What Is a Global Corporation?

A global corporation, also known as a global company, is coined from the base term
‘global’, which means all around the world. It makes sense to assume that a global
company is a company that does business all over the world. There aren’t many
companies in the world that can boast of having a business presence in every major
country. Actually, they probably can be numbered on the fingers of both hands. The
global company definition, therefore, should be a little more lenient to accommodate
this fact, which would enable more companies to call themselves global companies.
Really, a global company is any company that operates in at least a country other than
the country where it originated. Realistically, expanding to even just one additional
country is a lot of work and is therefore a great achievement. If you are operating in
one country, selling your products around the world and shipping them to customers in
countries in Europe while you’re in the United States, that doesn’t necessarily mean
you’re a global company. It takes more than that to earn the name a global company.

To be a global company, you need to introduce not only your products, but also your
company to people who live in another country. You need to conduct significant
research to figure out which country is your best choice for expansion and how to
introduce yourself. Probably, you'll have to send some of your employees to that
country to speak with people face-to-face and to experience that country on a first-
hand basis, before you decide whether the country is right for your company. Once
you expand to another country and establish yourself successfully, it's only natural
that you will want to try an additional country, and another, and yet another. That is
how global companies have started, and now they have a massive list of countries in
which they do business.

Examples of Global Corporations

Businesses only begun to be referred to as global fairly recently. The idea of doing
business globally and the characteristics of a global corporation aren’t all that new,
however. Consider Coca-Cola, which, in 1886, was struggling to get by. By World War
II, Coca-Cola was 50 years old and had proudly maintained its price at 5 cents, so as
to enable many people to afford the beverage. The company would sell its drink to
U.S. soldiers stationed all over the world for 5 cents a bottle, but no more.

Coca-Cola now sells its beverages in more than 200 countries. Not only does the
Coca-Cola company sell its popular fizzy drinks such as Coke, Fanta, and Sprite, it
also sells some 3,800 other products, including soy-based beverages that have been
enriched with vitamins. The Coca-Cola company also sells juices, iced teas, bottled
water, and a lot more. One of the reasons why Coca-Cola has seen such monumental
success in nearly every country it has established itself is that it never has a
standardized view of all countries. Instead, each country is considered on an individual
basis. The company will make sure it only provides products that fit with the tastes and
culture of the local community. Often, this means that Coca-Cola must create entirely
new products to fit a market's demographics, or it may tweak an existing product so
that it will appeal to residents in a specific locality. You may have noticed this. Some
Coca-Cola products are available in some countries but not in others; this is because
those products were created for that country or were tweaked to suit the preferences
of a specific country.

There are other global companies, such as the Hilton and Hyatt Hotels, Adobe, Cisco,
3M, Monsanto, and American Express. These companies range from hospitality
companies to tech and manufacturing companies. This shows that many types of
global corporations exist. Some aren’t global in a purely physical sense. Consider
internet giants Facebook and Google, which have a presence in virtually every country
in the world that has an internet connection. Their presence is more virtual than
physical, but it's global.

All contemporary global companies once had been mere startups. Coca-Cola was
once a drugstore in Atlanta, Georgia. Google started out as nothing more than a
research project undertaken by Larry Page and Sergey Brin. You, too, can become a
global company. However, do not rush it. Take it one country at a time.

The Benefits of a Global Corporation

The United States Small Business Administration points out that only 4 percent of
global consumers reside in the U.S. This means that you stand to benefit, in terms of
sales revenue, by expanding globally. There are also lots of other benefits to
globalizing your corporation:

You can increase your customer base

When you expand your business into another country, your customer base expands
along with it. The market in the United States could be full of products just like yours.
You may find, however, that this is not the case in another country. That could present
an expansion opportunity for your company. What's familiar to your consumers in the
U.S. could be fresh to consumers in another country.

You can reduce your operating costs

If the manufacturing or labor costs are lower in another country, expanding to that
country enables you to save on your operating costs. This can improve your bottom
line. In fact, reducing operating costs are a key reason why many global companies
expand.

