regional trade barriers.
Its two wheels mean trade and investment liberation and facilitation (TILF) and economic and technical cooperation (ECOTECH). 9. What are the nature and objectives of OPEC?
A: OPEC is a commodity cartel. It tried to limit the overall crude oil supply of the world for the purpose of maintaining higher oil prices. Translate the following sentences into English: 1. 过去的几十年，地区经济一体化越来越重要。
The past decades witnessed increasingly growing importance of regional economic integration. 2. 最著名的自由贸易区是北美自由贸易区，它是由美国、加拿大和墨西哥于1991年建立的。
The most notable free trade area is the North American Free Trade Agreement (NAFTA), the largest free market formed by the United States, Canada and Mexico in 1991.
3. 经济联盟成员国不仅要在税收、政府开支、企业策略等方面保持一致，而且还应使用同一货币。
The members of an Economic Union are required not only to harmonize their taxation, government expenditure, industry polices, etc., but also use the same currency.
4. 欧洲委员会是欧盟的管理机构之一，此机构将提议呈交给部长理事会做决定，并监督各成员国根据所制定的条约履行自己的义务。 The European Commission is one of the governing organs of the European Union. It is the body that puts proposals to the Council of Minister for decision and sees that the members carry out their duties under the treaty.
5. APEC建立于在澳大利亚首都堪培拉召开的一次部长级会议上。当时有12位成员国出席，分别为澳大利亚、美国、加拿大、日本、新
西兰和东盟六国。
APEC was set up at the Ministerial Meeting held in the Australian capital Canberra attended by 12 members of Australia, the United States, Canada, Japan, Republic of Korea, New Zealand and six ASEAN countries. Lesson 4
Economic Globalization Business Knowledge:
(1) Economic globalization as an objective trend
A. Basic feature *
B. Advantages and negative impacts (2) Multinational corporations
A. Organization- parent and affiliates B. Characteristics
a. c. a. c. a. c.
Enormous in size
Longevity and rapid growth Profit
As vehicles for cross-border transfer resources Multi-domestic corporation Transnational corporation b. Wide geographical spread C. Need, goals and roles
b. Security D. Four types
b. Global corporation d. World company
Answer the following questions:
1. What are the basic feature and major role of economic globalization?
A: The basic feature of economic globalization is to free flow of commodity, capital, technology, service, and information in the global context for optimized allocation.
2. Mention some of the pros and cons of economic globalization. What is the right attitude towards it? (有利和不利方面)
A: The pros is that with the basic feature of free flow of commodity, capital, technology, service, and information in the global context for optimized allocation, economic globalization is giving new impetus and providing opportunities to world economic development and meanwhile making the
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various economies more and more interdependent. While the cons of economic globalization is different countries and peoples do not enjoy balanced benefits.
The right attitude towards it is follow the trend closely, availing the opportunities it offers to develop ourselves and avoiding its possible impacts. 3. What is the formal definition of a multinational enterprise? How can you tell whether a multinational corporation is a parent or just an
affiliate?
A: A multinational enterprise shall be defined as a business organization that owns (whether wholly or partly), controls and manages assets in more than one country.
If the MNC is the original investing corporation, it is known as the parent MNC, which is normally also the international headquarters of the MNE. If the MNC is established as a result of investments by the MNE, whether through the parent or through another of its already established MNC, it is an affiliate MNC.
4. Describe briefly the characteristics of MNEs. A: The characteristics of MNEs is as follow:
a. b. c.
MNEs are generally enormous in size Wide geographical spread Longevity and rapid growth
5. What is the commonly recognized objective of MNEs? A: MNEs are formed for profit, and the second basic need is security. 6. Why is security so important to MNEs?
A: Without security, an MNE’s survival can never be assured. The need of security includes the security of profits in the short-and-long-run, the security of the MNE’s assets and investment, and the security of other organizational needs. Profit is useless if it cannot be secured by the MNE and transferred wherever it so desires.
7. Do you think “wide geographical spread” of MNEs plays a very important role in the development of their business? Why?
