AFM131 Study Guide - Final Guide: Economic Mobility, Gini Coefficient

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Published on 16 Oct 2011
School
University of Waterloo
Department
Accounting & Financial Management
Course
AFM131
Page:
of 2
September 16, 2010
Globalization
Impact on our daily lives?
- Economic (has been laid out in the past few years in terms of the unprecedented global
meltdown)
- Financial (ex. Money invested in GM, Ford, Chrysler)
- Personal (personal debt at record level; interest rates
Threat of stimulus spending of governments around the world attempt to deal with the
crisis...creates deficits
Volatility of exchange rate
Trade Between Canada and the United States
- Canada is importing far more than we are exporting
- Major trading partner: US
- Our ability to trade is related to what is going on in the US
Abdulmutallab incident
- Guy on a plane tried to blow it up
- US now believes they need to protect their country from foreign based terrorists
- Increased security at the border discourages trade because of longer trips/travel time
Why export (and not just build a subsidiary)
- Cheaper (at first)
- Maintain quality
- Gain access to a foreign market
- Simplest with lowest investment, risk and returns
Why build a foreign subsidiary?
- Helps you in terms of expanding
- Reduce costs if the resources are plentiful and/or cheaper
- Immediate and large market
- Maintain complete control over sale of product or service
- Possibly resulting in expropriation
- Where is the research and development going to be held?
Impact of Globalization on Wealth (video)
1. How does globalization affect the poor?
- tremendous income inequalities (have become extremely dangerous)
- more social unrest
- increased globalization leads to
2. What does a relatively high Gini coefficient mean?
- measure of inequality
- high Gini coefficient means a large gap in income (large income range)
3. How is concern for income inequality playing out in the global stage?
- they want social cohesion rather than reduction of poverty
- provide mobility opportunities for people to move up
- currently the growth in income is off-set by an increase in inequality
- does this happen through income growth and income mobility or through income
inequality?
- debate concerning how to achieve harmonious or inclusive society in rapidly developing
countries
Inter-provincial trade
- Huge issues in terms of inter-provincial trade
- Ch4 role of government
- Issues haven’t yet been resolved

Document Summary

Economic (has been laid out in the past few years in terms of the unprecedented global meltdown) Personal (personal debt at record level; interest rates. Threat of stimulus spending of governments around the world attempt to deal with the crisiscreates deficits. Canada is importing far more than we are exporting. Our ability to trade is related to what is going on in the us. Guy on a plane tried to blow it up. Us now believes they need to protect their country from foreign based terrorists. Increased security at the border discourages trade because of longer trips/travel time. Why export (and not just build a subsidiary) Simplest with lowest investment, risk and returns. Reduce costs if the resources are plentiful and/or cheaper. Maintain complete control over sale of product or service. Tremendous income inequalities (have become extremely dangerous) They want social cohesion rather than reduction of poverty. Provide mobility opportunities for people to move up.