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International Business Environment

IBO 01 Solved Free Assignment 2023

IBO 01 Solved Free Assignment January 2023

Q 1. (a) How does disequilibrium occur in the balance of payments? Describe the methods of correcting the disequilibrium with examples.

Ans. The balance of payments (BoP) is a record of all transactions between a country and the rest of the world. It comprises two main accounts: the current account and the capital account.

The current account includes transactions in goods and services, while the capital account includes financial transactions, such as investments and loans.

When a country’s exports exceed its imports, it has a surplus in the current account, while the opposite scenario results in a deficit.

Disequilibrium in the balance of payments occurs when there is an imbalance between a country’s imports and exports, resulting in a deficit or surplus.

Disequilibrium in the balance of payments can occur due to several reasons, including changes in the global economy, changes in domestic economic policies, changes in consumer behavior, and changes in exchange rates.

A trade deficit occurs when a country imports more than it exports, which can be caused by factors such as a decline in the competitiveness of domestic products, an increase in the cost of raw materials, or a decrease in demand for domestic products.

A trade surplus, on the other hand, occurs when a country exports more than it imports, which can be due to factors such as an increase in the competitiveness of domestic products, a decrease in the cost of raw materials, or an increase in demand for domestic products. IBO 01 Solved Free Assignment 2023

There are several methods for correcting disequilibrium in the balance of payments, including exchange rate adjustment, fiscal policy, and monetary policy.

Exchange rate adjustment is a common method used to correct a balance of payments deficit or surplus. When a country’s currency is overvalued, it can make imports cheaper and exports more expensive, leading to a trade deficit.

In such cases, the government may choose to devalue its currency to make its exports more competitive and reduce imports.

For example, in 2019, the Central Bank of Argentina devalued its currency, the peso, in response to a balance of payments crisis.

The devaluation made Argentine exports more competitive and reduced the demand for imports, helping to correct the balance of payments.

Another method of correcting disequilibrium in the balance of payments is through fiscal policy. Governments can increase taxes on imports or decrease taxes on exports to encourage domestic production and reduce imports.

For example, in 2018, the Indian government increased customs duties on a range of goods, including electronic items, to reduce imports and support domestic manufacturing. IBO 01 Solved Free Assignment 2023

Fiscal policy can also be used to reduce domestic consumption and increase savings, which can help reduce imports and correct a balance of payments deficit.

Monetary policy is another method that can be used to correct disequilibrium in the balance of payments. When a country has a balance of payments deficit, its currency may become weaker, which can lead to inflation.

To reduce inflation, the government may increase interest rates, which can lead to an increase in savings and a decrease in consumption. This can reduce imports and help correct the balance of payments deficit.

For example, in 2013, the Reserve Bank of India increased interest rates to curb inflation and reduce imports, which helped to correct the balance of payments.

In addition to these methods, countries can also resort to borrowing or lending to correct disequilibrium in the balance of payments.

For example, a country with a balance of payments deficit can borrow from other countries to finance its imports. IBO 01 Solved Free Assignment 2023

Similarly, a country with a balance of payments surplus can lend to other countries to finance their imports. However, excessive borrowing or lending can lead to debt and financial instability.

(b) What is transfer of technology? Briefly explain mechanisms through which technology transfer takes place?

Ans. Technology transfer refers to the process of sharing knowledge, skills, tools, and other forms of intellectual property from one organization or individual to another.

It is a critical aspect of economic development and can contribute to the growth of industries, improve productivity, and lead to innovation.

Technology transfer can occur through various mechanisms, including licensing, joint ventures, and foreign direct investment.

Licensing is a common mechanism for technology transfer. It involves a company or individual (the licensor) granting another company or individual (the licensee) the right to use their technology in exchange for a fee or royalty payment.

The licensor retains ownership of the technology and may continue to use it in their own operations or license it to other parties.

Licensing is a popular method of technology transfer because it allows the licensor to leverage their intellectual property and generate revenue from licensing fees or royalties. IBO 01 Solved Free Assignment 2023

Additionally, it provides the licensee with access to new technology without the need for extensive research and development.

Joint ventures are another mechanism for technology transfer. They involve two or more companies collaborating to develop and commercialize new products or services. Joint ventures can facilitate technology transfer by allowing companies to share knowledge, expertise, and resources.

For example, a company with expertise in research and development may partner with a company with experience in manufacturing to develop a new product.

Joint ventures can be particularly beneficial for companies entering new markets where they lack the necessary knowledge or resources to operate independently.

Foreign direct investment (FDI) is another mechanism for technology transfer. FDI occurs when a company invests in or acquires a company in another country.

