IB midterm review 1 
Globalization: trend away from distinct national economic units and toward one huge global market
Globalization of markets: moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market
Globalization of production: trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production
General Agreement on Tariffs and Trade (GATT): international treaty that committed signatories to lowering barriers to free flow of goods across national borders and led to the WTO
World Trade Organization (WTO): the organization that succeeded the GATT as a result of the successful completion of the Uruguay Round of GATT negotiations
International Monetary Fund (IMF): international institution set up to maintain order in the international monetary system
World Bank: international institution set up to promote general economic development in the world’s poorer nations
United Nations: an international organization made up of 189 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation
Drivers of globalization
Declining trade and investment barriers
Technological change (microprocessor, internet)
International trade: occurs when a firm exports goods or services to consumers in another country
Foreign Direct Investment: direct investment in business operations in a foreign country
Where it goes – 70% of developed countries, 16% Asia, 8% Latin America, 3% Africa
Who does it – 85% developed countries, 9% Asia, 3% Latin America
Moore’s law: the power of microprocessor technology doubles and its costs of production fall in half every 18 months
US partners ranking
Exports
Imports
Canada
Canada
Mexico
China
Japan
Mexico
US has 10% output, Germany 9%, China
Globalization of markets: moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market
Globalization of production: trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production
General Agreement on Tariffs and Trade (GATT): international treaty that committed signatories to lowering barriers to free flow of goods across national borders and led to the WTO
World Trade Organization (WTO): the organization that succeeded the GATT as a result of the successful completion of the Uruguay Round of GATT negotiations
International Monetary Fund (IMF): international institution set up to maintain order in the international monetary system
World Bank: international institution set up to promote general economic development in the world’s poorer nations
United Nations: an international organization made up of 189 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation
Drivers of globalization
Declining trade and investment barriers
Technological change (microprocessor, internet)
International trade: occurs when a firm exports goods or services to consumers in another country
Foreign Direct Investment: direct investment in business operations in a foreign country
Where it goes – 70% of developed countries, 16% Asia, 8% Latin America, 3% Africa
Who does it – 85% developed countries, 9% Asia, 3% Latin America
Moore’s law: the power of microprocessor technology doubles and its costs of production fall in half every 18 months
US partners ranking
Exports
Imports
Canada
Canada
Mexico
China
Japan
Mexico
US has 10% output, Germany 9%, China