Chapter 3 Flashcards
(29 cards)
Importing
Buying products from another country.
Free trade
The movement of goods and services among nations without political or economic barriers.
Trade Surplus
Occurs when the value of a country’s exports exceeds that of its imports.
Balance of Payments
The difference between money coming into a country (from exports) and money leaving the country (from imports) plus money flows from other factors. (Tourism, foreign aid)
Licensing
A global strategy in which a film (the licensor) allows a foreign company (the license) to produce its product in exchange for a fee (a royalty).
Contract Manufacturing
A foreign company’s production of private-label goods to which a domestic company then attaches its brand name or trademark; is part of the broad category of outsourcing.
Foreign Direct Investment
The buying of permanent property and businesses in foreign nations.
Multinational Corporation
When a company has operational business in multiple nations and has multinational stock ownership management.
Import Quota
A limit on the number of products in certain categories that a nation can import.
World trade organization
An independent entity of 164 member nations whose purpose is to oversee cross-border trade issues and global business practices; headquartered in Geneva.
Common market
A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc.
Outsourcing
Process whereby one firm contracts with other companies to do some or all of its functions.
Exporting
Selling products to another country.
Balance of trade
The total value of a nation’s exports compared to its imports over a particular period.
Trade deficit
Occurs when the value of a country’s imports exceeds that of its exports.
Dumping
Selling your products in a foreign country at lower prices than those charged in your own producing country.
Franchising
A contractual agreement whereby someone with a good idea for a business sells others the rights to use the name and sell a product or service in a given territory in a specified manner.
Joint Venture
A partnership in which two or more companies (often from different countries) join to undertake a major project.
Exchange Rate
The value of one nation’s currency relative to the currencies of other countries.
Trade Protectionism
The use of government regulations to limit the import of goods and services.
Embargo
A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
GATT
A 1948 agreement that established an internal forum for negotiating mutual reductions in trade restrictions.
USMCA
An agreement that created a free-trade area among the United States, Mexico, and Canada was ratified in 2020.
Comparative advantage
A country should sell to other countries those products that it produces most efficiently and buy from other countries those products that it cannot produce as effectively or efficiently.