You don’t need to be bogged down by seasonality

If you sell a seasonal product that experiences fluctuating sales at different times of
the year, then you can expand to countries that have seasons opposite to those in
your base country, enabling you to have high sales figures all year.

You can boost the growth rate of your company

If your company has been growing rapidly in your locale, chances are that this growth
may eventually stall, because of market saturation. In that instance, you can expand to
another country so you can maintain rapid growth.

You can create new jobs

Expanding into another country involves a lot, such as hiring representatives and
employees of your company in the new country, as well as setting up offices and
various facilities, and so on. You’re likely to employ locals and, in the process, you will
create new job opportunities in the country where you are expanding. This helps boost
the local economy and it also gives your company a good reputation.
The Global Economy
The study of the behavior and decisions of entire economies.

Macroeconomics

The study of the behavior and decisions of entire economies.

Globalization

A modern term used to describe the changes in societies and the world economy that result from
dramatically increased international trade and cultural exchange.

Why do nations trade?

“Countries engage in international trade for two basic reasons, each of which contributes to their
gain from trade. First, countries trade because they are different from each other. Nations, like
individuals, can benefit from their differences by reaching an arrangement in which each does the
things it does relatively well. Second, countries trade to achieve economies of scale in production.
That is, if each country produces only a limited range of goods, it can produce each of these goods
at a larger scale and hence more efficiently than if it tried to produce everything. In the real world,
patterns of international trade reflect the interaction of both these motives.”~Paul Krugman,
International Economics

Trade Barriers Definition

Preventing a foreign product from freely entering into a nation’s territory.

Types of Trade Barriers

Import QuotaVoluntary Export RestraintTariffInformal BarriersGovernment Licensing
RestrictionsGovernment Health and Safety Requirements

Effects of Trade Barriers

The overall impact of trade barriers is that they limit supply. This results in two common
consequences:Increased price of foreign goodsTrade wars

Protectionism

Definition~ The use of trade barriers to protect industries from foreign competition.PositivesProtect
jobsProtect infant industriesEnhance national securityNegativesLimits LDC’s ability to compete on a
global scaleReduces global living standardLimits attempts for international peace

International Agreements
World Trade Organization (1995)~ The only international organization dealing with the global rules
of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and
freely as possible.

European Union (1951/1999)~ A regional economic agreement among 27 countries across the
European continent

NAFTA (1994)~ This agreement removed most barriers to trade and investment among the United
States, Canada, and Mexico. Under the NAFTA, all non-tariff barriers to agricultural trade between
the United States and Mexico were eliminated. The agreement was phased in from and has
increased trade by over 200% since it was enacted.

Key Content:

Development- Process by which a nation improves the economic, political and social well being of
its people

.Developed-High level of material well being (US)

Less Developed- Low level of material well being (Ethiopia)

Newly Industrializing- Better performing LDC’s (Mexico)

Indicators of Development

Per capita GDP

Energy Consumption

Labor Force

Literacy

Infant Mortality

Life Expectancy

Consumer Goods

Three Levels of Development Developed Countries

South America

Central America

Caribbean

United States

CanadaSouthern AfricaMiddle AfricaEastern AfricaWestern AfricaNorthern AfricaSouthern

EuropeWestern EuropeEastern EuropeNorthern EuropeWestern AsiaSouth Central AsiaEast
AsiaSoutheast AsiaOceaniaTropic of CancerTropic of CapricornEquatorThree Levels of
DevelopmentDeveloped CountriesLess Developed CountriesNewly Industrialized Countries

**ISSUES IN DEVELOPMENT**
Rapid population growth

Resource distribution

Lack of physical capital

Lack of human capital

  Health/Nutrition

 Education/Training

 “Brain Drain”

Political Factors

 Colonial Dependency to Independent Planning

 Government Corruption

 Political Instability (civil wars, social unrest, lack of government infrastructure)

Debt

Rapid population growth

Many countries of the world are experiencing rapid population growth and although every case is
different one consistent similarity is that these nations are most often less developed countries.

