IB 150 Lecture Notes - Lecture 3: Jet Aircraft, Foreign Direct Investment, General Agreement On Tariffs And Trade

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IB 150 – Lecture 3
The Globalizing Economy
Rise of Global Standards
New Competitors
Disintegrated Borders
Growing Trade and Investment
Global Products/Customers
Internet and Information Technology
Borders are Disintegrating: The World Trade Organization
Formal structure for continued negotiations and for settling disputes among nations
1947: nations met to reduce tariffs from 45% to less than 5% now – the General Agreement
on Tariffs and Trade (GATT)
1986: Negotiations began in Uruguay to continue reducing tariffs. Completed in 94, renamed
WTO has 164 members (2016)
Trade is good, otherwise you wouldn't do it
Sell Anywhere, Locate Anywhere
Foreign Direct Investment (FDI) occurs when a multinational company from one country
has an ownership position located in another country.
Foreign Direct Investment
Developed countries get the bulk of FDI (69%) while developing countries get around 30%
Least developed countries get minimal FDI
Implications for managers – significant opportunities and risks around the world
The Shrinking Globe
1500-1840 – best average speed of horse-drawn coaches and sailing ships, 10mph
1850-1930 – steam locomotives average 65mph, steamships average 36mph
1950s – propeller aircraft 300-400mph
1960s – jet passenger aircraft 500-700mph
Implications for Production and Market Globalization
Production dispersed to economical locations dues to transportation and communication
New markets opened through www. Jet aircraft move people and goods. Global media
creating a worldwide culture
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