What general characteristics of a country should managers consider when analyzing an economic environment? What specific indicators help managers measure the economic development, performance, and potential of a country?
Answer: Managers apply three perspectives to help make sense of the economic environments of various countries. First, they estimate how much freedom they will have to make investments and run operations as they see fit. Second, they evaluate the type of economic system in the country, studying how current policies shape development and performance. The third investigates the points of change that drive economic change, assessing the conditions that moderate economic freedom as well as move a country from one economic system to another. Collectively, the insights help managers pinpoint where investments should go and, perhaps more importantly, where they should not. The key dimension used to distinguish one country from another is the gross national income (GNI). In particular, countries are classified according to per capita GNI, or the size of GNI of a nation divided by its total population. Those countries with high populations and high per capita GNI are generally most desirable in terms of market potential. A country's GNI growth rate also indicates its economic potential. Businesses comparing markets will also likely examine the purchasing power parity (PPP) of a possible foreign market.
Learn More :
Multinational Business
- Describe the different types of regional economic integration and give an example of each type.
- Explain the static effects and dynamic effects of economic integration. What is the difference between trade creation and trade diversion resulting from economic integration?
- What are the functions of the European Commission, the European Parliament, the Council, and the European Court of Justice?
- What are the rules of origin and regional content provisions of NAFTA?
- What has been the impact of NAFTA on trade and employment in NAFTA nations?
- Identify and briefly compare the major regional trading groups in Latin America, Asia, and Africa.
- Are commodity agreements effective? Why or why not?
- Why is geography important to most regional trade agreements? Provide examples of RTAs to illustrate your answer.
- In a brief essay, explain the roles of the World Trade Organization and the United Nations in international trade.
- What is the difference between a free trade agreement and a customs union? Provide examples of each in your answer.
- What are the disadvantages of import restrictions in regards to creating domestic employment opportunities?
- Explain the rationale for and problems with making the infant-industry argument work as intended.
- Why do developing countries sometimes impose import restrictions to increase their levels of industrialization?
- What is the difference between import substitution policies and export-led development policies? What are the potential effects of each?
- Many companies and industries argue that they should have the same access to foreign markets as foreign industries and companies have to their markets. In a short essay, discuss this issue of "comparable access," or "fairness."
- What are common reasons that governments enact export restrictions? What are the possible negative consequences of such restrictions?
- What is dumping? What are the possible effects of dumping on a country's economy?
- Briefly discuss the four non economic rationales for governmental intervention in the free movement of trade: maintaining essential industries, preventing shipments to unfriendly countries, maintaining or extending spheres of influence, and preserving national identity.
- Describe and compare the different types of tariffs (duties).
- In a short essay, list and discuss the nontariff barriers that relate to direct price influences: subsidies, aid and loans, customs valuations, and other direct price influences.
- List and define the types of nontariff barriers that limit the quantity of goods traded: quotas, embargoes, buy local legislation, standards and labels, specific permission requirements, administrative delays, and reciprocal requirements.
- What are the main arguments for limiting trade in services? What is your opinion on limiting trade in services?
- As an international business manager, how can you benefit from an understanding of international trade theories?
- In a short essay, discuss the theory of mercantilism, and discuss favorable and unfavorable balances of trade as they apply to international business.
- In a short essay, discuss the theory of absolute advantage and the reasons a country's efficiency improves based on this theory.