International Management: Culture, Strategy, and Behavior 11th Edition by Fred Luthans Solution man

In both the Goldman Sachs and PwC scenarios, global growth over the next decade, and the next 30 years, is heavily supported by Asia, as seen in Table 1-6.
In addition, China and India will remain the most populous countries in the world in 2050, although India will surpass China as the most populous – Table 1-7.
African countries could constitute the next wave of dynamic emerging markets.
Transitioning the economy to more non-oil industries will be vital to strengthening Africa for the long term.
Emerging nations, as a whole, have experienced unprecedented GDP growth in the decade since the global recession.
Note that as developing economies mature, their growth rates will likely begin to slow.

 
Global trade and investment continue to grow at a healthy rate, outpacing domestic growth in most countries.
Foreign direct investment (FDI) is the term used to indicate the amount invested in property, plant, and equipment in another country.
Table 1-9 shows trade flows among major world countries in both absolute and percentage terms.
Tables 1-10 and 1-11 show FDI inflows and outflows by leading developed and emerging economies.
As nations become more affluent, they begin looking for countries with economic growth potential where they can invest.
For example, Japanese MNCs have invested not only in their Asian neighbors but also in the U.S. and the EU.
See International Management in Action: Apple Inc. and the Impact of a “Trade War” summarized at the end of the outline.
This section ends with a quiz which illustrates how transnational today’s MNCs have become – lists ten companies and asks for a home country, answers at end of the chapter.
Teaching Tip: International trade is not without controversy. Many labor groups, in countries all over the world, fear that imports cost domestic workers their jobs and threaten their national sovereignty. Proponents of international trade argue that imports provide consumers with more choices and cost savings, and actually create domestic employment because consumers can take the money that they save by buying imports and purchase more domestically produced products. It is appropriate to point out these two sides of the issue to students. Many websites are dedicated to the debate surrounding these issues. An example is the site (http://www.usw.org) sponsored by the United Steelworkers of America that supports the labor’s point of view.
Global Economic Systems
The evolution of global economies has resulted in three main systems: market economies, command economies, and mixed economies.
Market Economy
A market economy exists when private enterprise reserves the right to own property and monitor the production and distribution of goods and services while the state simply supports competition and efficient practices.
This model is least restrictive as the allocation of resources is roughly determined by the law of demand.
A general balance between supply and demand sustains prices, while an imbalance creates a price fluctuation.
Since interaction of the community and firms guides the system, organizations must be as versatile as the individual consumer.
Competition is encouraged to promote innovation, economic growth, high quality, and efficiency.
Monopolies are a danger to this system as they tend to stifle economic growth and consumer choice.
Command Economy
A command economy is comparable to a monopoly in the sense that the organization, in this case the government, has explicit control over the price and supply of a good or service.
The particular goods and services offered are not necessarily in response to consumers’ needs but are determined by the theoretical advancement of society.
Businesses are owned by the state and there is little motivation to improve customer service or introduce innovative ideas.
History confirms the inefficiency and economic stagnation of this system with the dramatic decline of communism in the 1980s.
Mixed Economy
A mixed economy is a combination of a market and a command economy.
While some sectors of this system reflect private ownership and the freedom and flexibility of the law of demand, other sectors are subject to government planning.
The balance allows competition to thrive while the government can extend assistance to individuals or companies.
Ownership of organizations viewed as critical to the nation may be transferred to the state to subsidize costs and allow the firms to flourish.
Economic Performance and Issues of Major Regions
From a vantage point of development, performance, and growth, the world’s economies can be evaluated as established economies, emerging economies, and developing economies – some of which may soon become emerging.
Established Economies
North America
North America constitutes one of the four largest trading blocs in the world. The combined purchasing power of the United States, Canada, and Mexico is more than $24 trillion.