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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.

  1. ALower trade barriers and easier supply chain integration
  2. BGreater use of a single global supply chain to minimize cost
  3. 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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