Global Business Today: Asia-Pacific Perspective 5th edition by Charles W. L. Hill Solution manual

www.wto.org/english/tratop_e/tratop_e.htm
 
C) This removal of barriers to trade has taken place in conjunction with increased international trade (the export of goods or services to consumers in another country), world output and foreign direct investment. WTO data shows that the volume of world merchandise trade has grown faster than the world economy since 1950, and has accelerated since the early 1980s. However, growth rates vary with global economic conditions, as was evident during the 2007–09 GFC.
 
D) The growth of foreign direct investment (the investing of resources and business activities outside a company’s home country) is a direct result of nations liberalising their regulations to allow foreign companies to invest in facilities and acquire local companies. With their investments, these foreign companies often also bring expertise and global connections that allow local operations to have a much broader reach than would be possible for a purely domestic company. FDI has tended to grow faster than world trade but the rate of growth is much more volatile.
 
Lecture note: The United Nations Conference on Trade and Development (UNCTAD) maintains an excellent site on data and issues relating to foreign investment, transnational corporations and foreign investment policies (www.unctad.org). One annual publication, The World Investment Report, is particularly useful.
 
The role of technological change
 
E) While the lowering of trade and investment barriers made globalisation of markets and production a theoretical possibility, technological change made it a tangible reality.
 
Microprocessors and telecommunications
F) Since the end of World War II, there have been major advances in communications and information processing.
 
G) Moore’s Law predicts that the power of microprocessor technology doubles and its cost of production falls by half every 18 months. As this happens, the cost of global communication plummets, lowering the cost of coordinating and controlling a global organisation.
 
The internet
H) The internet, which has experienced explosive growth worldwide, continues to promise development of the information backbone in tomorrow’s global economy. In 2014 there were around 2.8 billion internet users, representing 39 per cent population penetration (www.instore.rs/public_content/media/dokumenti/2015/Internet_Trends_2015.pdf).
 
I) The internet is seen as an equaliser, in that it reduces some of the constraints such as location, scale and time zones that typically limit global expansion by companies.
 
Lecture note: For data on the take-up of ICT and the direct and indirect social and economic effects on industries and economies, visit the website of the International Telecommunications Union, an agency of the United Nations, and in particular the report World Telecommunication/ICT Development Report 2012: Measuring ICT for social and economic development (www.itu.int/en/ITU-D/Statistics/Documents/publications/mis2012/MIS2012_without_Annex_4.pdf).
 
Transport technology
 
J) In addition to these developments, several major innovations in transport technology have occurred since World War II. In economic terms, the most important are probably the development of commercial jet aircraft and super-freighters, and the introduction of containerisation, which greatly simplifies trans-shipment from one mode of transport to another.
 
Implications for the globalisation of production and markets
 
K) Improvements in transport technology, including jet transport, temperature-controlled containerised shipping and coordinated ship–rail–truck systems, have made companies better able to respond to international customer demands. The internet has been a major force in facilitating international trade in services.
 
L) As a consequence of these trends, a manager in today’s company operates in an environment that offers more opportunities, but is also more complex and competitive than that faced a generation ago. People now work with individuals and companies from many countries, and while communications technology and the universality of English as the language of business have decreased the absolute level of cultural difficulties individuals face, the frequency with which they face intercultural and international challenges has increased.
 

The changing shape of the global economy

 
A) Hand in hand with the trend towards globalisation has been a dramatic change in the shape of the global economy. As late as the 1960s, four stylised facts described the character of the global economy. The first was the US dominance in the world economy. The second was the US dominance of the world trade picture. The third was the dominance of large, multinational US companies on the international business scene. The fourth was that roughly half of the globe—the centrally planned economies of the Communist world—was off-limits to Western international business.