Examples: Sudan, Ethiopia and Kenya

Why is population growing in these countries?~At the core it is simple math - many more people are
being born than are dying.

Population…continued
Why are there more babies being born?

 Children may be needed to help earn money

 Lack of contraceptive devices may lead to unwanted pregnancies and babies.

 The local or national culture or government may encourage large families

 Parents may be fearful of infant mortality (children dying very young)

 Better medical facilities could be increasing the lives of mothers and therefore increasing
their chances of having larger families

Why are there fewer deaths now?

 Better birthing facilities

 More widely available medicines and medical expertise

 A general improvement in diet and nutrition in many countries

Resource Distribution
In parts of Africa, Asia, and Latin America, physical geography makes development more difficult.

Only about 10 percent of the world’s land is arable, or suitable for producing crops.

Lack of Physical Capital

The lack of economic activity typical of LDCs is due in part to a lack of physical capital.
Subsistence agriculture provides little opportunity for individuals or families to save.

Lack of Human Capital

Health and Nutrition

Proper food and nutrition are necessary for physical and mental growth and development.
Inadequate nutrition is called malnutrition.

Education and Training

To be able to use technology and move beyond mere subsistence, a nation must have an educated
work force.

Brain Drain

The scientists, engineers, teachers, and entrepreneurs of LDCs are often enticed to the benefits of
living in a developed nation. The loss of educated citizens to the developed world is called “brain
drain.”

Political Factors

Shifting from colonial dependency >

Many nations, specifically on the African continent, were under colonial domination until recent
times.

This domination created an economic structure that was “export” heavy and “import” light. This
unequal balance of trade made nations dependent on the colonial power for manufactured products.

In addition to hyper-dependency for manufactured goods, colonies often lacked infrastructure and
internal leadership.

But independence is a good thing…RIGHT?!!?!?

Political Instability
Political instability plagues less developed nations with civil wars and social unrest acting to prevent
the necessary social stability required for sustained development.

Corruption

“Corruption is a major cause of poverty as well as a barrier to overcoming it. The two scourges feed
off each other, locking their populations in a cycle of misery. Corruption must be vigorously
addressed if aid is to make a real difference in freeing people from poverty.” ~ Peter Eigen

“Corruption isn’t a natural disaster: it is the cold, calculated theft of opportunity from the men, women
and children who are least able to protect themselves. Leaders must go beyond lip service and
make good on their promises to provide the commitment and resources to improve governance,
transparency and accountability.”~ David Nussbaum

Issue Focus: Debt

“Debt is an efficient tool. It ensures access to other peoples' raw materials and infrastructure on the
cheapest possible terms. Dozens of countries must compete for shrinking export markets and can
export only a limited range of products because of Northern protectionism and their lack of cash to
invest in diversification. Market saturation ensues, reducing exporters' income to a bare minimum
while the North enjoys huge savings. The IMF cannot seem to understand that investing in ... [a]
healthy, well-fed, literate population ... is the most intelligent economic choice a country can make.”

-- Susan George, A Fate Worse Than Debt, (New York: Grove Weidenfeld, 1990), pp. 143, 187, 235

The Unholy Trinity?!?!?! World Bank International Monetary Fund

World Trade Organization

World Bank

 The World Bank is a vital source of financial and technical assistance to developing countries
around the world. Their mission is to fight poverty with passion and professionalism for
lasting results and to help people help themselves

 It is not a bank in the common sense; it is made up of 186 member countries.

 They provide low-interest loans, interest-free credits and grants to developing countries.

 The World Bank, established in 1944, is headquartered in Washington, D.C.

 The three pillars of the World Bank:

Results

Reform

Resources

 International Monetary Fund

Started in 1944 at the Bretton Woods Conference.

 The IMF is an organization of 186 countries, working to foster global monetary cooperation,
secure financial stability, facilitate international trade, promote high employment and
sustainable economic growth, and reduce poverty around the world.

 Creates structural adjustment programs (SAP) in less developed nations across the globe.

World Trade Organization

 The World Trade Organization (WTO) is the only global international organization dealing
with the rules of trade between nations.

