Lecture 3 Flashcards
What is globalization
the integration of markets globally
A single interdependent system
What are imports
products purchased in Canada that are manufactured in other countries
What are exports
products made in canada that are purhased by consumers in other countries
what is absolute advantage
a country can produce something more effeciently than any other country
What is comparative advantage
a country can produce certain items more efficiently than it can other items
What are 4 conditions the theory of national competitive advantage focuses on
- Factor conditions
- Demand Conditions
- Related and Supporting Industries
- Strategies, structure, and rivalries
What is balance of trade
the difference in value between total exports and total imports
What is trade surplus
when the nation exports more than it imports
What is trade deficit
when the nation imports more than it exports
What is balance of payments
the flow of money into or out of a country
What is foreign exchange rate
ratio of one currency to another
When the value of the canadian dollar depreciates, exports _______ and imports ________
Exports increase and imports cost more
When the value of the canadian dollar appreciates, exports _______ and imports ______
Exports decrease and imports cost less
What are the 4 questions a business must pass for to know if it should go international or not
- Is there international demand for the firms product?
- Can the firm be modified to fit a foreign market?
- Is the foreign business climate suited to imports?
- Does the firm have or can it get the necessary skills and knowledge to do business?
What is an Importer business
buys products in a foreign markets for resale at home
What is an international firm
A domestic firm that conducts much of its business abroad.
What is a multinational firm
controls assets, factories, mines, sales offices, and affiliates in 2 or more foreign countries
Planning and decision making are geared to international markets
What are 3 barriers to international trade?
- Social and cultural differences
- Economic differences
- Legal and political differences
What is a quota
limitations on importation of a product class
What are tariffs
A tax on imported goods
Raises government revenues aswell
What is subsidy
Government financial assistance for domestic firms
What is protectionism
Protects local business at the expense of free market competition
What is local-content law
requires that at least of the product be made in a local country
What is dumping
selling goods abroad for less than a firm charges at home; illegal in most nations
What is a cartel
association of producers created to control supply and demand
What did the WTO accomplish
Protested against trade liberalization- participates in trade agreements and trade disputes
What did the EU accomplish
largest free marketplace in the world. Eliminated most quotas and set uniform tariffs within the EU
What is the goal of NAFTA
to remove tariffs and other trade barriers between Canada, US, and Mexico
