CHAPTER 1 Globalization 2
Opening CaseThe Globalization of Health Care 3
Introduction 4
What Is Globalization? 5
The Globalization of Markets 6
The Globalization of Production 7
The Emergency of Global Institutions 8
Drivers of Globalization 10
Declining Trade and Investment Barriers 10
The Role of Technological Change 13
Country Focus:Ecuadorean Valentine Roses 17
The Changing Demographics of the Global Economy 18
The Changing World Output and World Trade Picture 18
The Changing Foreign Direct Investment Picture 19
The Changing Nature of the Multinational Enterprise 21
Management FocusChina's Lenovo Acquires IBM's PC Operations 23
The Changing World Order 23
The Global Economy of the 21st Century 24
The Globalization Debate 25
Antiglobalization Protests 25
Globalization,Jobs,and Income 27
Globalization,Labor Policies,and the Environment 29
Globalization and National Sovereignty 30
Country FocusProtesting Globalization in France 31
Globalization and the World's Poor 32
Managing in the Global Marketplace 33
Chapter Summary 35
Critical Thinking and Discussion Questions 36
Research Task 36
Closing CaseWipro Ltd.—The New Face of Global Competition 37
CHAPTER 2 International Trade Theory 42
Opening CaseInternational Trade in Information Technology Hardware and U.S.Economic Growth 43
Introduction 44
An Overview of Trade Theory 44
The Benefits of Trade 45
The Pattern of International Trade 45
Trade Theory and Government Policy 46
Mercantilism 46
Absolute Advantage 47
Comparative Advantage 50
The Gains from Trade 50
Qualifications and Assumptions 52
Extensions of the Ricardian Model 53
Country FocusMoving U.S.White-Collar Jobs Offshore 57
Management FocusFree Trade and REI 58
Heckscher-Olin Theory 58
The Leontief Paradox 59
The Product Life-Cycle Theory 60
Evaluating the Product Life-Cycle Theory 62
New Trade Theory 62
Increasing Product Variety and Reducing Costs 63
Economics of Scale,First-Mover Advantages,and the Pattern of Trade 63
Implications of New Trade Theory 64
National Competitive Advantage:Porter's Diamond 65
Factor Endowments 66
Demand Conditions 67
Related and Supporting Industries 67
Firm Strategy,Structure,and Rivalry 67
Management FocusThe Rise of Finland's Nokia 68
Evaluating Porter's Theory 69
Implications for Managers 70
Location 70
First-Mover Advantages 71
Government Policy 71
Chapter Summary 72
Critical Thinking and Discussion Questions 73
Research Task 74
Closing CaseLogitech 74
CHAPTER 3 The Political Economy of International Trade 78
Opening CaseTrade in Textiles—The Chinese Juggernaut 79
Introduction 80
Instruments of Trade Policy 81
Tariffs 81
Subsidies 82
Import Quotas and Voluntary Export Restraints 82
Country FocusSubsidized Wheat Production in Japan 83
Local Content Requirements 85
Administration Policies 85
Antidumping Policies 85
The Case for Government Intervention 86
Political Arguments for Intervention 86
Management FocusU.S.Magnesium Seeks Protection 87
Economic Arguments for Intervention 90
Country FocusTrade in Hormone-Treated Beef 91
The Revised Case for Free Trade 93
Retaliation and Trade War 93
Domestic Politics 94
Development of the World Trading System 94
From Smith to the Great Depression 94
1947-1979:GATT,Trade Liberalization,and Economic Growth 95
1980-1993:Protectionist Trends 96
The Uruguay Round and the World Trade Organization 96
WTO:Experience to Date 97
The Future of the WTO:Unresolved Issues and the Doha Round 100
Country FocusEstimating the Gains from Trade for America 104
Implications for Managers 106
Trade Barriers and Firm Strategy 106
Policy Implications 107
Chapter Summary 108
Critical Thinking and Discussion Questions 109
Research Task 109
Closing CaseSubsidy Dogfight—Boeing versus Airbus 110
Glossary 113