1st partial Flashcards
What is globalization?
Widening set of interdependent relationships among different parts of the world; entails the elimination of barriers to international movement
What is an IB?
Business that operates in more than 1 country; all commercial transactions (sales, investments, transports)
Objectives of IB
- Sales expansion (+ clients, + profits)
- Resource acquisition (+ suppliers, - costs)
- Diversify units (risk minimization)
Types of government policies to influence on trade
- Protectionism
- Free trade
- Restricted trade
Governmental restrictions and support to influence international trade competitiveness; limit trade though barriers
Protectionism
The state does not influence directly in economic relations with other countries; laissez-faire; no limits or intervention
Free trade
The market forces are rejected based on the idea that international competitiveness depends on the country.
Theory:
There is a necessity to protect industries that are less developed in a country.
Restricted trade
Economic reasons for government intervention
- fighting unemployment
- protecting “infant industries”
- develop an industrial base
- economic relationships with other countries
Non-economic reasons for government intervention
- preserve national culture
- promoting acceptable practices abroad
- maintain & extend spheres of influence
- maintain essential industries
Two types of instruments of trade control
tariffs and non-tariff barriers
What is a tariff?
Tax assigned on a good shipped internationally
Classification of a tariff
- Movement (import, export, transit)
- determined by (conventional, autonomous)
- calculation (specific, advalorem, compound)
- economic objective (protectionism, revenue)
- treatment ( min, max )
2 types of non-tariff barriers
direct price influences
quantity controls
Actions by the government that affect prices without assigning a tax
Direct price influences
Types of direct price influences
- Subsidies (direct / indirect)
- Norms (certifications: technical, health, ecological…)
- Contingent tariff (regulation on time of the year)
- Import deposit
- Loans
- Customs valuation (attitude of agents)
Actions by the government that limit quantities of products moved internationally
Quantity controls
Types of quantity controls
- Quota (limit / embargo)
- Buy local legislation
- Stds and labels
- Permission requirements (gov. licence, foreign-exchange control)
Regulate international interaction in business; 94% of world trade participants
WTO
OBJECTIVE: Open global commerce
164 members
Support trade, avoid discriminatory tariffs
Has most impact in business
World Trade Organization
Help countries in financial need
International Monetary Fund
Stability of international finance and currencies
Cooperation among countries
Promote balanced growth
Offer help to countries in financial need
IMF
35 member countries
OBJ: Coordination of economic and social policies
Organization for Economic Cooperation and Development
Exchange of information and harmonization of policies to maximize economic growth and development
Research and debate (no resolution)
OECD
OBJ: Maximize investment opportunities and growth of developing countries through integration into the global economy
United Nations Conference on Trade and Development
UNCTAD
