ECON 401 Assignment 1 Essay

ECON 401 Assignment 1 Essay ECON 401 Assignment 1 Essay ECON 401 Assignment 1, version B- Globalization of markets: Moving away from an economic system in which national markets are distinct and entities, isolated by trade barriers and barriers of distance, time and culture, and towards a system in which national markets are emerging into one global market. Example: McDonalds having to adapt their menus to people changing preferences. In order to stay competitive, McDonalds had to adapt a healthier menu. Also McDonalds realized that their customers want a place where they are able to have a meeting, a place to â€Å"hangout†, therefore lots of McDonalds in Grande Prairie renovated their restaurant and changed the way their menu is designed to make it more appealing, and healthier, for the consumer. They also offer free Wi-Fi for their customers who want to do their business while they are enjoying their meals. Globalization of Production: tend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in costs and quality of factors of production. Example: Nike decided to move where the production was made for their product to china to save on costs of labour to create a higher profit margin. By doing this they were able to increase their revenues and also the labour laws in those countries are not the same as North America, therefore they are able to create more product in a less amount of time because breaks might not be required in a country, like China. Whereas, they would be in North America. 1. The Venezuelan economy teaches us that when a dictator is in control, it can be really bad for the country. With a dictator like Chavez in control of political decisions, not every decision made will benefit the country. For example, â€Å"in 2009, when Chavez also extended governmental control over the media and making them only partly free† (p.50 International business, Hill 2010). One of the good things that happened under Chavez’s control is that the government share of GPD increased from 20%at the end of the 1990’s to almost 40% in 2008. However, when the oil prices fell in 2008/2009, the Venezuelan economy went into reverse, shrinking by 3.3%in 2009 and 2.8% in 2010. (P.50 International business, Hill 2010). The future prosperity and standards of living seemed to have increase in the later years but not due to the fact of the economy but more due to the fact that multinational companies will pay billions for poor countries to sell them their resources and the pay them the price its actually worth. In my opinion, the prognosis for the Venezuelan economy will continue to increase because the multinational companies like Shell, for example, need the resources that a country, like Venezuela, has to offer. A country, like Venezuela, is very attractive to international businesses because there is a huge possibility for company to make billions of dollars of this country. If the oil prices were to retreat from their current high level I don’t think Venezuela would have the same prosperity because oil export is the main income for this country and if the oil export would decrease this country wouldn’t have the same revenue therefor wouldn’t have the same prosperity. 2. According to Joseph Stiglitz the problem with the strong rules to protect intellectual property and patents, especially in relation to medicines are as long as you don’t have laws in place to protect those property right there’s nothing in place in order to protect them you can have rules in place but doesn’t mean everyone is going to follow those rules. For example in a case study in chapter six called â€Å"The rise of India’s drug industry† this story is one of the most successful stories in international trade in my opinion because India protected their property rights and were able to make millions of dollars and also to protect themselves from other companies or country stealing their ideas after they spent