1. Key terms
Foreign direct investment: When a corporation headquartered in one nation invests in a corporation located in another nation either by purchasing an existing enterprise or by providing capital to start a new one.
Gross Domestic Product: monetary value of a nation’s total output of goods and services in one year
OECD countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.
Portfolio investment: Foreign investors purchase the stocks or bonds of national corporations but do not control these corporations.
Outsourcing: contracting out a business function to an external provider

2. Key terms
Monetary policy: policies that attempt to influence balance of payments, exchange rates, inflation, and employment by increasing or decreasing interest rates and controlling the money supply
Fiscal policy: use of government tax and spending policies to achieve macro-economic goals
Welfare state: government undertakes economic action to ensure the provision of social goods and services.

3. Debating Economic Globalization –
Globalist thesis
Skeptic thesis
Economic globalization unfolds on a historically unprecedented scale.
National systems no longer function as autonomous systems of wealth creation.
No single center, not even the US, can dictate the rules of global trade and commerce.
Current world economy less globalized compared to
Internationalization not globalization: complements but does not displace the national regulation of economic and financial activity
Distinct national capitalisms continue to flourish
Critical nature of US leadership
International economic regimes reflect distribution of power

4. Debating Economic Globalization
Globalist view
Skeptic view
Dominance of OECD economies is being diluted.
Global corporate capital, rather than states, exercises decisive influence over economic power.
Globalization is the dominant tendency in the world economy. Regionalization is a complementing but not a competing tendency.
Growing gap between North and South
Poor economies remain reliant on exports of primary products
Home base is a vital foundation for success of TNCs
Regional integration is a state-led response to gain competitive advantage in globalization

5. Economic Globalization and National Economic Policy- Globalist view
Globalization is producing a convergence among national models of capitalism
Limits on public expenditure
Limits on corporate tax rates
Limits on protectionist trade measures.
Governments have to negotiate economic policy with public and private actors at the national and global levels.
Trade-off between exchange rate policy, domestic monetary policy and capital mobility

6. Economic Integration in Europe
Stages of Economic Integration
Free trade area: no visible trade restrictions between members
Customs Union: Free trade area plus common external trade regime
Internal Commodity Market: Customs Union plus free movement of goods (no invisible trade restrictions)
Common Market: Internal Commodity Market plus free movement of services, capital and labor
Monetary Union: common market plus a common currency
Economic Union: monetary union plus a common economic policy

7. Economic Integration in Europe
Single Market (1992)
Free movement of goods, services, capital, labor
Mutual recognition of product standards – health and safety standards (CE mark)
Public procurement
Removing physical frontier controls
Harmonize rates of VAT and excise duties
EU citizenship, non-discrimination in access to social and welfare benefits
Work-in progress. Member state transposition of internal market legislation
Trade in services: low level intra-EU trade. Services directive (2006)
FDI flows: low-level of intra-EU FDI flows

8. Economic Integration in Europe- Eurozone
Single market –single money: reduction in transaction costs
Single currency: permanently fixed exchange rates
Fixed exchange rate system: central banks set an exchange rate- revaluation /devaluation
Floating exchange rate system: market determines exchange rate
Monetary union in the absence of fiscal union
Stability and Growth Pact
Budget deficit no more than 3% of GDP
National debt lower than 60% of GDP

9. Economic Integration in Europe Eurozone
European Central Bank
Executive Board: President (Trichet)/ vice-president plus 4 members
Governing Council: executive board plus governors of national central banks
Membership and enlargement:
Britain, Sweden, and Denmark opt out
New members have to adopt once they fulfill conditions: Cyprus, Malta, Slovenia, Slovakia have adopted euro

10. Europeanization and Globalization
Diversion of trade and investment
Positive integration: setting up collective rules
Free movement of labor
Social and environmental policies
Institutionalization and interest representation