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globalisation - Coggle Diagram
globalisation
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Transfer pricing, happens when two countries of the same multynational group trade with eachother.
transmispricing, tranfer pricing manipulation
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60 percent of trade happens within multynationals, acrossboundries of the same coroprate group.
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world trade organisation, sets global trade rules in organisations
Uruguay Round GATT tariffs, give legal ground rules for countries to follow.
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attracted criticism for doing agreements with countries who don't respect civil rights, however this doesn't mean a country's own legal and local laws and differences aren't relevant
not a perfectly globalised trade environment because coalition of countries still plays a role in the global economy
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the arms lengh principle
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the arms lengh principle is supposed to ensure that prices are recorded as if the trade between corporate countries is done at arms lengh.
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a transfer price should be thes ame as if the two companies involved were indeed two unrelated parties
forms
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global village, electronic nervous system- internet
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combined reporting is favoured by academics and govermental organisations- as this prirotises the economic substance of multynational transactions instead o f the legal form which a multynational organises itself and transactions.
this method involves raking all the various parts of the multynational company based on whats going on in the real world
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relative comparative advantage- both sides receive a benefit by specialising in certain types of good to sell to others
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