University of Washington                        Geography 349                              Autumn 2004

 

SECOND  IN-CLASS  TEST

 

Name_____________________________________             Student No.___________________

 

Please answer each question below (but only one of the two essay choices), in the spaces provided.  Points total 66;  your raw score will be multiplied by 0.349 to yield your points (out of 23) toward the quarter’s total of 100 points.  You have 110 minutes.

 

 

DEFINITIONS  [11 points]

Provide very brief definitions.  You need not use complete sentences.  However, make sure that you define the terms well enough so that each is distinguished from all the others.

 

currency depreciation 

 

 


currency devaluation

 

 

 

exchange risk

 

 

 

forward rate

 

 


freight forwarder

 

 


pro forma invoice

 

 


spot rate

 

 

 

 

 

 

These are the conditions under which an export sale may be made.  Please distinguish among them, by telling what the initials stand for OR what the designation means.
C&F

 


C.I.F. 

 

F.A.S. 

 

F.O.B. 

 

 

BRIEF  EXPLANATIONS  [45 points]

Complete sentences are not required.

 

1.  [4 points]  The name “bill of lading” comes from an archaic form of “bill of loading.”  It’s a crucial document, because it serves what four functions?

 

 

 

 

 

 

 

 

 
2.  [7 points]  A “letter of credit” is really a stylized letter.  In its most basic form (not confirmed) in international trade, it is from whom to whom, saying what?

 

FROM:

 

TO:

 

SAYING:

 

 

What 4 parties are named on a confirmed letter of credit?

 

 

 

 

 

3.  [6 points]  What are three influences on the value of the US dollar, relative to other currencies?  In which direction should each influence operate (i.e., tending to raise or lower the relative value of the USD)?

 

a.

 

 

b.

 

 

c.

 

4.  [5 points]  What are the five components of an international marketing plan?

 

 

 

 

 

 

 

 

 

 

5.  [10 points]  What are the three key variables (things that have to be negotiated) in export payment, in addition to the sales price?  Name two key options within each variable, and underline the option that is more favorable to the exporter.

 

Variable One

 

Option A

 

Option B

 

Variable Two

 

Option A

 

Option B

 

Variable Three

 

Option A

 

Option B

6.  [13 points]  Fill in the cells of the table below, making use of our study of forms of international business and Dunning’s eclectic framework for understanding FDI.  In each case, the question is “Why would a company based in the US engage in each of the following forms of IB.”

E = Exporting from the US

L = Licensing to a separate, foreign company for production in that foreign market

C = Contracting for production in a dedicated (but not owned) facility abroad, for importing product back into the home market

W = Establishing a wholly-owned subsidiary in a host country, for importing product back into the home market

JV = Establishing a joint venture (51% ownership, with a 49% host-country partner) for production in and for a foreign market

 

Form

What actually goes overseas?

What does the parent company get in return?

What is the most likely O advantage?

What L advantage likely determines where production occurs?

Does the company see a sufficient I advantage to internalize production? Why or why not, do you think?

E

 

 

 

 

 

 

 

 

L

 

 

 

 

 

 

 

 

C

 

 

 

 

 

 

 

 

W

 

 

 

 

 

 

 

 

JV

 

 

 

 

 

 

 

 

ESSAY  [10 points]

Write an essay on one of the topics below.

 

Discuss the development of trade policy in Canada, during the 20th century, with a major focus on Canada's trade relationships within North America:

  • What have been the dominant policies, at what times, during the century?
  • In what sector(s) does Canada have comparative advantage, especially relative to the other two countries?  What factor endowments have influenced those comparative advantages?  Have the factor endowments or comparative advantages changed during the century?  Are any acquired advantages relevant to explaining Canada's trade?
  • Why did Canada enter into an FTA with the US?  Why did Canada join NAFTA?
  • Given the elements above, how should NAFTA affect Canada:  which Canadian sectors, factor owners, or regions should benefit and which should suffer?


Select one of the following major international economic institutions:  IBRD;  IMF;  GATT and its successor, the WTO. 

  • What do the initials stand for?
  • Why was it established?  What was its purpose?
  • How has its purpose changed over time?
  • What imbalances of power exist among countries, and among interests (e.g., corporations, labor, consumers, agricultural interests), in the decision making of the institution?  What causes these imbalances?  What measures would ameliorate the imbalances?