A: Yes, I do. MNEs enables them to have a wide range of options in terms of decisions in areas such as sourcing and pricing. They are also more able to take advantage of changes in the international economic environment. Such multi-nationality also enables MNEs to engage in worldwide integrated production and marketing.
8. What is the relationship between MNEs and their host countries?
A: MNCs are under the legal jurisdiction of their host governments that can impose various rules, regulations, and laws on the MNCs to the extent of nationalizing all their assets.
9. What are the four types of multinational enterprises? Describe each of them briefly. A: The four types of multinational enterprises is that:
a. Multi-domestic corporation: it is a group of relatively independent subsidiaries. The parent company delegates sufficient power to each
subsidiary to manage the production and marketing in the host country for the needs of local customers.
b. Global corporation: it operates and views the world market as an integrated whole. Power and responsibility are concentrated at the
headquarters that manages production and marketing to achieve the economies of scale as much as possible. c.
Transnational Corporation: The activities and resources of the transnational corporation are highly neither centralized as the second type nor decentralized as the first type but are integrated in an interdependent network of affiliates. d. World Company: their national identities are blurred to a large extent.
10. Are there may world companies at present? Imagine their future role in complete globalization.
A: Now it is very few. When such companies become dominating, the possibility of conflicts among sovereign states may be greatly reduced. Possibly they will be instrumental to the realization of complete globalization. Translate the following sentences into English:
1. 经济全球化为世界经济发展提供了新的动力和机会，同时也使各经济体更加相互依赖、相互影响。
Economic globalization is giving new impetus and providing opportunities to world economic development and meanwhile making the various economies more and more interdependent.
2. 跨国公司是在一个以上国家拥有、控制和经营资产的商业组织。
A multinational enterprise is a business organization that owns (whether wholly or partly), controls and manages assets in more than one country. 3. 许多人欢呼经济全球化带来的好处，但同时也有强烈的反对声音。
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While many people are acclaiming the benefits brought about by economic globalization, there are also loud vices of opposition. 4. 除了总部以外，跨国企业组织也可能有不同的地区总部和业务总部。
An MNE may also have various regional or operational headquarters, in addition to international headquarters. 5. 跨国公司的内部交换占整个国际贸易的一个很大的比例。
The transfer of the Intra-MNE transactions constitutes a very significant proportion of total international trade.
6. 尽管公司的日常管理工作下放到跨过企业的子公司，但重要决策，如有关公司目标和新投资等都由母公司来决定。
Although the day-do-day running of corporate operation maybe decentralized to the affiliate MNCs, the major decisions, such as those on corporate goals and new investments are made by the parent company.
7. 无论人们是否喜欢，经济全球化已成为世界经济发展中的一个客观趋势。
Like it or not, economic globalization has become an objective trend in world economic development. Lesson 5
International Trade I Business Knowledge:
(1) The definition of international trade (2) Two reasons for international trade
A. The uneven distribution of natural resources among countries B. International specialization
(3) Two theories for international specialization
A. The theory of absolute advantage B. The theory of comparative advantage
a. c.
Contents of the theory
The cornerstone of modern thinking on international trade b. Not a static concept
d. David Ricardo, the economist who introduced the theory
Answer the following questions:
1. How would you define international trade?
A: International trade can be defined as the exchange of goods and services produced in one country with those produced in another sufficient. 2. Why did international trade first begin?
A: The distribution of natural resources is uneven. Some countries are abundant in resources, while elsewhere reserves are scarce or even nonexistent. And a country may be rich in some resources but poor in others. That’s why international trade first began. 3. What is the new incentive for trade that arose with the development of manufacturing and technology?
A: With the development of manufacturing and technology, there arose another incentive for trade, i.e. international specialization. One country producing more of a commodity than it uses itself and selling the remainder to other countries.
4. According to the theory of absolute advantage, trade occurs only when a country has an absolute advantage or comparative advantage? A: According to the theory of absolute advantage, trade occurs only when each country has an absolute advantage over the others in the production of one commodity.
