JoHo & Leren
- Waar kan ik JoHo vinden?
- Waarom & hoe donateur worden?
- Waarom & hoe serviceabonnee worden?
- Waaraan denken voor en na je eindexamen?
- Waar & hoe stagelopen in Nederland?
- Waar en hoe studeren in het buitenland?
- Waar en hoe stagelopen in het buitenland?
- Waar en hoe een taalcursus- of reis doen?
- Waar en hoe vind ik een bijbaan of tijdelijk werk?
- Waar kan ik meer vinden over de TEFL cursus?
- UVA Psychologie Amsterdam
- VU Psychologie Amsterdam
RUG Psychologie Groningen
UL Psychologie Leiden
- RU Psychologie Nijmegen
- EUR Psychologie Rotterdam
- UU Psychologie Utrecht
- TiU Psychologie Tilburg
Pedagogiek & OK
Bedrijfskunde en International Business
- Business Economics
- Sociale wetenschappen
- Statistiek & Methoden en Technieken
- Samenvattingen gebruiken na je studie
- Studiehulp zoeken
- Waar en hoe vind ik een stage in het buitenland?
- Waar vind ik stages per werkveld?
- Waar vind ik stages die bij mijn opleiding passen?
- Welke organisaties kan ik het beste inschakelen of laten bemiddelen?
- Waar moet ik opletten als ik stage ga lopen in het buitenland?
- Stagelopen heeft invloed op mijn verzekeringssituatie .. hoe zit dat?
- Waar vind ik extra fondsen of financiering?
- Voor abonnees
- Voor donateurs
- Bijbanen & Studentenbanen
- Sabbatical nemen en carrière switch zoeken
- Hoe maak ik gebruik van de vacatureservice?
- Hoe kan je je competenties & kwaliteiten checken?
- Hoe maak je werken leuk?
- Hoe vind ik werk dat bij mij past?
- Wat leer ik van tijdelijk werk in het buitenland?
- Samenvattingen zoeken voor je oriëntatie
- Voor donateurs
Summary International Economics and Business
Te gebruiken bij
Auteur(s): Sjoerd Beugelsdijk, Steven Brakman, Harry Garretsen, Charles Van Marrewijk
Druk/Jaar van uitgave: 2e/2013
Remarks & Related
Chapters 13 and 14 are not included in this summary.
Zoek recente samenvattingen & studiehulp
Chapter 1: Economic globalization – what, how and when?
Economic globalization process = The increased interdependence of national economies and the trend towards greater integration of goods, labour and capital markets.
The economic globalization process influences managerial decisions and market organization.
International economics analyses the interactions in the global economic environment, meaning it analyses the managerial decisions taken of the basis of a cost-benefit analysis in the global economic environment.
This book is all about the global economy; what is it, how big is it, how functions it and how do participants interact are central questions. This first chapter gives some basic background information about the global economy. It forms the basis for the rest of the chapters.
1.2 ‘The universe and population- history’
Refer to Figure 1.1 on page 5 in the book. It shows the history of our planet. Mankind appeared on our planet 1.8 million years ago, taking the Homo Erectus who invented tools as a starting point.
All estimates made of the global population prior to 200 Before Christ (BC) are based on archaeological and anthropological evidence. From the nomadic time (before 8000 BC) we know that people lived from gathering berries and that it took five square kilometres to feed a human being. According to data sources in Kremer, there were around 125.000 people 1 million years ago. The next 700.000 years the population grew to 1 million and reached about 170 million in the year zero. In Figure 1.2 on page 6, the developments of world population over the last 2500 years are shown. All stagnations in growth can be explained historically by wars and other phenomena. Table 1.1 shows population and population density for 20 big countries.
Refer to Table 1.2 on page 8 in the book. About 60% of the world total population lives in Asia (as of measures in 2010). It is expected that this share falls to 55% in 2050. The African population is expected to increase most dramatically (from 1.02 billion to 2.19 billion) and the European population is expected to decline from 738 to 719 million. This can be explained by the higher African total fertility rate (average number of children per woman); Europe has a rate of 1.59 and Africa of 4.37. As a result of better health care systems and availability of food and safe water supplies, life expectancy at birth I higher in developed countries than in developing countries (78 years versus 67 years in 2010). Life expectancy is particularly low in Africa (57.4 years), partly due to the HIV/AIDS epidemic. In the 35 most highly affected countries of Africa, life expectancy at birth would be 6.5 years less than it would have been in the absence of AIDS.
