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Foreign trade Flashcards

1
Q

Forms of foreign trade

A
  1. Pure foreign trade - exchange of goods between a country or union of countries and another country
  2. International trade - trade between several countries
  3. Global trade - sum of all foreing trades of countries included in the international division of labour
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2
Q

Causes of foreign trade

A
  1. International division of labour
  2. Resource distribution
  3. Specialization
  4. Absolute adventage
  5. Comparative advantage
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3
Q

International division of labour

A

Refers to the conception of economic production as internally transnational and internally interdependent on labour power based in different places:
The old IDL refers that labour power enjoys comparative adventage based on finished products
The new IDL defines comparative adventage on the basis of tasks and processes

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4
Q

Resource distribution

A

Natural resources like land, climate, location, human resources and capital resources determine which products can a country produce

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5
Q

Specialization

A

When a country produces only a certain products rather than be self-sufficient

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6
Q

Absolute adventage

A

A country has an absolute adventage if it can produce higher amount of given product with given resources

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7
Q

Comparative adventage

A

A country has a comparative adventage on a product that it can produce most efficiently given all the products in could produce

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8
Q

Fundamentals principles of foreign trade

A
  1. Export of goods which are produced in given country or exit in sufficient amount
  2. Import of goods which are not produced in given country or don’t exit in sufficient amount
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9
Q

Subjects of foreign trade

A

Tangible goods
Intagible goods - services, valuable rights

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10
Q

Economic importance of foreign trade

A

Foreign trade allows countries to specialize in production of products intended for export
Foreign trade increases employement opportunities in exporter’s country
Foreign trade allows countries to gain rising revenues
Foreign trade ensures that products which are not product in a given country can be importet
Foreign trade provides information about products and production technologies of foreign countries
Foreign trade increases competition in given country

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11
Q

Political importance of foreign trade

A

Consolidates friendly relationships with other countries
World peace

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12
Q

Cultural importance of foreign trade

A

Foreign trade allows consumers to learn about culture, history, life, art of foreign countries

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13
Q

Internal conditions of countries involved in foreign trade

A

Natural conditions (climate, natural resources)
Historical conditions
Economic conditions
Technical conditions
Demographic conditions

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14
Q

External conditions of countries involved in foreign trade

A

Geographical location
The maturity of neighbouring countries
Political and economic relations with neighbouring countries
The international political situation
Interest in good relations and economic co-operation

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15
Q

Negative aspects of foreign trade

A

Imported products compete with products from domestic producers, because of this, some domestic producers may go out of business.
A country can become too dependent on another country.

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16
Q

Foreign trade operations according to the direction of the goods

A

Export means sending products across the international border with the aim of selling and exchange of goods
Import means bringing goods of foreign origin into a given country across international border
Re-export means export of products which have already been imported to the given country from another foreign country

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17
Q

Foreign trade operations according to the organisation of purchase and sale

A

Direct and indirect

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18
Q

Direct export, import, re-export

A

Export - selling products to the foreign customer without the use of intermediary
Import - buying goods from foreign producer without the use of intermediary
Re-export - selling products to a foreign country purchased in another country without passing through the re-exporter’s country

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19
Q

Indirect export, import, re-export

A

Export - selling products to a domestic intermediary who will sell the products to the foreign customer
Import - buying products from a domestic intermediary who bought them from a foreign producer
Re-export - importing products from a foreign country to the re-exporter’s country and then exporting them to another country

20
Q

World trade organisation

A

Only global organisation dealing with the rules of trade between countries.
Ensures the smooth flow of trade.
Settles trade disputes.

21
Q

Slovak Investment and Trade Development Agency (SARIO)

A

It’s aim is to use any type of stimuli to increase the influx of foreign investors.

22
Q

EXIMBANKA SR

A

Aim is to support the maximum export volume while ensuring the return on investment through the minimisation of the financial risks.

