Chapter 3 Global Markets Flashcards
Importing
Buying products from another country.
Exporting
Selling products to another country.
Free Trade
The movement of goods and services among nations withoout political or economic barriers.
Comparative Advantage Theory
Theory that states that a country should sell to other countries those products that it produces most effectively and effciently, and buy from other countries those products that it cannot produce as effectively or effciently.
Absolute Advantage
The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more effectively than all other countries.
Balance of Trade
The total of a nation’s exports compared to it’s imports measured over a paticular period.
Trade Surplus
A favorable balance of trade; occurs when the value of a country’s exports exceeds that of it’s imports.
Trade Deficit
An unfavorable balance of tade; occurs when the value of a country’s imports exceeds that of it’s exports.
Balance of Payments
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
Dumping
Selling products in a foreign country at lower prices than those charged in the producing country.
Licensing
A global stratagy in which a firm (the licensor) allows a foreign company (the Licensee) to produce its product in exchange for a fee (a royalty).
Contract Manufacturing
A foreign country’s production of private-label goods to which a domestic company then attaches its company name or trademark; part of the broad catagory of outsourcing.
Joint Venture
A partnership in which two or more companies (often from different countries) join to undertake a major project.
Stategic Alliance
A long-term partnership between two or more companies established to help each company build competetive market advantages.
Foreign Direct Investment (FDI)
The buying of perminent property and businesses in foreign nations.
Foreign Subsidiary
A company owned in a foreign country by another company, called the parent company.
Multinational Corporation
An Organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
Sovereign Wealth Funds (SWFs)
Investment funds controlled by governments holding large sakes in foreign companies.
Exchange Rate
the value of one nation’s currency relative to the currencies of other countries.
Devaluation
Lowering the value of a nation’s currency relative to other countries.
Countertrading
A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
Trade Protectionism
The use of government regulations to limit the import of goods and services.
Tariff
A tax imposed on imports
Import Quota
A limit on the number of products in certain catagories that a nation can import.
Embargo
A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
General Agreement on Tariffs and Trade (GATT)
A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.
World Trade Organization (WTO)
The international organization that replaced the General Agreement on Tariffs and Trade, and was assigned the duty to mediate trade disputes among nations.
Common Market
A regional group of countries that have a common external tariff, no interal tariffs, and a coordination of laws to facilitate exchange; also called BLOC. An example is the European Union.
North American Free Trade Agreement (NAFTA)
Agreement that created a free-trade area among the United States, Canada, and Mexico.