Population ageing will be the major demographic trend for the next fifty years. The rise in life expectancy at birth and the decline in fertility rates will lead to rapid increases in the share of older people. The median age is used as an indicator. The median splits a population in two equal halves. Whereas half of the world population was younger than 29.2 and a half was older than 29.2 in 2010, the median is expected to be 38.5 in 2050.
Population and business
Firms study demographic trends very closely, as they have to adapt their products and services to those trends. They also want to know what impact trends have on their core activities and strategies. A few examples;
Many automobile firms started production and assembly plants in China since 2000, due to the rapidly growing Chinese population and thus market
Investment firms are increasing the share of investments in firm activities that will benefit from the ageing process (health care, travel, etc.)
Business and population
Businesses are also important drives of much that happens at the population level. Policy makers thus take account of business developments and try to influence them so that the whole population takes advantage of them. A few examples;
Businesses are the key drivers of employment and growth, particularly in capitalist societies
The pharmaceutical industry is the key producer of new medicine
1.3 ‘GNP and GDP- income levels’
The total value of goods and services produced in a certain time period is the best indicator of economic power. You should estimate this total value and compare results across nations, taking three steps;
A well-functioning statistics office must gather information about goods and services produced
What should be compared? Gross domestic product GDP or gross national product GNP?
How to compare the outcome?
Point 2- GDP or GNP?
Gross domestic product (GDP) = The market value of the goods and services produced by labour and property located in a country.
Gross national product (GNP) = The market value of the goods and services produced by labour and property of residents of a country.
Example; A Mexican worker is providing labour services in the USA > These services are American GDP and Mexican GNP. Note that the GNP GDP difference does not only hold for labour services, but also for other factors of production.
GDP + Net receipts of factor income = GNP
For big countries the difference between GDP and GNP is ignorable. For small countries it can be very high. Throughout the book, GDP is used.
Point 3- How to compare?
When GDP level in each country is converted to the same international standard currency (US$ mostly) on the basis of the average exchange rate in the period of observation, you can see in Table 1.3 on page 12 in the book that the US has the world’s largest economy. However, a ranking based on values measured in current US$ is deceptive, because it overestimates production in high-income countries relative to low-income countries. For this, we have to distinguish between tradable and non-tradable goods.
Tradable goods = Can be transported or provided in another country, perhaps at some cost. Providers of tradable goods compete with one another, implying that prices can be compared effectively.
Non-tradable goods = Have to be provided locally and do not compete with international providers (housing services, getting a haircut, going to the cinema).
Getting a haircut in the USA may cost you $15 and only $1.50 in Tanzania, making the value of production in a high-income country relative to a low-income country being overestimated by a factor of 10.
To solve this problem, the UN International Comparison Project collects data on the prices of goods and services for all countries in the worlds and calculates PPP exchange rates. See Table 1.3.
Income per capita
Income per capita = Gives an idea of the well-being for the average person in a country, but gives no information about income distribution within that country. Table 1.3 on page 12 also lists per capita incomes.
Income and business
Managers of large firms do concern the income level in a country, as they want to know how large the demand will be for a certain product in a certain region. So not only population size and density are important, but also GDP per capita. Take people’s first needs like food and drinks. In India GDP per capita may be low, but food and drinks will be bought. As soon as GDP per capita starts growing, total spending on food and drinks will rise quite gradually and more money is left for luxurious items. This is crucial information for firms.
Business and income
Business developments are a key determinant of a country’s GDP. Profitable businesses create jobs and profitable businesses pay well, the other way around for loss making businesses. In an international context, the locations of multinationals influence cross-country distributions of income and hence of GDP per capita.
1.4 ‘The global economy- Some general information’
There is no one standard answer to the question: “What is globalization?”. Globalization means different things to different people. Take farm leaders, trade unionists and human rights activists as an example ; they all see different pros and cons for globalization.
Based on this argumentation, there are five key issues to be considered:
Cultural globalization > Which is about the debate whether there is one big global culture or a set of universal cultural variables, and the degree to which these universal cultural variables displace embedded national cultures and traditions.
An example that illustrates this debate: there are people afraid of ‘McDonaldization’ (hige multinationals are the carriers of culture globalization) and there are people seeing enough room for local traditions.
