and product safety legislation. 5.4 state and define the three types of globalization strategies. Global Strategy • This strategy regards the world as one big market. The product and its marketing are uniform across the globe. Key decisions are ⿞ centralized at corporate headquarters in the businesses home country. This allows companies to take control of the economies of scale (savings gained by producing larger quantities), develop products faster, and ⿞ co-ordinate activities. Weaknesses are a lack of response to individual cultures and the need for intense synchronization and communication between countries. ⿞ This strategy has an ethnocentric view - idea that all people want the same product and will respond in a similar fashion to the marketing ⿞ strategies used in the home market. Example = Levis ⿞ Multi domestic Strategy • Tries to customize products, services, and marketing for the local culture and is effective when cultural differences are prominent. Decsions ⿞ are decentralized and made with local needs and customs in mind. the competition in each market is also considered. Advantages of a multi domestic strategy include less political and exchange rate risk, increased product differentiation and greater ⿞ responsiveness to local needs. This strategy has an polycentric view - idea that local management is most capable of determining what is best for the local subsidiary. ⿞ They use this strategy because of the different cultures, history and languages found in Europe ⿞ Example Mc donalds ⿞ Transitional Strategy • Tries to combine the best elements of global and multidomestic strategies. It attempts to respect the needs of the local market, while ⿞ maintaining the efficiencies of a global strategy. Products are manufactured at the least expensive source, while Human Resources are marketing are achieved at a local level. This strategy is difficult to accomplish because of the simultaneous need for strong controls and commitment to local diversity. ⿞ This strategy has a geocentric view - values both bot local differences and what is best for the company. ⿞ For example = Coke ⿞ 5.5 What is a trade agreement? A trade agreement is an enforceable treaty between two of more countries that address the movement of goods and service, eliminates trade barriers, establishes terms of trade, and encourages foreign investments. Bilateral - involve two parties such as Canada-Costa Rica Free Trade agreement (CCRFTA) and the Canada-Israel Free Trade Agreement (CIFTA) Multilateral - worldwide trade agreements which involve three or more countries such as NAFTA and EU. 5.6 What is NAFTA? Sets rules surrounding the movement of goods, services, and investments across North America (Between Canada, U.S and Mexico). It eliminates tarries for and other trade barriers and promotes fair competition amount the three countries. Launched in January 1994. Largest free trading area. 5.7 State and explain three advantages of NAFTA NAFTA benefited many manufactures, consumers, workers, and families in each country. It increased prosperity for North American citizens. • Many higher paying jobs have been created in Canada in the education, engineering and banking sectors, and market competition has grown, improving choices for consumers.

NAFTA has benefitted businesses by providing allowing a free flow of goods and services across North America borders. This provides • businesses with access to better raw materials, talent, capital and technology. This flow is critical if North America is to remain competitive against rising economies in Asia. Since NAFTA, trade heads tripled between the three partners. The exchange between canada and the U.S has doubled. Employment has improved • almost 24% with 39.9 million jobs. 5.8 State the disadvantages of NAFTA Labour costs in Mexico are substantially lower than in Canada and U.S. Many Manufacturing jobs have been lost to Mexico. This limits wage • growth in Canada and the U.S. This limits wage growth and the The income gap has increased. This has caused the United States gap to widen by a lot. Since tariffs on imports have been lifted, its been hard for small farmers in Mexico to compete. Many of the farmers left Mexico and moved to • the United States. Mexicos pollution has increased because they are more concerned with economic growth than the environment. Mexico has to deal with • maquiladoras = factories established by the U.S Canadas main disagreements with nafta are a loss of canadian culture, and canadian companies being sold to foreign investors. • 5.9 Name four trade agreements canada has signed NAFTA • EU • Canada-Costa Rica Free Trade Agreement (CCFTA) • Canada-Israel Free Trade Agreement (CIFTA) • 5.10 What is the purpose of the European Union? To make trade across the small countries of Europe easier by removing obstacles like border crossing, import documents, and different currencies. It establishes common financial, security and foreign policies. 5.11 Where are the headquarters for the EU? Brussels, Belgium 5.12 What are the three government governing bodies of the EU? Council of the EU • The main decision making body which is made of a representative of each country. The councils presidency rotates each month. Different ⿞ members go to council meetings depending on the topic of discussion. If the EU is making a major decision (whether to let a new member in) the vote must be unanimous, although for most decisions , majority is sufficient. European Parliament • Elected by the population of the EU to pass laws, establish a budget, and supervise other EU institutions, it meets four times a week. ⿞ European Commission • Responsible for managing day to day operations of the EU. It does not have a national focus but represents the EU as a whole. The ⿞ European Commission discusses trade agreements and allows members to have a united voice in international affairs. 5.13 State advantages of the Euro

