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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 4 of 25
The real wordsTheory

Economic globalization, stated three ways

Economic globalizationThe increasing integration of national economic systems through growth in international trade, investment and capital flows.

The deck then gives two more framings of the same thing, and both are worth quoting:

  • A dynamic and multidimensional process in which national resources become more and more internationally mobile while national economies become increasingly interdependent
  • Integration of national economies into the international economy through trade, direct foreign investment by corporations and multinationals, short-term capital flows, international flows of workers, and flows of technology
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