 Established on January 1, 1995 and is headquartered Geneva, Switzerland

 It is made up of 153 countries

 Functions:

• Administering WTO trade agreements

• Forum for trade negotiations

 • Handling trade disputes

• Monitoring national trade policies

• Technical assistance and training for developing countries

• Cooperation with other international organizations

BASIC MICRO ECONOMICS BY: MS. HIJPRA R. CENTENO

HOW TO ORGANIZE ECONOMIES: AN OVERVIEW OF ECONOMIC SYSTEMS BY THE END OF THIS SECTION,
YOU WILL BE ABLE TO:

• CONTRAST TRADITIONAL ECONOMIES, COMMAND ECONOMIES, AND MARKET ECONOMIES

• EXPLAIN GROSS DOMESTIC PRODUCT (GDP)

• ASSESS THE IMPORTANCE AND EFFECTS OF GLOBALIZATION

THINK ABOUT WHAT A COMPLEX SYSTEM A MODERN ECONOMY IS. IT INCLUDES ALL PRODUCTION OF
GOODS AND SERVICES, ALL BUYING AND SELLING, ALL EMPLOYMENT. THE ECONOMIC LIFE OF EVERY
INDIVIDUAL IS INTERRELATED, AT LEAST TO A SMALL EXTENT, WITH THE ECONOMIC LIVES OF
THOUSANDS OR EVEN MILLIONS OF OTHER INDIVIDUALS.

THERE ARE AT LEAST THREE WAYS THAT SOCIETIES ORGANIZE AN ECONOMY. THE FIRST IS THE
TRADITIONAL ECONOMY, WHICH IS THE OLDEST ECONOMIC SYSTEM AND IS USE IN PARTS OF ASIA,
AFRICA, AND SOUTH AMERICA. TRADITIONAL ECONOMIES ORGANIZE THEIR ECONOMIC AFFAIRS THE
WAY THEY HAVE ALWAYS DONE (I.E., TRADITION). OCCUPATIONS STAY IN THE FAMILY. MOST FAMILIES
ARE FARMERS WHO GROW THE CROPS USING TRADITIONAL METHODS. WHAT YOU PRODUCE IS WHAT
YOU CONSUME. BECAUSE TRADITION DRIVES THE WAY OF LIFE, THERE IS LITTLE ECONOMIC PROGRESS
OR DEVELOPMENT.

A COMMAND ECONOMY

ANCIENT EGYPT WAS AN EXAMPLE OF A COMMAND ECONOMY

COMMAND ECONOMIES ARE VERY DIFFERENT. IN A COMMAND ECONOMY, ECONOMIC EFFORT IS

DEVOTED TO GOALS PASSED DOWN FROM A RULER OR RULING CLASS. ANCIENT EGYPT WAS A GOOD
EXAMPLE: A LARGE PART OF ECONOMIC LIFE WAS DEVOTED TO BUILDING PYRAMIDS FOR THE
PHARAOHS.
MEDIEVAL MANOR LIFE IS ANOTHER EXAMPLE: THE LORD PROVIDED THE LAND FOR GROWING CROPS
AND PROTECTION IN THE EVENT OF WAR. IN RETURN, VASSALS PROVIDED LABOR AND SOLDIERS TO DO
THE LORD’S BIDDING. IN THE LAST CENTURY, IN A COMMAND ECONOMY, THE GOVERNMENT DECIDES
WHAT GOODS AND SERVICES WILL BE PRODUCED AND WHAT PRICES IT WILL CHARGE FOR THEM. THE
GOVERNMENT DECIDES WHAT METHODS OF PRODUCTION TO USE AND SETS WAGES FOR WORKERS.
THE GOVERNMENT PROVIDES MANY NECESSITIES LIKE HEALTHCARE AND EDUCATION FOR FREE.