5. Who introduced the theory of comparative advantage? Which theory makes more sense, absolute advantage or comparative advantage? A: David Ricardo, English economist, introduced the theory of comparative advantage. It seems that the idea of comparative advantage makes more sense.
6. Explain briefly why trade to exploit comparative advantage promotes efficiency among countries.
A: The comparative advantage holds that even if a country is less efficient than another in the production of both commodities, there is still a basis for mutually beneficial trade. The first should specialize in the production ad export of the commodity in which its absolute disadvantage is smaller and import the commodity that its absolute disadvantage is greater.
7. Is comparative advantage something static? Is it purely decided by the endowments of nature? Give examples to show the development
of comparative advantage by certain countries?
A: Comparative advantage is not a static concept. A country may develop a particular comparative advantage purely through its own actions, independent of the endowments of nature. Such as the watch making in Switzerland. Translate the following sentences into English:
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1. 在复杂的经济世界中，没有一个国家可以完全自给自足。 In the complex economic world, no country can be completely self-sufficient.
2. 随着制造业和技术的发展，出现了另一个刺激贸易的因素，即国际专业化。
With the development of manufacturing and technology, there arose another incentive for trade, i.e. international specialization. 3. 按照比较利益学说，两个贸易伙伴均可从贸易中得到好处。
According to the theory of Comparative advantage, both trade partners can benefit from trade.
4. 比较利益并不是一个静止的概念，一个国家可以通过自己的行动发展某种特定的比较利益。
Comparative advantage is not a static concept. A country may develop a particular comparative advantage purely through its own actions 5. 比较利益理论已成为现代国际贸易思想的基石。
The idea of comparative advantage has become the cornerstone of modern thinking on international trade. Lesson 6
International Trade II Business Knowledge:
(1) Other bases for trade among countries
A. Patterns of demand: different consumption preference
B. Economy of scale: the cost advantages of large-scale production C. Innovation or style
(2) The reasons why complete specialization may never occur (3) Tariff barriers-the most common form of trade restriction
A. Export duty B. Import duty
a. c.
Specific duty Compound duty b. Ad valorem duty
(4) Quotas-the most common form of non-tariff barriers Answer the following questions:
1. Are there other bases for trade when there are no differences among countries in production conditions? Mention some of the bases. A: Yes, there are. First, patterns of demand may differ among nations. Second, trade may occur out of economies of scale, i.e. the cost advantages of large-scale production. Third, trade takes place because of innovation or style.
2. What is economy of scale? What is the relation between economies of scale is trade?
A: Economies of scale is the cost advantages of large-scale production. The cost for the production of commodities will decrease if the goods are produced on a larger scale.
3. What does the theory of international specialization seek to answer?
A: The theory of international specialization seeks to answer the question which countries will produce what goods, with what trade patterns among them.
4. Will complete specialization occur in reality? Why?
A: No, it may never occur. For strategic or domestic reasons, a country may continue to produce goods for which it does not have an advantage. The benefits of specialization may also be affected by transport cost. Protectionist measures that are often taken by governments are also barriers to trade. 5. What are tariff barriers? What is a customs area and what is a customs union? A: A Tariff barrier is a tax levied on a commodity when it crosses the boundary of customs areas.
A customs area is usually coincides with the area of a country. And a customs area extending beyond national boundaries to include two or more independent nations is called a customs union.
6. What is most favored nation treatment? Is it a very special treatment? Why?
A: MFN treatment refers to a tariff treatment under which a country is required to extend to all signatories any tariff concessions granted to any participating country. It gives a country the lowest tariffs only within the tariff’s schedule, but it still possible to have lower tariffs. 7. What is the most common form of non-tariff barriers? Explain it in a few words.
A: Quotas or quantitative restrictions are the most common form of non-tariff barriers. A quota limits the imports or exports of a commodity during a given period of time. The limits may be in quantity or value terms, and quotas maybe on a country basis or global, without reference to countries.
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