1. John Wiley & Sons, Inc c 19981 GLOBAL ECONOMIC ENVIRONMENT Chapter Two

2. John Wiley & Sons, Inc c 19982 Global Economic Environment w Overview w 1. Intertwined World Economy w 2. Economic Environment Within a Nation w 3. Role of the General Agreement on Tariffs and Trade (GATT) and The World Trade Organization (WTO) w 4. US Position on Foreign Direct Investment and Trade

3. John Wiley & Sons, Inc c 19983 Global Economic Environment (cont) w 5. Information Technology and The Changing Nature of Competition w 6. Regional Economic Arrangements w 7. Multinational Corporation

4. John Wiley & Sons, Inc c 19984 1. Intertwined World Economy Ten Big Emerging Markets (BEM’s) w Chinese Economic Area CEA (China, HongKong, Taiwan) w India w South Korea w Mexico w Brazil w Argentina w South Africa w Poland w Turkey w Assn of Southeast Asian Nations - ASEAN (Indonesia,Brunei,Mal aysia,Singapore, Thailand, Philippines, Vietnam)

5. John Wiley & Sons, Inc c 19985 1. Intertwined World Economy (cont) w Exhibit 2-1 “Top Ten Countries with which US Traded Merchandise in 1995” w Foreign Direct Investment w Portfolio Investment (indirect investment)

6. John Wiley & Sons, Inc c 19986 2. Economic Environment Within a Country w market economy vs command economy w Exhibit 2-2 “ Interrelationships Between Control of Economic Activity and Ownership of Productive Resources” Robinson Patman and Sherman Act Keiretsus w Exhibit 2-3 “Telecommunications Hotspots”

7. John Wiley & Sons, Inc c 19987 3. Role of GATT and WTO w GATT Most favored nation concept (MFN) Uruguay round w WTO Exhibit 2-4 “Summary of the Final Act of the Uruguay Round of GATT” w Financial Services in the WTO/GATT

8. John Wiley & Sons, Inc c 19988 4. US Position in Foreign Direct Investment and Trade w US Direct Investment Overseas Exhibit 2-5 “US Direct Investment Abroad” w Foreign Direct Investment (FDI) in The United States Exhibit 2-6 “FDI Outlays in the US” Exhibit 2-7 FDI Stock in the US 1986-1994”

9. John Wiley & Sons, Inc c 19989 4. US Position in FDI and Trade (cont) w Balance of Payments Position Exhibit 2-8 “US International Trade in Goods and Services, Balance of Payments Basis 1981- 1995” Exhibit 2-9 “US International Trade in Goods, Balance of Payments Basis, 1981-1995” Exhibit 2-10 “US International Trade in Services, Balance of Payments Basis 1981- 1995

10. John Wiley & Sons, Inc c 199810 5. Information Technology and The Changing Nature of Competition w Trade Related Intellectual Property (TRIP’s) w Information related products

11. John Wiley & Sons, Inc c 199811 6. Regional Economic Arrangements Multination Trading Blocs w European Union (EU) w North American Free Trade Agreement (NAFTA) w European Free Trade Area (EFTA) EU plus Finland, Sweden, Norway, Iceland, Austria, Liechtenstein, Switzerland. w MERCOSUR Southern Cone Free Trade Area (Brazil, Argentina, Uruguay, Paraquay plus Chile) w Andean Group in South America

12. John Wiley & Sons, Inc c 199812 6. Regional Economic Arrangements (cont) w Gulf Cooperation Council (GCC) in West Africa w South Asian Agreement for Regional Cooperation (SAARC) India, Pakistan, Sri Lanka, Bangladesh, Nepal, Maldives, Bhutan w ASEAN

13. John Wiley & Sons, Inc c 199813 6. Regional Economic Arrangements (cont) w Free trade areas w Customs Unions free trade areas plus common external tariffs = a customs union w Common Markets w Monetary Union w Political Union

14. John Wiley & Sons, Inc c 199814 7. Multinational Corporations w “ in 1985, 80% of the non-communist world’s productive assets would be controlled by just 200 - 300 companies ” Howard Perlmutter, Professor,Wharton School