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Globalization and International Linkages
Globalization and International Linkages
INTERNATIONAL
LINKAGES
CHAPTER 1
INTERNATIONAL MANAGEMENT
• Market Economy
• Command Economy
• Mixed Economy
MARKET ECONOMY:
• Private enterprise reserve the right own property and decide on what and how much to
produce
• Contains the least restriction in the allocation of resources
• A general balance between supply and demand
• Competition is encouraged
• Government may limit monopolies, or unfair practices
COMMAND ECONOMY:
• Compared to Monopoly where the government has explicit control over the price and
supply
• The control is based on theoretical need of the population and might be distorted
• Business are owned by the state to ensure investment in the best interests of the society
• Government subsidies provide security to organizations
• Common in communists countries
• What are some of the issues with this system?
MIXED ECONOMY:
• South American countries have accumulated heavy foreign debt and experienced severe
inflation
• Major development is inter-country trade, including free market policies among South
American countries
• South American countries increasingly looking to do business with U.S.
ECONOMIC PERFORMANCE: EUROPEAN UNION
JAPAN CHINA
• Phenomenal economic success in 1970s and 1980s • Annual real economic growth of 10% during the 1980’s
and early 1990’s
• Ministry of International Trade and Industry (MITI)
• More recent growth of 8% or higher
• Keiretsus
• Healthy and growing economy
• Vertically integrated industries
• GDP growth of 11.1% in 1st ¼ of 2007
• Holding provide assistance needed in providing goods and
services to end users • Atrractive to foreign investors despite major political risk
• Decade long recession in 1990s • Product pirating is a major problem
• Bank loans backed by real estate or projected revenues • Complicated and high-risk venture
• By 2000, most major banks had billions of dollars in
uncollectible loans
• International competition has increased
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