Professional Documents
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Course Information
Course Number/Section IMS 5200.595
Course Title Global Business
Term and Dates Spring 2007
Course Pre-requisites
The course is designed for graduate students who had already taken international business,
calculus for business and statistics in their undergraduate studies.
Course Description
The course deals with economic relations in a global economy characterized by increasing
interdependence of nations. Students through the foundations of neoclassic and contemporary
economic theories will learn about absolute and comparative advantage of nations in
international trade. The course also introduces new theories of international trade that have
relevance in the current global economic situation. Students through various graphs will be
able to see the impacts of trade barriers and protectionist government policies on the
economic welfare of nations. Furthermore, students in this course will learn about the
challenges of globalization such as environmental questions, child labor by multinational
firms, the north-south dialogue on terms of trade as well as the clash between multinational
firms and developing countries on employment, transfer pricing and technology sharing. In
addition, students through group research and case reports will present their findings to the
class.
Students upon finishing the course are expected to manage the following core issues:
1 Analyze the international trade dynamics and its trends and directions in the global
marketplace
2 Understand the impact of trade barriers on the welfare of a nation and how it affects the
world economy
Course Objectives:
1. Understand the dynamics of trade and the changes of leadership in the global
economy
2. Recognize why the current terms of trade benefits more the developed
countries more than the developing countries
3. Recognize how Ricardo’s approach to specialization based on cost
comparative advantage theory will help both the rich and poor nations
4. Understand the negative impact of tariff imposition on societies on both sides
of the trade
5. Recognize the dilemma of nations in choosing between economic efficiency
and national security
6. Rationalize why the protectionist economic policy is not beneficial for
developed and developing countries
7. Understand why regional arrangements such as the expansion of EU and
NAFTA can be in contrast to the objectives of multilateralism which has been
fostered by GATT and WTO for many years.
8. Recognize the impact of globalization on the environment, child labor and the
widening of income gap between the rich and the poor.
9. Recognize why MNE can be seen as a threat to developing countries’
sovereignty.
Textbooks and some other bookstore materials are available at the UTD Bookstore
or Off-Campus Books
Required Textbook
Suggested Readings/Texts
Friedman, Thomas, The World is Flat: A Brief History of the Twenty-First Century, Farrar,
Straus and Giroux, 2005
Yergin, D. and Stanislaw, J., Commanding Heights: The Battle for the World Economy, PBS
Series, 2002
Suggested Readings/Journals
The Economist, Wall Street-international section and Journal of International Business Studies
3 Buckley, Ross, The Rich Borrow and the Poor Repay: The Fatal Flaw in
International Finance
http://www.wnyc.org/shows/lopate/episodes/11102005
4 Hubert, Murray and Slater, Joanna, In search of a Ready Scapegoat, Far Eastern
Economic Review, November 13, 2003
http://www.wnyc.org/shows/lopate/episodes/11102005
Grading Information
Weights
Individual Participation 15 %
Group Project 15 %
Midterm Examinational 30 %
Final Examination 40 %
Bonus-special assignment 5%
Total 100%
Grading criteria
Course Policies
Late Work
Not accepted unless there is any special situation preventing a student to complete
the work on time.
The same guidelines that apply to traditional classes should be observed in the
virtual classroom environment. Please use proper netiquette when interacting with
class members and the professor.
All students are expected to participate in individual and group activities and share the group
assignment works. Instructor will ask each group member to evaluate all other group
members’ participation.
Groups will be selected for case studies and report during the first week of the course. A Peer
Evaluation Form will be submitted by each student. Based on the evaluation information,
instructor will assign a group participation grade for each student. Relevant information will
be posted under Groups icon. Each group will work on a separate case and a 3 page written
report will be submitted on the specific assignment due dates as indicated in the course
schedule table. The report should include:
a) problem definition
b) method/s applied to solve the problem
c) solutions
d) conclusion
Week 3 Chapter 4, Tariffs and the Discussion 3: Gr. Project 2: determining trade
Lecture 4 concept of tariffs Unfair terms of trade international trade directions
3/28 in developing beyond cost comparative
countries advantage
Chapter 6 Trade
regulations and industrial Discussion 4:
policies competition in the
world of steel
production
Week 4 Gr. Project 3: Economic
4/4 Midterm (Ch. 1-4) performance of EU members
after accession.
