Chapter 3 Definitions Flashcards
International Business
All business activities that involve exchanges across national boundaries.
Absolute Advantage
The ability to produce a specific product more efficiently than any other nation.
Comparative advantage
The ability to produce a specific product more efficiently than any other product.
Importing
Purchasing raw materials or products in other nations and bringing them into one’s own country.
Balance of trade
The total value of a nation’s exports minus the total value of its imports over some period of time.
Trade deficit
A negative balance of trade
Balance of payments
The total flow of money into a country minus the total flow of money out of that country over some period of time.
Import duty (tariff)
A tax levied on a particular foreign product entering a country.
Dumping
Exportation of large quantities of a product at a price lower than that of the same product in the home market.
Nontariff Barrier
A nontax measure imposed by a government to favor domestic over foreign suppliers.
Import quota
A limit on the amount of a particular good that may be imported into a country during a given period of time.
Embargo
A complete halt to trading with a particular nation or in a particular product.
Foreign-exchange control
A restriction on the amount of a particular foreign currency that can be purchased or sold.
Currency devaluation
The reduction of the value of a nation’s currency relative to the currencies of other countries.
General Agreement on Tariffs and Trade (GATT)
A international organization of 153 nations dedicated to reducing or eliminating tariffs and other barriers to world trade.
World Trade Organization (WTO)
Powerful successor to GATT that incorporates trade in goods, services and ideas.
Economic community
An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies.
Licensing
A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensations.
Letter of credit
Issued by a bank on request of an importing stating that the bank will pay an amount of money to a stated beneficiary
Bill of lading
Document issued by a transport carrier to an exporter to prove that merchandise has been shipped
Draft
Issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise thus guaranteeing payment once accepted by the importer’s bank
Strategic Alliance
A partnership formed to create competitive advantage on a worldwide basis.
Trading company
Provides a link between buyers and sellers in different countries.
Countertrade
An international barter transaction
Multinational enterprise
A firm that operates on a worldwide scale without ties to any specific nation or region.
Export-Import Bank of the United States
An independent agency of the U.S. government whose function is to assist in financing the exports of American firms.
Multilateral development bank (MDB)
An internationally supported bank that provides loans to developing countries to help them grow.
International Monetary Fund (IMF)
An international bank with 186 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits.
