PHASE1IP 8 ECON310-1403A-01 Quesadra D. Goodrum Individual Project Phase 1 Colorado Technical University Online Professor: David Bernotas 07/14/2014 Table of Contents Introduction 2 The World Bank and International Monetary Fund 2 Imports and exports as part of GDP 3 Multinational corporations 3 Foreign direct investment and capital flows 4 Foreign exchange market and exchange rates 5 Labor theory of value 5 Marginal rate of transformation 6 Gains from trade, comparative advantage 6 Economies of scale 6 Conclusion 7 References 8 Introduction Myriads of terms and concepts come to mind and all need to be taken into consideration when contemplating entry into the world market. Entering into the world market can prove to be very beneficial to your business and industry. The term world market is on a major scale and when looking at it through an aspect of both macroeconomics and microeconomics. In this meeting I’ll discuss some key terms and concepts you’ll want to familiarize yourself with before the end of this meeting. I will touch on the following terms during the course of this meeting: The World Bank and International Monetary Fund, Imports and exports as part of, Multinational corporations, foreign direct investment and capital flows, Foreign exchange market and exchange rates, Labor theory of value, Marginal rate of transformation, Gains from trade, comparative advantage, and Economies of scale.The World Bank and International Monetary Fund The Word bank was created in 1944 after World War II. It is an international financial institution. The primary goal for the bank is to help provide financial relief to countries that are devastated by the impact of the war. Here are some lesser known facts about the word bank as time passed its goals and functions changed with the time the as everything does. The bank began to provide loans to developing countries for use of building establishing, ad or improving capital programs. “The World Bank is a component of the World Bank Group, and a member of the United Nations Development Group (Investopedia, 2014).” The economy has drastically changed since then in today’s market; the bank serves a purpose much bigger and much grander than that of the past. The International Monetary Fund is a relief aid made to help and assist today’s World Bank in mustering up global growth. In addition to this it also helps in aiding third world countries achieve economic stability. The main function of the world back in today’s economy is acting as an international organization that lends an aided hand and helps fight against poverty. You may ask in what ways does The Worlds Bank helps fights against poverty. It helps by offering developmental assistance to middle and poor-income countries. The bank in addition to the fight against poverty also gives out loans, offering advice, and training in both the private sector as well as the public sector. One can say the World Banks slogan is helping others help themselves.

1. PHASE1IP 8
ECON310-1403A-01
Quesadra D. Goodrum
Individual Project Phase 1
Colorado Technical University Online
Professor: David Bernotas
07/14/2014
Table of Contents
Introduction 2
The World Bank and International Monetary Fund 2
Imports and exports as part of GDP 3
Multinational corporations 3
Foreign direct investment and capital flows 4
Foreign exchange market and exchange rates 5
Labor theory of value 5
Marginal rate of transformation 6
Gains from trade, comparative advantage 6
Economies of scale 6
Conclusion 7
References 8
Introduction
Myriads of terms and concepts come to mind and all need to be
taken into consideration when contemplating entry into the
world market. Entering into the world market can prove to be
very beneficial to your business and industry. The term world
market is on a major scale and when looking at it through an
aspect of both macroeconomics and microeconomics. In this
meeting I’ll discuss some key terms and concepts you’ll want to
familiarize yourself with before the end of this meeting. I will
touch on the following terms during the course of this meeting:

2. The World Bank and International Monetary Fund, Imports and
exports as part of, Multinational corporations, foreign direct
investment and capital flows, Foreign exchange market and
exchange rates, Labor theory of value, Marginal rate of
transformation, Gains from trade, comparative advantage, and
Economies of scale.The World Bank and International Monetary
Fund
The Word bank was created in 1944 after World War II. It is an
international financial institution. The primary goal for the bank
is to help provide financial relief to countries that are
devastated by the impact of the war. Here are some lesser
known facts about the word bank as time passed its goals and
functions changed with the time the as everything does. The
bank began to provide loans to developing countries for use of
building establishing, ad or improving capital programs. “The
World Bank is a component of the World Bank Group, and a
member of the United Nations Development Group
(Investopedia, 2014).”
The economy has drastically changed since then in today’s
market; the bank serves a purpose much bigger and much
grander than that of the past. The International Monetary Fund
is a relief aid made to help and assist today’s World Bank in
mustering up global growth. In addition to this it also helps in
aiding third world countries achieve economic stability. The
main function of the world back in today’s economy is acting as
an international organization that lends an aided hand and helps
fight against poverty. You may ask in what ways does The
Worlds Bank helps fights against poverty. It helps by offering
developmental assistance to middle and poor-income countries.
The bank in addition to the fight against poverty also gives out
loans, offering advice, and training in both the private sector as
well as the public sector. One can say the World Banks slogan
is helping others help themselves (Investopedia, 2014).
The International Monetary Fund provides policy advice to its
members. In addition to the policy advice it also offers
financing to members that are suffering economic difficulties.

