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This lecture will discuss trade theory basics: the supply and demand model and producer and consumer surplus. There is a strong interlinkage between international business and international economics, which is why economics is usually a big part of business programmes. It is very important to also learn about international economics because by operating globally, firms are affected by several matters that are related to economics (e.g. exchange rate fluctuations).Globalization can be related to different concepts, because everyone has different perceptions of what it is:Economic: e.g. rise of global markets, international capital flowsCultural: The homogenization of cultural values (e.g. more people speaking English and the American way of life, which is highly promoted by movies made in Hollywood that are shown all over the world). We see other dimensions of this cultural aspect that seem to more and more homogenized.Geographic: Compressed time and space (more airspace transportation instead of train/car). It is being easier to connect with other people, as the world seems to have become ‘’smaller’’.Furthermore people like to talk about institutional globalization, which refers to the idea that institutional ranginess, e.g. how laws operate, how they spread and become more similar in other countries in the world. One key driver behind this spreading of institutional arrangements has to do with the rise of large firms. Good governance is an example of this (e.g. when the world bank takes over development programmes in third world countries).We can also think of the political dimension of globalization. Nation-states are...
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