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)