3. “The IMF also works with developing nations to help them
achieve macroeconomic stability and reduce poverty
(Investopedia, 2014).” “The IMF can provide other sources of
financing to countries in need that would not be available in the
absence of an economic stabilization program supported by the
Fund (Woods, 2003).”Imports and exports as part of GDP
Exports are also referenced as gross exports when referring to
the Gross Domestic Product (GDP). GDP number refers to the
amount that a country produces. This number includes a mixture
of both goods and services that a country produces to be sold on
the world market for the consumption of other nations. Do to
that simple fact exports are to be added and not subtracted.
Imports referenced as gross imports when referring to the GDP.
Imports are subtracted and not added; imports must be deducted
to avoid counting foreign supply as domestic. The reason that
imports are subtracted is due to the fact that imported goods
will be included in the terms of Consumer spending,
Government spending, and or a country’s businesses spending
on capital (Dickinson, 2012). Multinational corporations
A business organization whose activities are located and or
split amongst two and or more countries is called a
multinational corporation. Organizational formations of this
kind are what define foreign direct investment. You will come
to find companies such as these often have offices in one
country and factories in another. This means that they have a
centralized head office where they co-ordinate global
management (Investopedia, 2014). Most multinationals
organizations originate in one country and then expand
internationally therefore splitting the company between
countries such as: American, Japanese or Western European. To
name a few multinational companies such as: Nike, Coca-Cola,
Walmart, AOL, Toshiba, Adidas and Volts Wagon
(Investopedia, 2014). Foreign direct investment and capital
flows
The movement of money for the purpose of investment, trade or
business production is Foreign direct Investment and Cash

4. Flow. “Capital flows occur within corporations in the form of
investment capital and capital spending on operations and
research & development. (Investopedia, 2014).” Direct
Investment flows are the least volatile types of income source
when it comes to international investment.
This is the case for most countries. However there are
exceptions that exist and the main exception to this rule is the
United States. This is because the United States is the largest
country. One moment the United States is a net supplier and in
the next moment it’s not instead it has reversed roles and
become a dominant recipient. Because of the continuous
flipping back and forth from dominant net supplier to dominant
net recipient and then back again it’s just harder to keep up with
what we are as a country. Developing countries, direct
investment particularly has been the most dependable source of
foreign investment (Lipsey, 2000).Foreign exchange market and
exchange rates
The development of the foreign exchange market was to help
assists countries in international trade and investments by way
currency conversion. For example $1 U.S. dollars is equal to
0.58395 £ Great British Pounds (GBP). I want to buy a shipment
from a European dealer and the shipment in GBP is 8,467.25£; I
would need to pay $14,500 U.S. dollars to receive the shipment
because of the exchange rate difference. The foreign exchange
market also facilitates the value of currencies, and the carry
trade. It is done so on the basis of the interest rate differential
between two currencies (Investopedia, 2014).Labor theory of
value
Labor theory of value is an economic theory. In this theory it
stipulates the value of a good and or service that is dependent
upon the labor used in its production. This theory was first
proposed by Adam Smith (1723-1790) who was one of the
founders of economics as we have come to know it today. This
concept of this was so important because of the contribution it
played to the philosophical ideals of Karl Marx. This theory
further states that any goods which take the same amount of

