AFM131 Study Guide - Final Guide: Economic Mobility, Gini Coefficient
SchoolUniversity of Waterloo
DepartmentAccounting & Financial Management
September 16, 2010
Impact on our daily lives?
- Economic (has been laid out in the past few years in terms of the unprecedented global
- 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
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
- 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
- debate concerning how to achieve harmonious or inclusive society in rapidly developing
- Huge issues in terms of inter-provincial trade
- Ch4 role of government
- Issues haven’t yet been resolved