Explain How Countries Can Engage in International Trade (Define)

Question 1

Explain How Countries Can Engage in International Trade (Define):

Foreign Portfolio Investment

Answer 1

Investing in businesses by purchasing foreign stocks, bonds, and other financial instruments.

Question 2

Explain How Countries Can Engage in International Trade (Define):

Global Sourcing

Answer 2

The process of buying equipment, capital goods, raw materials, or services from around the world.

Question 3

Explain How Countries Can Engage in International Trade (Define):

Value added

Answer 3

It is the difference between the cost of the raw materials and the finished goods.

Question 4

Explain How Countries Can Engage in International Trade (Define):

Licensing Agreement

Answer 4

A licensing agreement is a legal contract where the owner of a product, brand, patent, or intellectual property (licensor) grants another party (licensee) the right to use it in exchange for fees or royalties. This allows the licensee to produce, sell, or distribute the licensed product while the licensor retains ownership.

Question 5

Explain How Countries Can Engage in International Trade (Define):

Franchising

Answer 5

an agreement to use a company’s name, services, products, and marketing.

Question 6

Explain How Countries Can Engage in International Trade (Define):

Joint Venture

Answer 6

A joint venture is a business arrangement where two or more companies or parties collaborate to undertake a specific project or business activity, sharing resources, risks, profits, and control. Each party maintains its separate legal identity while working together under agreed terms.

Question 7

Explain How Countries Can Engage in International Trade (Define):

Foreign Subsidiary

Answer 7

Exists when a parent company allows a branch of its company, in another country, to be run as an independent entity.