Economic globalization > Which is about the decline of national markets and the rise of global markets. Drivers for economic globalization are fundamental changes in technology which permit more efficient ways of internationally organizing production processes.
Geographical globalization > Which is about the result of ‘joint time and space’ due to reduced travel times and the rapid (electronic) exchange of information. Some neo-liberals named this development the ‘end of geography’ in which location no longer matters.
Institutional globalization > Which is about the spread of universal institutional regulations across the world, triggered by US President Reagan’s and UK Prime Minister Thatcher’s ‘revolution’ of neo-liberalism. These neo-liberal policies are represented by institutions such as the IMF (International Monetary Fund), the WB (World Bank) and the WTO (World Trade Organization). These universal institutional regulations are not only on macro-economic level, but also on the micro-economic level: multinationals adopt similar policies under the pressure of competition and regulation.
Political globalization > Which is about the relationship between the power of the market (multinational corporations) versus the nation-state, which continuously has to make changes and updates in reaction to economic and political forces. Popular anti-globalists stress that large multinationals become more and more powerful, out-powering the majority of nation-states. In contradiction, others point out that real evidence for these fears is lacking, as the state has to provide security, a legal system, education and infrastructure, which are all of vital importance for economic activity and growth.
Keynes once said that the master economist should “examine the present in light of the past, for the purpose of the future”, by which the common opinion about economic globalization was that it was a totally new phenomenon with overwhelming power. Later research, however, showed that it is historically seen not a new phenomenon at all.
1.5 ‘Globalization and welfare’
Before explaining the topic of this section, let’s first take a look at logarithmic graphs:
Note: This explanation of logarithmic graphs is based on Figure 1.7 in the book
A logarithmic scale is a scale that divides the vertical axis in steps of ten-fold increases: 1-10-100-1000-10000.
The important advantage of a logarithmic graph is that it can simultaneously show the developments in the level of a variable and its growth rate, where the slope (rise/run) of the line reflects the variable’s growth rate. In Figure 1.7, Variable A grows constantly by 14,7% per year. Variable B has no constant growth rate (-5% for the first 30 years and then 8%). C, finally, does not grow at all: 0%, so a straight line.
The important disadvantage of logarithmic graphs is that they can be misleading concerning the difference in levels for variables at the same point in time and for the same variable at different points in time. Let’s illustrate this;
In 1950, the difference between variables A and B is about twice that between the variables B and C, because the vertical difference is twice as large. However, this is a logarithmic graph, so these differences are multiplicative: the level of variable C is 100 times higher than the level of A
In 2000, if the variables all measure something positive, variable A obviously has fared better than variables B and C. But how much better? This is hard to tell from the figure
Now, back to the theory: globalization and welfare.
To describe the evolution of income over time, researcher Angus Maddison uses so-called ‘1990 international dollars’. Maddison collects data for virtually all countries in the world . The development of the world per capita income is illustrated in Figure 1.6, using a logarithmic scale. The logarithmic scale shows the level of income and the growth rate of the income. As you can see in the figure ; world income per capita only started to increase from the year 1000-1800 approximately. Since 1800, per capita world income rose more than eleven-fold in a period of 188 years. Maddison made a note: not only per capita incomes are a measure of welfare, life expectation also is.
Leading and Lagging nations in terms of relative GDP/capita index
The calculations of the deviation index of GDP per capita can be split in above the world average and below the world average. The calculations over 2000 years are available for 28 individual countries and 6 country groups, together covering the global economy. See Figure 1.8 + description: at the beginning of our calendar (year 0): the leading country was Italy, where many other countries were laggards. Later on, the Netherlands, the USA, Switzerland, Australia and the UK became leaders, where Africa, China, India and Iraq became laggards.