 CURRENTLY, CUBA AND NORTH KOREA HAVE COMMAND ECONOMIES

A MARKET ECONOMY

NOTHING SAYS “MARKET” MORE THAN THE NEW YORK STOCK EXCHANGE. ALTHOUGH COMMAND
ECONOMIES HAVE A VERY CENTRALIZED STRUCTURE FOR ECONOMIC DECISIONS, MARKET ECONOMIES
HAVE A VERY DECENTRALIZED STRUCTURE. A MARKET IS AN INSTITUTION THAT BRINGS TOGETHER
BUYERS AND SELLERS OF GOODS OR SERVICES, WHO MAY BE EITHER INDIVIDUALS OR BUSINESSES. THE
NEW YORK STOCK EXCHANGE IS A PRIME EXAMPLE OF A MARKET WHICH BRINGS BUYERS AND SELLERS
TOGETHER. IN A MARKET ECONOMY, DECISION-MAKING IS DECENTRALIZED. MARKET ECONOMIES ARE
BASED ON PRIVATE ENTERPRISE: THE PRIVATE INDIVIDUALS OR GROUPS OF PRIVATE INDIVIDUALS OWN
AND OPERATE THE MEANS OF PRODUCTION (RESOURCES AND BUSINESSES)

BUSINESSES SUPPLY GOODS AND SERVICES BASED ON DEMAND. (IN A COMMAND ECONOMY, BY
CONTRAST, THE GOVERNMENT OWNS RESOURCES AND BUSINESSES.) SUPPLY OF GOODS AND SERVICES
DEPENDS ON WHAT THE DEMANDS. A PERSON’S INCOME IS BASED ON HIS OR HER ABILITY TO CONVERT
RESOURCES (ESPECIALLY LABOR) INTO SOMETHING THAT SOCIETY VALUES. THE MORE SOCIETY VALUES
THE PERSON’S OUTPUT, THE HIGHER THE INCOME. IN THIS SCENARIO, MARKET FORCES, NOT
GOVERNMENTS, DETERMINE ECONOMIC DECISION.

MOST ECONOMIES IN THE REAL WORLD ARE MIXED. THEY COMBINE ELEMENTS OF COMMAND AND
MARKET (AND EVEN TRADITIONAL) SYSTEMS. THE U.S. ECONOMY IS POSITIONED TOWARD THE
MARKET-ORIENTED END OF THE SPECTRUM. MANY COUNTRIES IN EUROPE AND LATIN AMERICA, WHILE
PRIMARILY MARKET-ORIENTED, HAVE A GREATER DEGREE OF GOVERNMENT INVOLVEMENT IN
ECONOMIC DECISIONS THAN THE U.S. ECONOMY. CHINA AND RUSSIA, WHILE OVER THE PAST SEVERAL
DECADES HAVE MOVED MORE IN THE DIRECTION OF HAVING A MARKET-ORIENTED SYSTEM, REMAIN
CLOSER TO THE COMMAND ECONOMY END OF THE SPECTRUM. THE HERITAGE FOUNDATION PROVIDES
INFORMATION ABOUT HOW FREE AND THUS MARKETORIENTED DIFFERENT COUNTRIES' ARE.

• WHAT COUNTRIES ARE CONSIDERED ECONOMICALLY FREE?

EACH YEAR, RESEARCHERS AT THE HERITAGE FOUNDATION AND THE WALL STREET JOURNAL LOOK AT
50 DIFFERENT CATEGORIES OF ECONOMIC FREEDOM FOR COUNTRIES AROUND THE WORLD. THEY GIVE
EACH NATION A SCORE BASED ON THE EXTENT OF ECONOMIC FREEDOM IN EACH CATEGORY.
THE 2016 HERITAGE FOUNDATION’S INDEX OF ECONOMIC FREEDOM REPORT RANKED 178 COUNTRIES
AROUND THE WORLD: THESE COUNTRIES INCLUDE AFGHANISTAN, IRAQ, LIBYA, SYRIA, SOMALIA, AND
YEMEN.

