chapter 6 Flashcards
Three major types of political risks
- Ownership risk
- Operating risk
- Transfer risk
government restriction when countries require a portion of a product sold to have a local content
Local-content laws
Trade laws (often tariffs) that favor local firms and discriminate against foreign ones
trade barriers
A tool used by governments to protect local companies from outside competition.
Tariffs
Non-monetary barriers to foreign products, such as biases against a foreign company’s bids, or product standards that go against a foreign company’s product features
non-tariff barriers
Most common forms of tariffs (3)
- Specific (charges imposed on particular products by weight or volume in local currency)
- Ad valorem (straight % of value of the goods)
- Discriminatory (tariff charged against goods coming from particular country)
Non-tariff barriers (4)
- Quotas (restriction on amount)
- Embargoes (complete ban)
- Administrative delay
- Local-content requirements
Three types of economic activity
- Primary (argriculture and extractive processes(
- Secondary (manufacturing)
- Tertiary (services)
stipulates that an indentical product must have an identical price in all countries when price is expressed in a common-denominator currency
Law of one price
NICs
Newly Industrialized Countries, have an emergin industrial base, one that is capable of exporting. Infrastrucutre shows considerable development
Free trade area
all trade barriers among members are removed
Customs union
Free trade area + common trade policy to non-members
Common market
customs union + Removal of barriers to the free movement of goods, services, capital and people
Economic Union
Common market + integration of economic policies