This can provide the investor with access to new markets, resources, and knowledge, while also facilitating technology transfer.

For example, a company may acquire a company in another country that has advanced technology or expertise that they can leverage in their own operations.

FDI can also lead to the transfer of technology through the hiring of local employees who have specialized knowledge or expertise.

In addition to these mechanisms, technology transfer can also occur through informal channels such as conferences, academic collaborations, and informal networks. IBO 01 Solved Free Assignment 2023

These channels can facilitate the sharing of knowledge and expertise among researchers, scientists, and other professionals.

Additionally, they can provide opportunities for individuals to gain exposure to new technologies and ideas.

Despite the many benefits of technology transfer, there are also challenges and risks associated with the process.

One challenge is the protection of intellectual property. Companies may be reluctant to share their technology if they fear that it will be copied or stolen by competitors.

This can be addressed through the use of patents, trademarks, and other legal protections.

Another challenge is the potential for unequal partnerships, where the technology recipient is dependent on the technology provider and lacks the ability to innovate or develop their own technology.

To address this, partnerships should be structured in a way that allows for mutual benefit and knowledge sharing.IBO 01 Solved Free Assignment 2023

Q 2. How is a void contract different from a voidable contract? Explain essential elements of a valid contract.

Ans. Contracts are legally binding agreements between parties that establish rights and obligations.

However, not all contracts are created equal, and there are different types of contracts that have varying levels of enforceability. Two common types of contracts are void contracts and voidable contracts.

A void contract is an agreement that is considered to be unenforceable from the beginning. It is a contract that is not legally binding and does not create any rights or obligations.

This is because a void contract lacks one or more essential elements that are required for a contract to be valid.

Examples of void contracts include agreements that involve illegal activities, contracts that are against public policy, and contracts that are entered into under duress or coercion.IBO 01 Solved Free Assignment 2023

In contrast, a voidable contract is an agreement that is initially valid but can be voided by one or more parties. This type of contract contains a flaw or defect that allows one party to avoid their obligations under the contract.

For example, a contract that is entered into under fraudulent circumstances may be considered voidable, as the party that was deceived can choose to avoid the contract.

Similarly, contracts that involve minors or individuals who lack mental capacity may also be voidable.

Now, let’s examine the essential elements of a valid contract. There are five elements that must be present for a contract to be considered legally binding:

Offer: An offer is a proposal made by one party to another, indicating a willingness to enter into a contract. The offer must be clear, definite, and communicated to the other party.IBO 01 Solved Free Assignment 2023

Acceptance: Acceptance is the agreement by the other party to the terms of the offer. It must be clear and unequivocal and must be communicated to the offeror.

Consideration: Consideration is something of value that is exchanged between the parties. It can be a promise to perform a certain action, the transfer of money or goods, or any other form of value.

Capacity: The parties to the contract must have the legal capacity to enter into the agreement. This means that they must be of legal age, mentally competent, and not under duress or undue influence.

Legality: The contract must be for a legal purpose. It cannot involve illegal activities or be against public policy.

If any of these elements are missing or are defective, the contract may be considered void or voidable. Therefore, it is essential to ensure that all of these elements are present and properly executed when entering into a contract.

In conclusion, while contracts are legally binding agreements between parties, not all contracts are created equal. A void contract is unenforceable from the beginning, while a voidable contract is initially valid but can be voided by one or more parties.

To be considered legally binding, a contract must contain the essential elements of offer, acceptance, consideration, capacity, and legality. It is important to understand these essential elements to ensure that contracts are valid and enforceable.

Q 3. Comment on the following:

(a) The law of contract is not the whole law of agreement nor is it the whole law of obligations.

Ans. (a) The law of contract is not the whole law of agreement nor is it the whole law of obligations.IBO 01 Solved Free Assignment 2023

This statement is true. While the law of contract deals specifically with the formation, performance, and enforcement of contracts, there are other types of agreements and obligations that are outside the scope of contract law.

For example, tort law deals with obligations that arise from wrongful actions or omissions that cause harm to others, while property law deals with the rights and obligations related to ownership and possession of property.

Therefore, while contract law is an important part of the legal system, it is not the only area that governs agreements and obligations.

(b) World Trade is not concentrated in a few countries and products.

Ans. This statement is also true. While some countries and products may dominate global trade, the world economy is becoming increasingly interconnected and diverse. IBO 01 Solved Free Assignment 2023

With the growth of digital technologies and the expansion of global supply chains, businesses and consumers have more opportunities to engage in cross-border trade and access a wider range of products and services.

