Chapter 5 Flashcards
(29 cards)
Globalization
The transformation of the world economy into a single, interdependent system.
Imports
Products made or grown abroad, sold in Canada
Exports
Products made or grown domestically and shipped abroad
Where are the three major marketplaces in the world?
NA, EU, and Asia
BRICS nations
Brazil, Russia, India, China, and South Africa. A political club with its own agendas, especially to meet against the recent policies from the US.
Absolute advantage
Country is able to produce something more efficiently than any other country.
Comparative advantage
Country is able to produce a good more efficiently than any other good.
National competitive advantage
Reason for why countries engage in international trade.
When factor of production/ demand/ related and supporting industries/ strategies, structures, and rivalries conditions all exist in an industry, companies will engage in international business.
International competitiveness
Ability of a country to generate more wealth than its competitors.
Balance of payments
Money flowing into a country - money flowing out. Takes into account for foreign tourist spending and foreign investments, thus a favorable balance of trade does not mean favorable balance of payments
Lowest level of international involvement
Exporter: Produces in one country, distribute/sell them in other countries
Importer: Firm that buys products in foreign markets, sells them domestically.
Second level of international involvement
International firm: Conducts a sizable chunk of its business abroad, still, the main focus in the domestic market.
Final level of international involvement
Multinational firm: most of planning and decisions are geared toward the global market
Independent agent
Foreign individual or organization that represents a firm’s interests in foreign markets. No specialization in one product or market.
Licensing agreements
Firm grants individuals/companies in foreign companies the exclusive right to manufacture their products in the area. Parent company receives royalties as payment.
Branch offices
Firm sends some of their managers overseas, gaining more direct control.
Strategic alliance
Company find partner in a foreign country to do business with; investing resources and capital or something else for mutual benefits.
Foreign direct investment (FDI)
Buying or establishing tangible assets in another country
Social/Cultural barriers to international trade
Foreign language, insufficient knowledge physical stature of citizens, and cultural misunderstandings
Economic barriers to international trade
Amount of government involvement in the foreign market. The economic status and financial infrastructure in the country.
Quotas
Restricts the total number of certain products that can be imported into a country
Embargo
Forbidding exportation/importation of a product entirely
Tariff
Tax charged on imported products
Subsidy
Government payment given to domestic firms to compete with foreign companies