1.6 ‘Globalization’s manifestation on international trade and business’
The most significant manifestation of the idea of a global economy is the rise in international trade and capital flows. Capital flows are not a completely new phenomenon, in the ancient cultures of Egypt and Greece for example such flows have always been central in economic interactions. According to Maddison, capital flows have been the most important for the economic rise of Western Europe the past millennium (Recap: Figure 1.8)
Historical overview of the developments in the world economy
Venice: key figure in the economic rise of Western Europe (1000-1500):
Based on improved techniques of shipbuilding and navigation (the compass), Venice opened up trade routes within Europe, the Mediterranean and to China via the caravan routes, bringing in products and new technology (relevant for that time)
By establishing a system of public finance, Venice became the lead economy of the period
Portugal: more ambitious interactions between Europe and the rest of the world (second half of the 15th century)
By opening up trade and settlement in the Atlantic islands
By developing trade routes around Africa, to China, Japan and India
Portugal’s geographic location enabled its fishermen to gather knowledge of Atlantic winds, weather and tides
Portugal soon became the dominant player in the intercontinental trade due to the gained knowledge, maritime experience and the inventions Venice already did (improved techniques of shipbuilding and navigation)
The Netherlands: most dynamic economy (1400-mid 17th century)
By creating large canal networks
By developing shipping, shipbuilding and commercial services > Figure 1.9 shows how the carrying capacity of Dutch merchant shipping was about the same as the combined fleets of Britain, France and Germany.
By providing property rights, education and religious tolerance
Only 40% of the labour force in agriculture > a financial and entrepreneurial elite from Flanders and Brabant emigrated to Holland on a large scale > Holland became the centre for banking, finance and international commerce
Britain: leading economy (18th century)
By improving its financial, banking, fiscal and agricultural institutions along the lines pioneered by the Dutch
By accelerating technical progress and investing in physical capital, education and skills
By reformations in commercial trade policies: reducing protective duties on agricultural imports and eventually removing all trade and tariff restrictions
Europe (18th century-current) > Figure 1.10:
Massive outflow of capital for overseas investment (end 19th – beginning 20th centuries)
Collapse of trade, capital and migration flows and slow economic growth due to the two world wars and the Great Depression (mid-20th century)
The world economy starts growing again, and becomes more closely connected than ever before (end 20th century)
International trade and MNEs
After the before provided historical overview of the world economy, it is clear that there are two waves of globalization: the end of the 19th century until the beginning of the 20th century and after the Second World War.
Globalization is not only due to macro-economic forces, but also to effects of micro-level enterprises.
1.7 ‘The global economy- a detailed analysis’
Economic globalization = ‘The increased interdependence of national economies and the trend towards greater integration of flows of goods, labour and capital markets’.
Only focusing on the volume of these flows gives a biased view of the degree of globalization. Two examples to illustrate this: the price wedge and fragmentation.
The price wedge
Basic economic picture: a downward-sloping demand curve (people buy less if a product becomes more expensive) and an upward-sloping supply curve (firms produce more if the price rises). Take Figure 1.11, international trade flows can also be depicted in this most basic framework, with two twists:
Home’s demand curve for imports is the home’s demand for the good not provided by the home’s domestic suppliers. Similarly, this applies for the Foreign’s export supply curve
There may be a number of reasons for a deviation between Home’s and Foreign’s price > The price wedge = for example, because foreign firms have to overcome certain transport costs, tariffs, trade impediments, cultural differences, et cetera.
Point A: price wedge = paH – paF > 0, resulting in volume qa. From point A, rises in international trade flows can occur for two basic reasons:
A shift to the right in either demand or supply at a constant price wedge will result in increasing trade flows. In Figure , demand shifts to the right > international economy moves to point B, trade flows move from qa to qb (constant price wedge: paH – paF = pbH – pbF). Generally: increased globalization if the rise in trade flows is larger than the rise in production
Price wedge diminishes, resulting from for example lower tariffs or lower transportation costs. If the price wedge completely disappears, the international economy would move to point C
The price wedge in history
According to O’Rourke and Williamson, early growth of international trade was of the first kind: a shift to the right in either demand or supply, as the importing countries themselves could not produce the goods then exported (spices, coffee, tea and sugar). Usually, these were expensive luxury items and their buyers could afford to pay the price wedge.
The two waves of globalization (Figure 1.10) explain the second kind of growth in international trade: decreasing transport costs, technology improvements, falling trade restrictions, international cooperation, the removal of trade restrictions and improved communication possibilities all led to a decreasing price wedge.
The development of the price wedge in between the two waves of globalization (decrease in the first wave, increase during the World Wars and a decrease in the second wave) is also visible on the capital market. As you compare Figure 1.10 with Figure 1.13, there are two waves of globalization in the capital market as well.
Generally, real wage differences between countries explain the direction of migration flows to a very large extent.
