CFA Level I · CFA Level I Exam · Introduction to Geopolitics
Which of the following is the most likely effect on a multinational firm of a sustained shift from globalization toward nationalism among major economies?
A sustained shift toward nationalism most likely raises costs for multinational firms because tariffs, local-content rules and diverging regulations fragment supply chains and complicate compliance. Lower trade barriers and single global supply chains are characteristics of globalization, not of its reversal.
- ALower trade barriers and easier supply chain integration
- BGreater use of a single global supply chain to minimize cost
- CHigher costs from fragmented supply chains and regulatory complianceCorrect
Explanation
Nationalism tends to raise tariffs, local-content rules and regulatory divergence. Firms must then restructure supply chains and bear higher costs. Lower barriers and single global supply chains are features of globalization, not of its retreat.
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