Chapter 03 - International Institutions from an International Business Perspective
Answers to Questions
1. What are the characteristics of informal cognitive institutions and why are they of special significance
to international business managers?
Cognitive institutions use shared ideas to define reality by means of conceptual frameworks or schema.
Examples in the text included the supplier relationship contrast between the U.S. and Japan and in guanxi.
2. The UN may be best known for its peace-keeping missions, but it also has many agencies involved in
activities that directly impact business. Comment on the UN's influence on a single trade transaction.
The transaction will differ by students. The important aspect here is that the answer reveal awareness of
the contributions to the trading infrastructure by the WTO, and beyond that, and at more subtle levels, the
3. Sovereign wealth funds and high reserves are held by many developing nations today, and they had
been the major market for IMF loans in the past. How might the IMF adjust to a world in which fewer
poor countries need their loans?
There are many other areas on which the IMF could focus, such as exchange rate stability, advice on
4. In your judgment, do bilateral trade agreements such as NAFTA and Mercosur undercut the WTO?
This is a debatable issue, a bit of a chicken and egg situation. Bilateral agreements may substitute for
5. When the U.S. Congress approved NAFTA, there was strong trade union and labor opposition. Do
you agree with labor's opposition? Explain.
This question brings in trade theory as well as NAFTA knowledge. Although this is an opinion question,
6. Mercosur's main trading partner is with the EU rather than the U.S. Why might this be the case?