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Sem 5 Prep
← Intl TradeWhat globalization actually is

Formulas for this chapter

Foreign content share

Foreign content share = imported input value / total factory cost

Whenever a question asks how globalized a product's production is, or asks what happens to that when a supplier is moved. Recompute the denominator whenever the total cost changes.

Imported input value
Cost of every component and service bought abroad
Total factory cost
Foreign plus domestic content, in the same currency

Re-export margin

Re-export margin = re-export value - original import value

When goods are imported and sent on without significant processing. Gross trade rises by the sum of both flows while value added is only the margin.

Re-export value
Price at which the unaltered goods leave the country
Import value
Price at which they entered
Step 2 of 25
The real wordsTheory

The definition, in two halves

GlobalizationThe free cross-border movement of goods, services, capital, information and people. Also the process of creating networks of connections among actors at multicontinental distances, mediated through flows of people, information and ideas, capital and goods.

The deck opens with the second half: the growing integration of societies and national economies has been among the most fervently discussed topics of recent years.

Write both halves. The first is the movement, the second is the integration that movement produces.

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