chapter three 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
comparitive advantage
the ability to produce a specific product more efficiently than any other product
exporting
selling and shipping raw materials or products to other nations
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
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 compensation
letter of credit
a legal document issued by a bank or other financial institution guaranteeing to pay a seller a stated amount for a specified period of time
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
import duty
a tax levied on a particular foreign product entering a country
tariff
a tax levied on a particular foreign product entering a country
import quota
a limit on the amount of a particular good that may be imported into a country during a given period of time
International Monetary Fund
an international bank that makes short term loans to developing countries experiencing balance-of-payment deficits
currency devaluation
the reduction of the value of a nation’s currency relative to the currencies of other countries
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
World Trade Organization (WTO)
powerful successor to GATT that incorporates trade in goods, services, and ideas
embargo
a complete halt to trading with a particular nation or in a particular product
