Exam review Module 1 Flashcards
Comparative Advantage
The theory of comparative advantage says that a country should make and then sell those products it produces most efficiently but buy those it cannot produce as efficiently.
Absolute Advantage
Absolute advantage means that a country has a monopoly on a certain product of can produce the product more efficiently than any other country.
exporting
Selling goods to other countries. Importing = Buying goods from others countries.
balance of trade
Relationship of imports to exports.
balance of payments
Balance of trade + other money flows i.e: tourism, foreign aid.
dumping
selling products for less in a foreign country.
Ways of entering world trade:
licensing, exporting, franchising, contract-manufacturing, joint ventures, strategic alliances, FDI (foreign direct investment).
Multinational corporation
manufacturing facilities or physical presence in different nations.
forces in global business
sociocultural, economic, financial, legal.
Forces that inhibit or aid global business
sociocultural i.e: religion, financial i.e: disposable income, legal i.e: country laws, environmental forces i.e: internet usage).
Trade Protectionism
the use of government regulations to limit the import of goods and services.
TP allows
domestic producers to survive and grow, producing more jobs.
key tools in TP
tariffs (import/export tax), import quotas, embargoes.
tariff
Taxes on foreign products.
types of tariffs
1- protective tariffs
used to raise the price of foreign products
types of tariffs
2 - revenue tariffs
used to raise money for the government.
Non-tariff barriers
= safety, health, labelling standards.
WTO
world trade organization
replaced the general agreement on tariffs and trade (GATT)
- WTO mediates trade disputes among nations
IMF
International Monetary Fund (IMF) is an international bank that makes short-term loans to countries experiencing problems with their balance of trade.
World bank
The World Bank is a United Nations (UN) agency that borrows money from the more prosperous countries and lends it to less-developed countries to develop their infrastructures.
common market
= regional group of countries that have a common external tariff, no internal tariff, and a coordination of laws to facilitate exchange.
common market allows for
elimination of trade barriers within certain regions. ex: NAFTA, EU.
future of Global business in Canada
The internet is expanding the potential for global business
Expanding markets for Canada: China, India, Brazil, Russia.