IN 2015, 101 OF THE 178 INCLUDED COUNTRIES SHIFTED TOWARD GREATER ECONOMIC FREEDOM,
ALTHOUGH 77 OF THE COUNTRIES SHIFTED TOWARD LESS ECONOMIC FREEDOM. IN RECENT DECADES,
THE OVERALL TREND HAS BEEN A HIGHER LEVEL OF ECONOMIC FREEDOM AROUND THE WORLD.

MOST ECONOMIC FREEDOM

1. HONG KONG 7. Chile

2. SINGAPORE 8. Ireland

3. NEW ZEALAND 9. Estonia

4. SWITZERLAND 10. United Kingdom

5. AUSTRALIA 11. United States

6. CANADA 12. Denmark

LEAST ECONOMIC FREEDOM

167. TIMOR-LESTE 173. Eritrea

168. DEMOCRATIC REPUBLIC OF CONGO 174. Turkmenistan

169. ARGENTINA 175. Zimbabwe

170. EQUATORIAL GUINEA 176. Venezuela

171. IRAN 177. Cuba

172. REPUBLIC OF CONGO 178. North Korea

REGULATIONS: THE RULES OF THE GAME

MARKETS AND GOVERNMENT REGULATIONS ARE ALWAYS ENTANGLED. THERE IS NO SUCH THING AS
AN ABSOLUTELY FREE MARKET. REGULATIONS ALWAYS DEFINE THE “RULES OF THE GAME” IN THE
ECONOMY. ECONOMIES THAT ARE PRIMARILY MARKET-ORIENTED HAVE FEWER REGULATIONS—
IDEALLY JUST ENOUGH TO MAINTAIN AN EVEN PLAYING FIELD FOR PARTICIPANTS. AT A MINIMUM,
THESE LAWS GOVERN MATTERS LIKE SAFEGUARDING PRIVATE PROPERTY AGAINST THEFT, PROTECTING
PEOPLE FROM VIOLENCE, ENFORCING LEGAL CONTRACTS, PREVENTING FRAUD, AND COLLECTING
TAXES.

CONVERSELY, EVEN THE MOST COMMAND-ORIENTED ECONOMIES OPERATE USING MARKETS. HOW
ELSE WOULD BUYING AND SELLING OCCUR? THE GOVERNMENT HEAVILY REGULATES DECISIONS OF
WHAT TO PRODUCE AND PRICES TO CHARGE. HEAVILY REGULATED ECONOMIES OFTEN HAVE
UNDERGROUND ECONOMIES (OR BLACK MARKETS), WHICH ARE MARKETS WHERE THE BUYERS AND
SELLERS MAKE TRANSACTIONS WITHOUT THE GOVERNMENT’S APPROVAL. THE QUESTION OF HOW TO
ORGANIZE ECONOMIC INSTITUTIONS IS TYPICALLY NOT A BLACK-OR-WHITE CHOICE BETWEEN ALL
MARKET OR ALL GOVERNMENT, BUT INSTEAD INVOLVES A BALANCING ACT OVER THE APPROPRIATE
COMBINATION OF MARKET FREEDOM AND GOVERNMENT RULES

GLOBALIZATION

CARGO SHIPS ARE ONE MODE OF TRANSPORTATION FOR SHIPPING GOODS IN THE GLOBAL ECONOMY

THE RISE OF GLOBALIZATION

RECENT DECADES HAVE SEEN A TREND TOWARD GLOBALIZATION, WHICH IS THE EXPANDING
CULTURAL, POLITICAL, AND ECONOMIC CONNECTIONS BETWEEN PEOPLE AROUND THE WORLD. ONE
MEASURE OF THIS IS THE INCREASED BUYING AND SELLING OF GOODS, SERVICES, AND ASSETS ACROSS
NATIONAL BORDERS—IN OTHER WORDS, INTERNATIONAL TRADE AND FINANCIAL CAPITAL FLOWS.

