Introduction to International Business

1
Introduction to International Business

• David J. Boggs, Ph.D.
• Economic Environment

2
Some Acronyms

• EU    European Union
• FDI    foreign direct investment
• GDP gross domestic product
• GNP gross national product
• IMF    International Monetary Fund
• MENA Middle East and North Africa
• MDF Mediterranean Development Forum
• NGOs non-governmental organization
• NICs newly industrialized countries
• OECD Organization for Economic Cooperation and
  Development
• PPP    purchasing power parity
• VAT value-added tax
• WTO World Trade Organization
• http//www.worldbank.org/wbi/mdf/mdf1/terms.htm

3
Economic Systems

• Capitalism
• laissez-faire, private, free-market economy
• Mixed Economy (Socialism)
• basic means of production, distribution and
  exchange controlled
• transportation, banking, goods and services,
  natural resources, communications, postal
• Communism
• theoretically classless society, government
  ownership, centralized planning

4
Factors that Measure Economic Freedom (Heritage
Foundation)

• Trade policy
• Taxation
• Government intervention in the economy
• Monetary policy
• Capital flows and investment
• Banking
• Wage and price controls
• Property rights
• Black market activity

5
Country Economic Categories (World Bank
Categories)

• High-income
• Middle-income
• upper-middle
• lower-middle
• Low-income
• Developing
• Geographic, Oil, non-market, and transition
  economies

6
Economic Transitions

• Rates of growth vary substantially around the
  world
• Many formerly communist countries are now mixed
  or market economies
• Rates of liberalization and privatization vary
  around the world

7
Economic Factors that Affect International
Business

• GNI, GNP and GDP (gross and per capita)
• Private and public consumption and investment
• Discretionary income
• Income distribution
• Unit labor costs
• National economic and indicative plans

8
Other Important Economic Factors

• Public deficit and debt
• Domestic or external
• Percent of GDP or exports
• Interest rates and inflation
• Balance of Payments
• Goods, services, income, dividends, payments, and
  unilateral transfers (aid, gifts, etc.)
• Effect on currency values and trade policy

9
Economic Indicators

• Telephones
• Computers
• Passenger cars
• Trucks and buses
• Steel consumed
• Electricity consumed

• TVs
• VCRs
• Miles of paved roads
• Private consumption expenditures
• Airports

10
Socioeconomic Factors

• Population
• Population density and distribution
• Rural versus urban population
• Age distribution
• Family structures and divorce
• Working women
• Rates of change for all of the above

11
Quality of Life

• Human happiness
• Life expectancy
• Educational standards
• Individual purchasing power
• Health
• Sanitation
• Treatment of Women

• Canada
• United States
• Japan
• Netherlands
• Norway

12
Other Issues

• What is the appropriate balance between income
  equality and economic growth?

13
The Exam Map
14
To get a C or better on the exam, you should

• Attend classes regularly
• Take good notes
• Understand and give examples of all concepts
• Read all chapters before class
• Study for several days rather than cram
• Memorize geography
• Prepare/plan responses to essay questions
• Study practice questions