Additionally, the rise of emerging economies has led to new players in the global marketplace, with countries such as China and India becoming major exporters and importers.

(c) The effects of globalization have not been favorable on the world economy.

Ans. This statement is debatable. While globalization has brought significant benefits, such as increased economic growth, expanded access to goods and services, and improved standards of living in many countries, it has also created challenges and inequalities. IBO 01 Solved Free Assignment 2023

Some argue that globalization has contributed to job losses, wage stagnation, and environmental degradation, particularly in developed countries.

Others point to the rise of multinational corporations and the erosion of national sovereignty as problematic aspects of globalization.

Overall, the effects of globalization are complex and multifaceted, and opinions on its impact on the world economy are divided.

(d) Indian foreign trade policy does not facilitate the import of technology.

Ans. This statement is not entirely accurate. The Indian government has implemented several policies to encourage the import of technology and promote foreign investment in the country.

For example, India has established special economic zones that provide tax incentives and other benefits to companies that invest in certain sectors, including technology. IBO 01 Solved Free Assignment 2023

Additionally, the Indian government has relaxed restrictions on foreign ownership of companies in certain industries and has streamlined the process for obtaining visas and work permits for foreign workers.

However, there are still some barriers to importing technology in India, such as high tariffs and complex regulatory requirements, which can make it difficult for companies to do business in the country.

Q 4. Distinguish between:

(a) Implied conditions and Implied warranties

Ans. (a) Implied conditions and Implied warranties:

Implied conditions and implied warranties are both terms used in contract law. Implied conditions are the legal obligations that are not explicitly mentioned in the contract but are implied by the nature of the agreement and by law.

They are considered an integral part of the contract and their breach can result in the contract being void. IBO 01 Solved Free Assignment 2023

For example, if you purchase a car, it is assumed that the car will be roadworthy, and if it is not, then it is a breach of the implied condition.

On the other hand, an implied warranty is an unspoken promise that is not necessarily critical to the operation of the contract. It is a guarantee that the product is of acceptable quality and is fit for the intended purpose.

If the product is found to be defective, then the purchaser may claim damages under the warranty.

(b) Arbitration and Litigation:

Ans. Arbitration and litigation are both methods of dispute resolution. Litigation involves the process of taking a dispute to court where a judge or jury hears the evidence presented by both parties and makes a decision based on the law. The parties are bound by the decision of the court.

Arbitration, on the other hand, is an alternative dispute resolution process where the parties agree to submit their dispute to a neutral third party, who then makes a binding decision. IBO 01 Solved Free Assignment 2023

Unlike litigation, arbitration is less formal and less expensive, and the proceedings are usually confidential.

(c) Trade diversion and Trade creation

Ans. Trade diversion and trade creation are both concepts related to international trade. Trade diversion occurs when trade is shifted from a more efficient producer outside a free trade area to a less efficient producer within a free trade area.

This shift is due to the preferential treatment that the less efficient producer receives within the free trade area. This can result in a loss of welfare for the global economy.

Trade creation, on the other hand, is the increase in trade between countries as a result of the removal of trade barriers.

This leads to increased economic welfare for the countries involved and the global economy.IBO 01 Solved Free Assignment 2023

(d) FDI and Portfolio Investment

Ans. Foreign direct investment (FDI) is an investment in which an investor acquires a controlling interest in a foreign company.

FDI involves the transfer of resources, technology, and knowledge from the investing country to the host country.

The investor has a significant degree of control over the foreign company and can influence its management decisions.

Portfolio investment, on the other hand, is an investment in which the investor does not acquire a controlling interest in the foreign company.

The investor is more interested in the potential return on investment rather than having control over the company. IBO 01 Solved Free Assignment 2023

Portfolio investment can be in the form of equity or debt securities. Unlike FDI, portfolio investment does not involve the transfer of technology or knowledge from the investing country to the host country.

Q 5. Write short notes on the following:

(a) Ethical system of beliefs

Ans. (a) Ethical system of beliefs:

An ethical system of beliefs is a set of principles, values, and standards that guide individual and societal behavior.

It provides a framework for making moral decisions and shapes our understanding of right and wrong. Ethical systems can be based on religion, culture, philosophy, or law.IBO 01 Solved Free Assignment 2023

There are several ethical systems of beliefs, including utilitarianism, deontology, virtue ethics, care ethics, and relativism.

Utilitarianism focuses on maximizing the overall happiness of society. Deontology emphasizes following moral rules and principles regardless of the consequences. Virtue ethics emphasizes cultivating virtuous character traits.

Care ethics emphasizes the importance of interpersonal relationships and empathy. Relativism suggests that ethical values are subjective and depend on the individual or cultural context.