23
Q

Structure of foreign trade

A

The territorial structure of foreign trade
The commodity structure of foreign trade

24
Q

The territorial structure of foreign trade

A

The total export and import of products sorted by continets/economic groupings/countries.
Distribution of trade flows between separate countries
EU Export Least: Ireland, Greece
EU Import Least: Finland, Denmark, Greece
EU Export Most: Germany, Czechia
EU Import Most: Czechia, Germany
Non EU Export Least: Brazil, Costa Rica, India
Non EU Import Least: Australia, Argentina, Egypt
Non EU Export Most: US, China
Non EU Import Most: China, Korea

25
The commodity structure of foreign trade
The total export and import of products sorted by the Harmonized Commodity Description and Coding System. HS - System of classification that allows countries to classify traded products on common basis for customs purposes. Most Exported: Machinery, electrical equipment, vehicles Least Exported: Works of art Most Imported: Machinery, electrical equipment, vehicles Least Imported: Works of art
26
Foreign trade balances
They compare inputs and outputs which are represented by imports and exports
27
Balance of trade
The difference between the value of imported and exported goods. The official term for net export that makes up the balance of payments
28
Favourable balance of trade
Export > Import Favourable for domestic producers Unfavourable for consumer cause money
29
Unfavourable balance of trade
Import > Export Unfavourable for domestic producers Favourable for consumer cause money
30
Equlibrium balance of trade
Export = Import
31
Balance of payments
It is a statement that monitors every transaction made between entities of a country and the rest of the world over some period of time International Monetary Fund - guidelines
32
A balance of payments surplus
Revenues > Expenditures
33
A balance of payments deficit
Revenues < Expenditures
34
A balance of payments equilibrium
Revenues = Expenditures
35
Current account
Measures the foreign trade, the net income on investments and direct payments Goods, Services, Primary income, Secondary income
36
Capital account
It includes any financial transactions that don't affect economic output Capital transfers, Gross acquisitions
37
Financial account
It describes the change in international ownership of assets Direct investment, Portfolio investment, Financial derivatives, Other investment, Reserve assets
38
Foreign trade legislation
Payment system Act, Commercial code, Foreign exchange act, Decrees of National bank of Slovakia, Customs law, European and International trade law
39
Commercial treaty
A legal agreement between countries for the purpose of establishing mutual economic relationships. It is an act whereby a definite arrangements are entered into by each contracting party towards each other It is concluded by the heads of countries and validated by governments It is concluded for longer period 2 - 5 y It can be bilateral (2 countries), plurilateral (between more than 2), multilateral (multiple countries) It governs the tax, legal and customs conditions
40
Bilateral trade agreement
A formal agreement between two countries for the purpose of specifying conditions of mutual exchange of goods, based on existitng commercial treaty It is more detailed than a commercial treaty It is concluded by relevant ministers It contains a list of contingent goods that can be mutually exported and imported It governs the licensing and payment methods
41
Other agreements
Payment agreement - governs mutual payment system methods Credit agreement - governs mutual credit relations between countries Co-operation agreement - governs the co-operation between countries in the fields of research, development, education, culture
42
Foreign trade participants
All entities engaged in foreign trade, they should have relevant information about the situation at foreign market, relevant business contacts and business skills Trading companies specialized in foreign trade Industrial companies that perform foreign trade for their own needs Organisations supported by foreign capital Individual persons that import foreign products for their own consumption Business intermediaries
43
Business intermediaries
They have knowledge of specific goods and foreign markets for which they are intended. They are independent merchants that perform foreign trade operations in favour of commissioner
44
Sales representative
Has standing business connections with the commissioner and trade in his own name Obligations: provide information to commmisioner, protect the interests of commissioner, monitor the situation of foreign market Rights: to receive the brokering commission, the reimburstments of expenses
45
Broker
Has temporary business connections with the commissioner and trade in his own name Merchant broker - deals with goods Stock broker - deals with stock Shipping broker - mediates the lease of ship space and charters Insurance broker - conclusion of insurance contracts
46
Commission agent
Has tspecial business connections with the commissioner and trade in commissioner's name Advantages: lower risk, unsold goods are returnd to commissioner, he receives the brokering commissions Disadvantages: Lower provision, he trades in commissioner's name

Ekonomika (7 decks)

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