Fragmentation = Technological and communication advances have enabled many production processes to be subdivided into various phases which are physically separable > Figure 1.15. The fragmentation process is facilitated by service links such as transportation, telecommunications, insurance, quality control and management control. Fragmentation helps to clarify why some phases of the production will be internally organized and why some phases will be outsourced.
JoHo donateurs ontvangen 10% korting op de scriptiebegeleiding van ScriptieMaster.
word JoHo donateur of abonnee voor online toegang
Korte advieswijzer JoHo services
JoHo donateur (= €5 per kalenderjaar):
- Voor wie JoHo wil steunen
- Voor wie toegang wil tot de (service)abonnementen
- Voor wie van basiskortingen gebruik wil maken
JoHo donateur met service-abonnement I (= €5 + €10 per kalenderjaar): upgrade naar abonnement I
- Voor wie toegang wil tot de online JoHo's en boeksamenvattingen
- Voor wie gebruik wil maken van de vacatureservice en bijbehorende keuzehulp & advieswijzers
- Voor wie gebruik wil maken van keuzehulp en advies wil bij werk in het buitenland, lange reizen, vrijwilligerswerk, stages en studie in het buitenland
JoHo donateur met service-abonnement II (= €5 + €20 per kalenderjaar): upgraden naar abonnement II
- Voor wie online volledig gebruik wil maken van alle JoHo's en boeksamenvattingen voor alle fases van een studie, met toegang tot alle online HBO & WO boeksamenvattingen en andere studiehulp
- Voor wie extra kortingen wil op de JoHo's en boeksamenvattingen
- Voor wie extra kortingen wil op (reis)artikelen en services
- Voor wie gebruik wil maken van de emigratie- en expatservice
JoHo donateur met service-abonnement III (= €5 + €40 per kalenderjaar):
- Voor wie gebruik wil maken van een cv-check, persoonlijke adviesservices & de hoogste kortingen op artikelen, samenvattingen en services
JoHo donateur met een doorlopende verzekering
- Sluit je via JoHo een jaarlijks doorlopende verzekering af, dan kan je gedurende de looptijd van je verzekering gebruikmaken van de voordelen van service-abonnement III: hoge kortingen + volledig online toegang + alle extra services. Lees meer
Je bent al donateur, maar je hebt geen toegang
Indien het een adviespagina, keuzehulppagina of een (exclusieve) samenvatting betreft, dan heb je een (service)abonnement nodig om toegang te krijgen tot deze pagina. Lees hierboven meer over welk abonnement je kunt afsluiten.
Wil je tijdelijk extra toegang, bijvoorbeeld tot de Exclusive samenvattingen of keuzekits en advieswijzers, sluit dan als donateur een maandabonnement met volledige online toegang af. Lees hier meer over de voordelen en services bij dit tijdelijke (service)abonnement.
Samenvattingen & Studiehulp: Mogelijk heb je als JoHo donateur heb je vorig studiejaar, ter kennismaking, gebruik kunnen maken van de de toegang tot de online JoHo's (samenvattingen en studiehulp) voor de propedeusevakken. Dit studiejaar kan je gebruik blijven van de JoHo's door te 'upgraden' naar abonnement I of abonnement II en een voordelig JoHo (service)abonnement af te sluiten. Daarnaast kan je ter waarde van de kosten van je abonnement gratis JoHo's komen afhalen in de JoHo support centers!
Lees hier de antwoorden op de meest gestelde vragen.
Meer en uitgebreide advieswijzers
voor samenvattingen en stages - voor vacatures en sollicitaties - voor reizen en backpacken - voor vrijwilligerswerk en duurzaamheid - voor emigratie en lang verblijf in het buitenland- voor samenwerken met JoHo
Steun JoHo en steun jezelf door JoHo donateur te worden
Bezoek gratis de Nederlandse carrièredagen in de Jaarbeurs Utrecht!
JoHo is een ontwikkelingsorganisatie met wereldwijd winkels en websites,
waar mensen en organisaties worden gestimuleerd en geholpen bij talentontwikkeling en internationale samenwerking
|Samenwerken & Adverteren||World Supporter platform||World Summaries platform||Expat platform||World Activity Platform||Emigratie platform||Jouw account pagina|
|JoHo||JoHo & Leren||JoHo & Werken||JoHo & Reizen||JoHo & Emigreren||You & JoHo|