Regardless of the ethical system, ethical beliefs play a crucial role in business decision-making.

Companies must consider ethical principles when deciding how to behave toward stakeholders such as customers, employees, suppliers, and the environment.

Ethical decision-making can lead to increased trust and respect from stakeholders, which can have positive impacts on the company’s reputation and long-term success.

In recent years, there has been an increasing focus on corporate social responsibility (CSR), which involves companies voluntarily considering ethical, social, and environmental concerns in their business practices.

CSR initiatives can include efforts to reduce carbon emissions, promote diversity and inclusion, and improve working conditions for employees.

Such initiatives not only align with ethical principles but can also contribute to improved financial performance and increased stakeholder engagement.

Ultimately, ethical beliefs and practices are essential for creating a sustainable and just society. IBO 01 Solved Free Assignment 2023

By considering ethical principles in decision-making, individuals and companies can contribute to the betterment of society and the world.


The United Nations Conference on Trade and Development (UNCTAD) is a permanent intergovernmental body established by the United Nations General Assembly in 1964.

UNCTAD’s mandate is to promote sustainable development and economic growth in developing countries, with a particular focus on trade and investment issues.

UNCTAD provides analysis, policy advice, and technical assistance to governments and other stakeholders on a range of issues related to trade, finance, investment, and technology. IBO 01 Solved Free Assignment 2023

Its work aims to promote development and poverty reduction in developing countries, particularly in Africa, Asia, and Latin America.

Some of UNCTAD’s key areas of work include:

Trade and development: UNCTAD works to promote fair and inclusive trade policies that benefit developing countries, particularly by addressing trade-related challenges and barriers that impede their development.

Investment: UNCTAD provides policy advice and technical assistance to developing countries to attract and maximize the benefits of foreign investment, particularly in sectors that can support sustainable development.

Finance: UNCTAD works to promote international financial stability and reform of the international financial system to better serve the development needs of developing countries.

Technology: UNCTAD provides analysis and technical assistance to developing countries to help them access and benefit from new technologies and innovations, particularly in the context of the digital economy.

(c) Asian Development Bank (ADB):

Ans. The Asian Development Bank (ADB) is a multilateral development bank founded in 1966 to promote economic and social progress in Asia and the Pacific.

ADB’s mission is to reduce poverty and promote sustainable development in the region by providing financial assistance, technical assistance, and policy advice to its member countries.IBO 01 Solved Free Assignment 2023

ADB’s work is focused on key sectors such as energy, transport, urban development, water supply and sanitation, education, and finance.

It provides financing in the form of loans, grants, and technical assistance to its developing member countries (DMCs) to support their development goals.

In addition to providing financial support, ADB also works to build capacity and promote knowledge sharing among its member countries.

ADB has played a critical role in supporting the economic growth and development of many countries in the region. Since its establishment, ADB has financed over 3,600 projects and provided over $385 billion in loans, grants, and technical assistance.

Its work has helped to improve infrastructure, enhance social services, increase economic opportunities, and promote regional cooperation in Asia and the Pacific.


(d) Intellectual Property Rights

Ans. Intellectual property rights (IPRs) refer to legal rights that protect the creations of the human mind, such as inventions, literary and artistic works, and symbols and designs.

IPRs are a form of intangible property and are recognized as important tools for promoting innovation, creativity, and economic growth.

There are several types of IPRs, including patents, trademarks, copyrights, trade secrets, and industrial designs.IBO 01 Solved Free Assignment 2023

Patents protect inventions, such as new products or processes, while trademarks protect symbols, logos, and brand names used to identify goods and services.

Copyrights protect literary and artistic works, while trade secrets protect confidential information used in business operations.

Industrial designs protect the aesthetic features of products, such as the shape or pattern of a product.

IPRs are important because they provide legal protection and incentives for individuals and companies to invest in research and development, and to create new products and services.

By protecting their intellectual property, inventors and creators can prevent others from copying or using their ideas without permission, which can help to ensure that they receive the financial rewards and recognition they deserve.

However, there are also concerns about the impact of IPRs on access to essential medicines, technology transfer, and innovation in developing countries.

Some argue that the high costs associated with obtaining and enforcing IPRs can prevent developing countries from accessing new technologies and products, and can limit their ability to develop their own innovative solutions to local problems.

In recent years, there has been increasing attention given to the need to balance the protection of intellectual property rights with the promotion of access to essential medicines, technology transfer, and innovation in developing countries.

International organizations such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO) are working to address these issues and to promote a more balanced approach to intellectual property protection.


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