GPE Mid term

  1. Three Pillars of the Global Economy
    • 1. Trade - Good and Services (WTO)
    • 2. Monetary - Exchange rates, (Central Bank, IMF)
    • 3. Development Finance - World Bank
  2. Political / Ecnonmic Context
    1980s vs. 2010
    • 1980s
    • 1. Launch of WWW
    • 2. Global Expansion of English Language

    • 2010
    • 1. Rise of the BRCs
    • 2. US no longer the dominant global leader
  3. What are the Industry Risks + Opportunities according to Porter?
    • 1. Market Potential (expanding or declining)
    • 2. Strengths / Weaknesses of your firm vs. competitors
    • 3. Barginning power of supplier
    • 4. Barginning power of buyer
  4. Rationalize
    The best interest of all society is served by individual choices. The invisible hand
  5. Meaningful Specific


    Wandering Generality
    No longer successful strategy to be a jack of all trades.

    Instead focus on core competencies
  6. What do a pair of jeans represent?


    Sovereignty at Bay
  7. Competitive Advantage
    The strategic advantage one business entity has over its rivals within a competitive industry.

    Theory: proposed by Michael Porter
  8. Perpetual Tension occures between which concepts?
    Political - Economic

    State - Market

    Government - Business
  9. Define Political Economy
    Provides the context for the political and economic interaction between states and the market
  10. What is Globalization?
    The integration of regional economies, societies and cultures through a global network which includes communication, transportation and trade.
  11. Comparative Advantage
    Defined by David Ricaro

    Free trade increases efficiency and has the potential to make everyone better off. Focusing on one product to maintain a comparative advantage (price, quality, etc.)
  12. Sovereignty at Bay
    When a nation states independence and autonomy is eclipsed by the growth of international economies.

    Not as self-contained as they once were.
  13. Role of the MNC in Advancing Globalization and Diminishing National Sovereignty
    • 1. Driving force of globalization
    • 2. Increase profits
    • 3. Access human and natural resources
    • 4. Economices of Scale
    • 5. Bypass increasing government ristrictions
    • 6. Investment incentives and competitions
    • 7. Exploit what is in the air (clustering)
    • 8. 24 hour capacity (Follow the Sun)
    • 9. Manufacture at peak capacity
  14. Hegemonic Stability Theory
    The idea/theory that the international system is more stable with a hegemon
  15. What is a hegemon?
    Dominance and leadership of one nation over others.

    • Stability / Diplomacy
    • Regime of free trade
    • Global organizations (IMF, WTO)
    • Currency for trade
    • Lender of last resort
    • Military overstretched
  16. Liberalism
    espouses free trade, free access to markets and laissey-faire economics

    Thinkers: Adam Smith and David Ricardo
  17. Economic Nationalism
    nations are best off when the state and market are joined in a partnership. The state protects domister firms which become richer and in turn increase state power.

    Nations act in their own interest.
  18. What is the "Invisable Hand"?
    A natural phenomenon that guides free markets and capitalism through competition for scarce resouces.

    Adam Smith
  19. Example of Nationalist impact on everyday business
    • 1. Entry control and foreign direct investment
    • 2. Ownership and equity restrictions
    • 3. Local content requirements
    • 4. Export performance requirements
    • 5. Import controls
    • 6. Builing and land ownership considerations
    • 7. Intellectual property protection
    • 8. Use of indeginous labor
  20. Paper Tiger
    A phrase that represents a hallowed out economy.

    • 1. No industrial base
    • 2. A service economy
  21. Non-Tariff Barriers
    • 1. Import quotas
    • 2. Marketing and ad restrictions
    • 3. Import licensing requirements
    • 4. Customs procedures
    • 5. Product quality standards
    • 6. Safety and health requirements
  22. The "lens of Nationalist"
    Hightech = high value, high profit

    lowtech = low value, and low profit margins
  23. The stages of the Marxist though process
    • Greed
    • Exploitation
    • Contradictions
    • Class consciousness
    • Social Revolution
  24. Marxism
    Focus on structualism and class awareness

    Economics drives eveything

    • Actors = classes
    • Dynamics = exploitation

    Power comes from the bourgoise owning the means of production.
  25. What is the role of the World Bank?
    Functions as an international organization that fights poverty by offering advice and training, loans / devlopment assistance.
  26. Economies of Scale
    Considered the most elegant theory in economics.

    Increase in production efficiency, lowers the coste per unit produced.

    Gives companies access to larger markets, more geographical reach.
  27. What is the role of the IMF?
    Oversees the IM System, monitors financial and economic policies of its members

    Provides loans to hel countries restore macroeconomic stability.
  28. Hegemonic Cycle Theory
    • 1. War
    • 2. Hegemon
    • 3. Multipolar
    • 4. Begin again
  29. Moral Hazard
    Whe two arties are in an agreement but each party could gain from acting contrary to the agreement.
  30. Strategies of Trade Policy
    Strategies to create comparative advantage.
  31. Keynesian Economics
    It is the governmets job to smooth out the bumps of the business cycle.

    • Internention would include:
    • 1) Government spending and tax breaks in order to stimulate the economy.

    2) Government spending cuts and tax hikes in good times to curb inflation.
  32. Bretton Woods System
    a meeting / conference held at the height of WWII where 44 allied nations met.

    • Outcome:
    • 1) Formation of the IMF
    • 2) Formation of the International bank for reconstruction and development
    • 3) Introducition of an adjustable pegged foreign exchange rate system.
  33. What is the Central Bank?
    Oversees the monetary system for a nation.
Card Set
GPE Mid term
Thunderbird GPE Midterm Exam (Goddard)