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119.
The ratio of international prices for goods being traded between two countries is known as
the ____________.
120.
When one nation is less efficient than another nation in the production of each of two
goods, the less efficient nation has a ____________ in the production of that good for which
its absolute disadvantage is less.
121.
The price of one currency stated in terms of another is known as the ____________.
122.
____________ refers to a reduction in the value of a country's currency relative to other
currencies.
123.
Some countries have abundant ____________, or the land, labor, capital, and related
production factors a nation possesses.
124.
Economist Stefan Linder proposed his theory of ______________, which argues for the
existence of similar preferences and demand for products and services among nations
with similar levels of per capita income.
125.
______________ refers to the unique differences that producers build into their products,
with the intent of positively influencing demand.
126.
The __________ is a theory explaining why a product that begins as a nation's export
eventually becomes its import.
127.
__________ refers to the predictable decline in the average cost of producing each unit of
output as a production facility gets larger and output increases.
128.
The rising scale on which efficiency improves as a result of cumulative experience and
learning is known as the __________.
129.
__________ is a nation's ability to design, produce, distribute, or service products within an
international trading context while earning increasing returns on its resources.
130.
The four kinds of variables that influence firms' ability to use their country's resources to
gain a competitive advantage, according to Michael Porter's diamond model, include
_______, __________, related and supporting industries, and firm strategy, structure and
rivalry.
131.
The four kinds of variables that influence firms' ability to use their country's resources to
gain a competitive advantage, according to Michael Porter's diamond model, include
demand conditions, factor conditions, _______, and __________.
132.
The purchase of stocks and bonds to obtain a return on the funds invested is known as
__________.
133.
The purchase of sufficient stock in a firm to obtain significant management control is
known as __________.
134.
The _________—or the value of the total outstanding stock—of all foreign direct
investment (FDI) worldwide was $26.3 trillion at the beginning of 2014.
135.
Individuals and corporations from ____________ accounted for $6.3 trillion invested abroad
in 2014, a total more than three times the FDI of the next-largest investor nation.
136.
Reflecting their continued economic development, ____________ have dramatically
increased their share of FDI stock, from 1 percent in 1980 to 19 percent at the beginning
of 2014.
137.
The vast proportion of outward FDI, about two-thirds, still originates from the
____________.
138.
Much of the world's outward FDI has been associated with ____________, including,
historically, approximately two-thirds of the value of corporate investments made in the
United States from abroad.
139.
Regarding the nations and regions from which FDI originated, the ____________ invest
primarily in one another, just as they trade more with one another.
140.
UNCTAD's Trade and Development Index initiative revealed that ____________ had a
significant and positive impact on export performance for all the nations studied and in
every time period, playing a key role in influencing the composition of exports, including
the technological content of the goods produced in a nation and the development of
sufficient capacity to meet export demand for these goods.
141.
Historically, foreign direct investment has followed ____________.
142.
____________ refers to the establishment of new facilities from the ground up.
143.
____________ refers to the purchase of an existing business in another nation.
144.
____________ is a theory that foreign direct investment is made by firms in industries with
relatively few competitors, due to their possession of technical and other advantages over
indigenous firms.
145.
A(n) ____________ is an industry with a limited number of competing firms.
146.
The ____________ theory suggests that strategic rivalry between firms in an oligopolistic
industry will result in firms closely following and imitating each other's international
investments to keep a competitor from gaining an advantage.
147.
____________ theory states that to obtain a higher return on its investment, a firm will
transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in
the open market.
148.
____________ theory states that for a firm to successfully invest overseas, it must have not
only ownership of unique knowledge or resources, but also the ability to dynamically
create, sustain, and exploit these capabilities over time.
149.
The ____________ theory of international production proposes states that for a firm to
invest in facilities overseas, it must have three kinds of advantages.
2-93
150.
Dunning's theory of international production proposed that for a firm to invest in facilities
overseas, it must have three kinds of advantages: ownership specific, location specific,
and _______.
Essay Questions
151.
Discuss the advantages of focusing attention on a nation that is already a sizable
purchaser of goods coming from the exporter's home country.
152.
Explain the logic of mercantilism and why it is generally viewed as a deficient theory.
153.
Discuss the theory of absolute advantage and how it explains the basis for trade between
nations.
154.
Discuss the keystone of international trade, the theory of comparative advantage.
155.
Discuss Dunning's eclectic theory of international production as a theory to explain flows
of international trade and foreign direct investment.
