International Trade & Investment Midterm Exam

January 12, 2021

Part II (30 Points)

Read the following questions and write a response to each. Type in your responses using as much space as necessary. However, be as concise as possible. (Please attempt all questions. Limit your responses to no more than six sentences or clearly stated descriptive phrases that adequately presents your thinking. )

Current debates on globalization can cause a lot of passion and other emotional responses that lead to controversy. State two non-economic reasons why such debates can cause disagreement and controversy.
If a country such as Malaysia scores much higher than the United States on Power Distance (one of Hofstede’s cultural dimensions), how can this information help a manager who plans to operate in both countries? State one area of management that differences in Power Distance is likely to be relevant.
Describe the type of political risk a firm in a specific industry would face in any one of today’s emerging markets you are familiar with or have some knowledge of. Select a country and make an assumption that may help in you answering this question, based on the firm’s size or products, among others)
Identify and describe briefly two host-country sources of political risk a firm would face as it expands abroad.
Show how Heckscher-Ohlin’s theory can be used to explain trade between any two countries of your choice.
What does the Product Life Cycle theory of international trade developed to explain? Give one example of the theory’s explanation.
Why is a subsidy a form of government intervention in trade?
What is a common market in regional economic integration?
Give one reason why a firm would prefer to expand into new national markets through an FDI rather than through trade?
Give one reason why a firm would prefer a greenfield FDI to FDI through a foreign acquisition?