5. time to produce should cost the same (Investopedia,
2014).Contrary to his theory some believe rather than that it is
simply a function of supply and demand for a given good or
service that determines its price (Investopedia, 2014).Marginal
rate of transformation
The rate at which one good must be sacrificed in order to
produce a single extra unit of another good is the marginal rate
of transformation. This is in the assumption that both goods
require the same inputs. The marginal rate of transformation is
synced along with the production possibilities frontier (PPF).
The PPF is used to show the output potential for two goods
using the same resources. If you produce more of one good
means producing less of the other; because the resources are
allocated between the two products (Investopedia, 2014). “The
marginal rate of transformation allows economists to analyze
the opportunity costs to produce one extra unit of something; in
this case the opportunity cost is represented in the lost
production of another specific good (Investopedia, 2014).”Gains
from trade, comparative advantage
A gain from trade refers to net benefits allocated to agents from
allowing an increase in voluntary trading amongst one another.
It is the increase of consumer surplus plus and producer surplus
from lower fixed prices mandated on a product through trade.
Market prices therefore reflect in price through the number of
outputs and inputs used to make the product. They are theorized
to show factors of production, including labor, into activities
according to comparative advantage. Comparative advantage is
having a low opportunity cost (Dickinson, 2012). Economies of
scale
Economies of scale are the results of cost advantages that
enterprises obtain due to size. In addition, to that it is equally
the result of cost advantage due to output, scale of operation,
and cost per unit. Usually it will be the results of decreasing
with an increasing scale. As fixed costs become more and more
spread out over units of output. Operational efficiency is often
also greater with an increasing scale, leading to lower variable

6. cost as well (Chandler Jr., 1993).Economies of scale apply to a
myriad of different varieties of organizational and business
situations.
The degree in which the economies of scale vary is dependent
upon the number of levels in which it uses. A larger
manufacturing facility would be expected to have a lower cost
per unit of output than a smaller facility. This is in light of all
other factors being equal. So it can be stated that a company
with many facilities should have a cost advantage over a
competitor with fewer (Chandler Jr., 1993).Conclusion
You should familiarize yourself with the above terms as
much as possible. You will be running into these terms a lot
during the course of your businesses expansion into the world
market. There are a myriad of terms and concepts you will
encounter on the world market of these the above mentioned are
of top most importance. Entering into the world market can
prove to be very beneficial ad lucrative to your business and
industry. Remember to make the decision that is best fit for
you.
References
Chandler Jr., A. D. (1993). The Visible Hand: The Management
Revolution in American Business. Cambridge: Belknap Press of
Harvard University Press.
Dickinson, E. (2012, April 25). GDP: a brief history. Retrieved
from ForiegnPolicy.com:
http://www.foreignpolicy.com/articles/2011/01/02/gdp_a_brief_
history
Investopedia. (2014, January 10). Investopedia. Retrieved from
Investopedia.com:
http://www.investopedia.com/terms/m/multinationalcorporation.
asp
Lipsey, R. E. (2000). The Role of Foreign Direct Investment in
International Capital Flows. Cambridge, MA: NBER digest.
Woods, N. (2003). The United States and the International

7. Financial Institutions: Power and Influence Within the World
Bank and the IMF. Oxford University Press.
Assignment
Assignment 1: The Effects of War and Peace on Foreign Aid
Use the Internet to research one (1) developing nation of your
choice. Your research should include an examination of the
effects that war and peace have on the distribution of foreign
aid.
Write a three to four (3) page research paper in which you:
1. Assess the positive and negative effects that peace and war,
respectively, have on the distribution of foreign aid in the
developing country that you have selected. Support your
response with concrete examples of each of the results that you
have cited.
2. Analyze the specific actions that the leadership of the
selected country has taken, through the use of its foreign aid
from donor nations and international lending institutions, to
relieve the severe problems caused by warfare.
3. Discuss whether or not the extension of foreign aid has
successfully reduced poverty and the incidence of warfare in the
selected country. Support your response with examples.
4. Use at least five (5) quality academic resources in this
assignment. Note: Wikipedia, blogs, and other nonacademic
websites do not qualify as academic resources. Approval of
resources is at the instructor's discretion. Resources must also
be within the last seven (7) years.
When referencing the selected resources, please use the
following format:
Internet Resources:

8. Author's Name. (Date of publication). Title of the resource.
Retrieved from website url.
Example:
Wuestewald, Eric. (2014). Portraits of people living on a dollar
a day. Retrieved from http://www.motherjones.com/mixed-
media/2014/04/living-on-a-dollar-a-day-photos-renee-byer-
thomas-nazario.
Your assignment must follow these formatting requirements:
· Be typed, double spaced, using Times New Roman font (size
12), with one-inch margins on all sides; citations and references
must follow APA or school-specific format. Check with your
professor for any additional instructions.
· Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the
date. The cover page and the reference page are not included in
the required assignment page length.
The specific course learning outcomes associated with this
assignment are:
· Analyze how funding in the form of aid, investment, and loans
moves from industrialized nations to the developing world to
alleviate the problems caused by warfare.
· Use technology and information resources to research issues in
sociology of developing countries.
· Write clearly and concisely about sociology of developing
countries using proper writing mechanics.