Week 6 Chapter 8, Regional trading Discussion 6: Fair Gr. Project 5: Does Foreign
arrangements Trade movement Direct Investment follow
4/18 helps Poor farmers export
in LDC
Chapter 9, International Review for final
factor movements and examination
multinational enterprise
Week 7 Special Review Session
Given that two nations have equal resources and both agreed to specialize in the
production of a product that is most efficient, determine:
Given that two nations have equal resources and both agreed to specialize in the
production of a product that is most efficient, determine:
a) Based on the following data, determine the equilibrium point of the demand and
supply for fountain pens in the absence of international trade (determine, price
and quantity of demand and supply)
b) Determine the level of consumer and producer surplus, in the absence of
international trade.
c) Assuming that the US government enters a free trade agreement with Mexico,
the price for a fountain pen will be $20. What will be
a. The total consumption level
b. The total number of locally produced fountain pens
c. The total number of imported fountain pens
d. The total amount of producers and consumers surplus
in the new free trade situation? In order to answer the above questions,
you need to plot the above numbers on a graph paper
Case 4: Even the Boeing 777 isn’t all American: Neither is the Airbus A330 all
European
In the current global economy it is increasingly difficult to say what is a “U.S.” product or
“European” content. Today, goods are produced efficiently in many different locations
and combined in all sorts of ways to fulfill buyer needs in many places. Nevertheless,
there are as many opponents as there are proponents of the idea of depending on
others to produce strategic products such as Boeing 777 and Airbus. The two opposed
views originate from political and economic outlooks.
It has come to the attention of Boeing that the Chinese are willing to buy a big number of
Boeing 777 fleets. However, the Chinese have indicated that they (the Chinese) will be
interested in the production of certain part of the aircraft. This condition was not well
received by the management at Boeing headquarter. The situation gets more
complicated as Airbus has expressed willing to share products with the Chinese. This
leaves Boeing either to accept the demand from China or to lose the market for Airbus.
a) Discuss the dilemma Boeing is facing
b) How would you attempt to solve the problem?
c) Provide the different possible alternative solutions
Provide the best option that might help to reconcile the two sides.
The relatively low production costs of foreign steelmakers encourage foreign steel
producers to participate in the US market. As a result of increased competition, the
average US cost of steel production came down from $685 in 1982 to $482 per ton in
1999. Global cost comparison still shows that cost of steel production in the US is higher
than its competitors. The American public, interest groups, economists and government
officials are divided on the issue of allowing cheaper steel production into the American
markets
Economists think that the US economic is going to suffer heavily if we deny industries
imported steel production at a competitive price. In fact, the economists argue that, the
US consumers are the ones who suffer from the effect of a protected expensive industry
and as a result, the economy will suffer. On the other hand, labor union and government
officials and special interest group argue that the steel industry is a strategic industry
which we can’t afford to lose it. They argue that, steel is used heavily in the defense
industry and is an intermediary product for many industrial products; therefore, its
absence or dependency on others will make the national economy highly vulnerable to
international shocks
There are many arguments which attempt to explain why foreign direct investment
enters a specific international market. Some believe that foreign direct investment is
taking place in order to take advantage of lower wages available in a foreign country,
while others indicate that FDI is entering a foreign market in order to get access to key
resources. There is also a group of authors who believe that the success of export in a
specific country leads to a second phase of market entry mode which includes joint
venture interment, wholly owned investment, contract manufacturing and management
and strategic alliances, in short foreign direct investment entry.
By analyzing the historical data from 1990-2005, examine if the American Foreign Direct
Investment is positively associated with the American Export to a specific country.
Consider a) US-Mexico b) US-China C) US-Saudi Arabia export over the last 15 years).
Plot your data on a graph to show the trend.. Hint. Plot the export and FDI on the x-axis
and the years on the y-axis. Produce three separate graphs for a, b, c groups. You may
also express the export and FDI figures as per capita rather than absolute values. US
per capital export are derived by dividing the total annual amount of US export by US
population for that particular year.
Discuss if there are other variables that might better explain the motives behind US FDI
in the three mentioned countries
Scholastic Honesty
The University has policies and discipline procedures regarding scholastic
dishonesty. Detailed information is available on the Scholastic Dishonesty web page.
All students are expected to maintain a high level of responsibility with respect to
academic honesty. Students who violate University rules on scholastic dishonesty
are subject to disciplinary penalties, including the possibility of failure in the course
and/or dismissal from the University. Since such dishonesty harms the individual, all
students and the integrity of the University, policies on scholastic dishonesty will be
strictly enforced.
As per university policy, incomplete grades will be granted only for work unavoidably
missed at the semester’s end and only if 70% of the course work has been
completed. An incomplete grade must be resolved within eight (8) weeks from the
first day of the subsequent long semester. If the required work to complete the
course and to remove the incomplete grade is not submitted by the specified
deadline, the incomplete grade is changed automatically to a grade of F.