Chapter 4 Flashcards
globalization
process by which the world economy is becoming a single interdependent system
import
product made or grown abroad but sold domestically
export
product made or grown domestically but shipped and sold abroad
North American Free Trade Agreement (NAFTA)
agreement to gradually eliminate tariffs and other trade barriers among the United States, Canada, Mexico
European Union (EU)
organization for economic, social, and security cooperation among European nations
Association of Southeast Asian Nations (ASEAN)
organization for economic, political, social, and cultural cooperation amond Southeast Asian nations
general agreement on tariffs and trade (GATT)
international trade agreement to encourage the multilateral reduction of elimination of trade barriers
World Trade Organization (WTO)
organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices
balance of trade
economic value of all products a country exports minus the economic value of all products it imports
trade deficit
situation in which a country’s imports exceed its exports, creating a negative balance of trade
trade surplus
situation in which a country’s exports exceed its imports, creating a positive balance of trade
balance of paymnets
flow of money into or out of a country
exchange rate
rate at which the currency of one nation can be exchanged for the currency of another nation
euro
common currency shared among most of the members of the European Union (excluding Denmark, Sweden, and the United Kingdom)
absolute advantage
abiltiy to produce something more efficiently than any other country
comparative advantage
ability to produce some products more efficienly than others
national competitive advantage
international competitive advantage stemming from a combination of factor conditions, demand conditions, related and supporting industries, and firm strategies, structures, and rivalries
outsourcing
practice of paying suppliesrs and distributors to perform certain business processes or to provide needed materials or services
offshoring
practice of outsourcing to foreign countries
exporter
form that distributes and sells products to one or more foreign countries
importer
firm that buys products in foreign markets and them imports them for resale in its home country
international firm
firm that conducts a significant portion of its business in foreign countries
multinational firm
form that designs, produces, and markets products in many nations
independent agent
foreign individual or organiztion that agrees to represent an exporter’s interests
licensing arrangement
arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country
branch office
foreign office set up by an international or multinational firm
strategic alliance
arrangement (also called joint venture) in which a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner’s country
foreign direct investment (FDI)
arrangement in which a firm buys or establishes tangible assets in another country
quota
restriction on the number of products of a certain type that can be imported into a country
embargo
goverment order banning exportation and/or importation of a particular product or all products from a particular country
tariff
tax levied on imported products
subsidy
goverment payment to help a domestic business compete with foreign firms
protectionism
practice of protecting domestic business agains foreign competition
local content law
law requireing that products sold in a particular country be at least partly made there
business practice law
law or regulation governing business practices in given countries
cartel
association of producers whose purpose is to control supply and prices