GLOBALIZATION HAS OCCURRED FOR A NUMBER OF REASONS. IMPROVEMENTS IN SHIPPING AND AIR
CARGO HAVE DRIVEN DOWN TRANSPORTATION COSTS. INNOVATIONS IN COMPUTING AND
TELECOMMUNICATIONS HAVE MADE IT EASIER AND CHEAPER TO MANAGE LONG-DISTANCE ECONOMIC
CONNECTIONS OF PRODUCTION AND SALES. MANY VALUABLE PRODUCTS AND SERVICES IN THE
MODERN ECONOMY CAN TAKE THE FORM OF. THESE PRODUCTS AND MANY OTHERS CAN BE
TRANSPORTED OVER TELEPHONES AND COMPUTER NETWORKS AT EVER-LOWER COSTS. FINALLY,
INTERNATIONAL AGREEMENTS AND TREATIES BETWEEN COUNTRIES HAVE ENCOURAGED GREATER
TRADE

• EXPORTS ARE THE GOODS AND SERVICES THAT ONE PRODUCES DOMESTICALLY AND SELLS ABROAD.

• IMPORTS ARE THE GOODS AND SERVICES THAT ONE PRODUCES A BROAD AND THEN SELLS
DOMESTICALLY.

• GROSS DOMESTIC PRODUCT(GDP) MEASURES THE SIZE OF TOTAL PRODUCTION IN AN ECONOMY.

THUS, THE RATIO OF EXPORTS DIVIDED BY GDP MEASURES WHAT SHARE OF A COUNTRY’S TOTAL
ECONOMIC PRODUCTION IS SOLD IN OTHER COUNTRIES
IN RECENT DECADES, THE EXPORT/GDP RATIO HAS GENERALLY RISEN. INTERESTINGLY, THE SHARE OF
U.S. EXPORTS IN PROPORTION TO THE U.S. ECONOMY IS WELL BELOW THE GLOBAL AVERAGE, IN PART
BECAUSE LARGE ECONOMIES LIKE THE UNITED STATES CAN CONTAIN MORE OF THE DIVISION OF LABOR
INSIDE THEIR NATIONAL BORDERS. HOWEVER, SMALLER ECONOMIES LIKE BELGIUM, KOREA, AND
CANADA NEED TO TRADE ACROSS THEIR BORDERS WITH OTHER COUNTRIES TO TAKE FULL ADVANTAGE
OF DIVISION OF LABOR, SPECIALIZATION, AND ECONOMIES OF SCALE. IN THIS SENSE, THE ENORMOUS
U.S. ECONOMY IS LESS AFFECTED BY GLOBALIZATION THAN MOST OTHER COUNTRIES.

DESPITE THE RISE IN GLOBALIZATION OVER THE LAST FEW DECADES, IN RECENT YEARS WE'VE SEEN
SIGNIFICANT PUSH BACK AGAINST GLOBALIZATION FROM PEOPLE ACROSS THE WORLD CONCERNED
ABOUT LOSS OF JOBS, LOSS OF POLITICAL SOVEREIGNTY, AND INCREASED ECONOMIC IN EQUALITY.
• THE USE OF MATHEMATICS IN PRINCIPLES OF ECONOMICS.

IT IS ESSENTIAL TO READ AND YOU WOULD LEARN MORE ABOUT HOW TO READ AND USE MODELS IN
ECONOMICS

DECISIONS ... DECISIONS IN THE SOCIAL MEDIA AGE

THE WORLD WE LIVE IN TODAY PROVIDES NEARLY INSTANT ACCESS TO A WEALTH OF INFORMATION.
TODAY, FARMERS ARE MORE LIKELY TO ACCESS, ONLINE, WEATHER FORECASTS FROM THE NATIONAL
OCEANIC AND ATMOSPHERIC ADMINISTRATION OR WATCH THE WEATHER CHANNEL. AFTER ALL,
KNOWING THE UPCOMING FORECAST COULD DRIVE WHEN TO HARVEST CROPS. CONSEQUENTLY,
KNOWING THE UPCOMING WEATHER COULD CHANGE THE AMOUNT OF CROP HARVESTED.

