978-1305500891 Chapter 8 Solution Manual

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END-OF-CHAPTER GUIDE

*Review Questions and Answers

*Critical Discussion Questions and Answers

*Global Action

*Closing Case

REVIEW QUESTIONS AND ANSWERS

1. ON CULTURE: Suppose the people of a given country place a very high value on their

economic independence and control over their economic destiny. However, suppose the

leaders of that country wish to join the EU and also use the euro instead of their own

currency. What objections are they likely to encounter from their citizens? Do you agree

with those objections? Why or why not? What would you recommend that the leaders use

as a response to their citizens in order to persuade them to join?

You might point out to students that restrictions placed upon member countries go

beyond the economic realm. For example, members may not use capital punishment.

2. Refer to PengAtlas Map 2.4 (European Union) and note those EU members that use the

euro. Note also PengAtlas Map 3.4 (Top 10 and Bottom 10 countries by GDP) and

compare to Map 2.4. Which country that is part of the top 10 in GDP and is also part of

the EU does not use the euro? What are the pros and cons of it having its own currency?

In your opinion, if it were to adopt the euro, which would gain more—that country or

those that currently use the euro?

The UK is part of the EU but it has its own currency (the pound sterling) and its own

central bank the Bank of England. For a country that was once a massive empire and

3. Refer to PengAtlas Maps 2.5 (Regional Economic Integration in South America) and 2.6

(Regional Integration in Asia Pacific). Why have these examples of economic integration

Chapter 8: Capitalizing on Global and Regional Integration

not been as successful as the EU or NAFTA? In your opinion, what do you see as the

future for economic integration outside the EU and NAFTA?

Student opinions may vary as to why other examples of economic integration have been

as successful as the EU and NAFTA and opinions may differ as to the future. However, it

4. How can economic integration produce the type of political benefits covered in this

chapter?

Some believe that the greater the amount of trade and interaction countries have with

5. How has the GATT/WTO played a role facilitating global economic integration?

This question is one that is discussed in the Debates and Extensions section of the

6. What institutional arrangements exist for trade dispute settlement?

7. In what ways are the benefits of global and regional integration similar?

Benefits include the following: (1) Disputes are handled constructively. (2) Consistent

8. How may regional integration have a negative effect on global trade and global

integration?

Regional integration, centered on preferential treatments for firms within a region,

discriminates against firms outside a region, thus undermining global integration. Also,

9. What do you personally believe about the value of the WTO? Explain why you feel the

way you do.

10. Why do some believe that one should think regional and downplay global? Do you

agree? Why?

Chapter 8: Capitalizing on Global and Regional Integration

The important thing is not so much the answer as the extent to which the student

demonstrates thought in providing the answer. The interest in regionalism, as opposed to

11. What do you recommend that managers do in order to be prepared for changes in the

rules of the game?

The important thing is not so much the answer as the extent to which the student

demonstrates thought in providing the answer. Students may have various suggestions.

CRITICAL DISCUSSION QUESTIONS AND ANSWERS

1. The Doha Round collapsed because many countries believed that no deal was better than

a bad deal. Do you agree or disagree with this approach? Why?

This is a question in which the answer is not as important as the thought process and the

2. Will Turkey become a full-fledged member of the EU? Why or why not?

The important thing is not so much the answer as the extent to which the student

3. ON ETHICS: Critics argue that the WTO single-mindedly promotes trade at the expense

of the environment. Therefore, trade—or more broadly, globalization—needs to slow

down. What is your view on the relationship between trade and the environment?

The important thing is not so much the answer as the extent to which the student

demonstrates thought in providing the answer. Those who believe that human activity

ON ETHICS: For the €750 billion European Stability Mechanism, even Sweden and Poland (EU

members that do not use the euro) felt they had enough at stake to contribute. But Britain

(another EU member that does not use the euro) decided not to contribute any funds. As a British

official, how do you defend this decision?

This is a question in which the answer is not as important as the thought process and the

ability to clearly articulate.

Chapter 8: Capitalizing on Global and Regional Integration

GLOBAL ACTION

1. The WTO membership is viewed by some as a signal of a country’s ability

to guarantee and protect trade among companies in stable macroeconomic

conditions. Since your company is looking to expand internationally for the

first time since 1999, a list of countries that have been admitted to the WTO

since 2000 is required. This will update your company’s market-entry initiative

so that it can review the international opportunities in a more thorough

manner.

Exercise 1 Answers

One resource that can be used is “World Trade Organization (WTO)”. This website can

2. Your firm is considering developing business in South America. Many in

your company are aware that there is considerable economic cooperation currently

underway in the region. Identify at least one regional trade agreement and its member

countries in South America. Then discuss the pros and cons of expanding to member

countries of this regional trade agreement vis-à-vis non-member countries.

Exercise 2 Answers

One resource that can be used is “Council on Foreign Relations”. This website can be

CLOSING CASE DISCUSSION GUIDE AND ANSWERS

The German Question in the European Union

1. Why is Germany a “reluctant hegemon” in the EU?

2. Why does Germany have to be assertive in the EU?

Chapter 8: Capitalizing on Global and Regional Integration

3. What are the benefits and costs of using a common currency for Germany, Greece, and

the EU?

4. ON ETHICS: While Greece needs help, the German economy has also suffered a major

recession itself. How would you advise the chancellor: to bail out or to kick out Greece?

As a German taxpayer, are you willing to pay higher taxes to help Greece? (Bear in mind,

after Greece, there will be numerous other countries.)