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Decreasing the risk of exchange rate fluctuations. • Price Transparency • Elimination of transaction costs • Easy billing • Increased markets • Economic stability • Enhanced labour movement • 5.14 State disadvantages of the Euro Initial costs • Lack of national control • Loss of tradition • 5.15 What is the WTO? An international organization established in 1995 (Which now has over 150 country members) that promotes trade liberalization throughout the world. 5.16 What are the three purposes of the WTO? The three main purposes of the WTO are to provide a forum for countries to negotiate trade, to provide rules that guide trade between between nations, and help to settle disputes that arise over the interpretations of trade agreements. 5.17 What are the advantages of the WTO The WTO promotes peace by ensuring nations can trade fairly and disputes are settled by consensus. It encourages governments to act fairly and limit protectionists policies. This lowers costs and raises the standard of living substantially. Food, clothes and necessities are less expensive when high duties are and tariffs are removed. Free trade has allowed for increased incomes and product selection, and greater economic prosperity. 5.18 What are the criticisms of the WTO? The WTO destabilizes markets, drains resources and labour from developing countries. They encourage countries to produce what they can most efficiently. Rather than underdeveloped countries grow stuff they encourage developing countries to do so. The WTO helps with the unfair distribution of intellectual property (drugs can be hard to get because they are expensive and patented by the WTO). The WTO’s decisions are not always clear and defined and negotiations can be complex and variable for example the Canadian softwood lumber dispute. 5.19 Explain why the WTO is vital to Canada? Trade is vital to Canada’s success. Canada is the 9th largest exporter and 10th largest importer in the world. Canada has small population and small power and gains strength through its dealings and trade through the WTO. Canadas priorities with the WTO are to reform global agriculture trade, improve market access for Canadian exporters, enhance rules on dumping and subsidies, and speed up border crossings. 5.20 What is APEC? Trade organization created in 1989, that unites twenty-one of the countries surrounding the Pacific Ocean to Co-operates on regional trade. APEC is not established by treaties, but is based on consensus and commitments are voluntary. 5.21 Decribe the size of APEC?

Composed of 21 member countries, 40.5% of the worlds population, 54% of the worlds GDP, and 43% of international trade. 5.22 state and describe APEC’s Three pillars. Trade and investment liberalization, business facilitation and technical co-operation. 5.23 describe how APEC has benefitted its memebers APEC discusses climate change, security, terrorism,, global economic success and intergration, and emergency preparedness. The organization has decreased tariffs and trade barriers between its members, which has caused a dramatic increase in exports. Since APEC was created, trade between participating members has increased to almost 400%. 5.24 What is the purpose of the G8? A trade organization encompassing the major economies of the world - France, Germany, US, canada, Great Britain, Russia, Italy, Japan - which meet to discuss macroeconomic issues such as economic growth, trade liberalization, and helping developing countries It’s purpose is to discuss macroeconomic issues, such as economic growth, trade liberalization, and helping developing countries. The G8 also discusses issues like the information highway, terrorism, climate control, energy, arms control, crime and drugs. 5.25 Name countries involved in the G8 France, Germany, US, canada, Great Britain, Russia, Italy, Japan 5.26 What is the purpose of the G20? A trade organization established during the economic crises of the 1990s to provide a discussion forum for the major economies of the world beyond the G8. The G20 purpose is to strengthen economic ties throughout the world. focuses on economic growth, elimination of trade barriers, reforming financial institutions and regulations, and restructuring global financial organizations such as the International Monetary Fund Bank and the World Bank. 5.27 Name 10 countries that are apart of the G20 Australia, Brazil, China, Mexico, Russia, Turkey, Argentina, India, South Africa, South Korea. 5.28 Describe what the OECD does. A trade organization with thirty member countries, established in 1961 to promote the advancement of democracy and market economies. OECD members have worked together to eliminate bribery, money laundering, and fraud, and to create a code of conduct for multinational companies. The OECD mission is: Promote economic growth • Expand employment • Improve standard of living • Sustain financial stability • Help countries financial development • Enhance World Trade •

5.29 What is the World Bank? What two institutions make up the world bank? An organization of 186 member countries that provides monetary and technical support for developing countries. The world bank is composed of two separate institutions: the international bank for reconstruction and development (IBRD) and the international development association (IDA). 5.30 What is the purpose of the world bank? the world bank provides loans and grants to poor countries to assist with education, health, infrastructure, farming, environmental issues, resource management, and other economic concerns. It helps with assistance and funds for projects or gives money to poor countries to solve disputes. 5.31 Describe the purpose of the IMF The purpose of the IMF is to promote financial stability, prevent and solve economic crises, encourage growth and assuage poverty.

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Chapter five think about it questions

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