SOME RELATIVELY NEW INFORMATION FORUMS, SUCH AS FACEBOOK, ARE RAPIDLY CHANGING HOW
INFORMATION IS DISTRIBUTED; HENCE, INFLUENCING DECISION MAKING. IN 2014, THE PEW RESEARCH
CENTER REPORTED THAT 71% OF ONLINE ADULTS USE FACEBOOK. THIS SOCIAL MEDIA FORUM POSTS
TOPICS RANGING FROM THE NATIONAL BASKETBALL ASSOCIATION, TO CELEBRITY SINGERS AND
PERFORMERS, TO FARMERS INFORMATION HELPS US MAKE DECISIONS AS SIMPLE AS WHAT TO WEAR
TODAY TO HOW MANY REPORTERS THE MEDIA SHOULD SEND TO COVER A CRASH. EACH OF THESE
DECISIONS IS AN ECONOMIC DECISION. AFTER ALL, RESOURCES ARE SCARCE. IF THE MEDIA SEND TEN
REPORTERS TO COVER AN ACCIDENT, THEY ARE NOT AVAILABLE TO COVER OTHER STORIES OR
COMPLETE OTHER TASKS. INFORMATION PROVIDES THE NECESSARY KNOWLEDGE TO MAKE THE BEST
POSSIBLE DECISIONS ON HOW TO UTILIZE SCARCE RESOURCES. WELCOME TO THE WORLD OF

IMPORTS - PRODUCTS (GOODS AND SERVICES) MADE ABROAD AND THEN SOLD DOMESTICALLY

LABOR MARKET - THE MARKET IN WHICH HOUSEHOLDS SELL THEIR LABOR AS WORKERS TO BUSINESS
FIRMS OR OTHER EMPLOYERS o MACROECONOMICS - THE BRANCH OF ECONOMICS THAT FOCUSES ON
BROAD ISSUES SUCH AS GROWTH, UNEMPLOYMENT, INFLATION, AND TRADE BALANCE

MARKET - INTERACTION BETWEEN POTENTIAL BUYERS AND SELLERS; A COMBINATION OF DEMAND

AND SUPPLY

MARKET ECONOMICS - AN ECONOMY WHERE ECONOMIC DECISIONS ARE DECENTRALIZED, PRIVATE

INDIVIDUALS OWN RESOURCES, AND BUSINESSES SUPPLY GOODS AND SERVICES BASED ON DEMAND

MICROECONOMICS - THE BRANCH OF ECONOMICS THAT FOCUSES ON ACTIONS OF PARTICULAR

AGENTS WITHIN THE ECONOMY, LIKE HOUSEHOLDS, WORKERS, AND BUSINESS FIRMS o MODEL - SEE
THEORY

MONETARY POLICY - POLICY THAT INVOLVES ALTERING THE LEVEL OF INTEREST RATES, THE
AVAILABILITY OF CREDIT IN THE ECONOMY, AND THE EXTENT OF BORROWING

PRIVATE ENTERPRISE - SYSTEM WHERE PRIVATE INDIVIDUALS OR GROUPS OF PRIVATE INDIVIDUALS

OWN AND OPERATE THE MEANS OF PRODUCTION (RESOURCES AND BUSINESSES)
SCARCITY - WHEN HUMAN WANTS FOR GOODS AND SERVICES EXCEED THE AVAILABLE SUPPLY
SPECIALIZATION - WHEN WORKERS OR FIRMS FOCUS ON PARTICULAR TASKS FOR WHICH THEY ARE
WELLSUITED WITHIN THE OVERALL PRODUCTION PROCESS

THEORY - A REPRESENTATION OF AN OBJECT OR SITUATION THAT IS SIMPLIFIED WHILE INCLUDING

ENOUGH OF THE KEY FEATURES TO HELP US UNDERSTAND THE OBJECT OR SITUATION

TRADITIONAL ECONOMY - TYPICALLY AN AGRICULTURAL ECONOMY WHERE THINGS ARE DONE THE
SAME AS THEY HAVE ALWAYS BEEN DONE

UNDERGROUND ECONOMY - A MARKET WHERE THE BUYERS AND SELLERS MAKE TRANSACTIONS IN
VIOLATION OF ONE OR MORE