Presentation on theme: "Section 6.1 The Global Marketplace"— Presentation transcript:
1 Section 6.1 The Global Marketplace Marketing Essentialsn Chapter 6 International TradeSection 6.1 The Global Marketplace
2 The Global Marketplace SECTION 6.1The Global MarketplaceWhat You'll LearnThe interdependence of nationsThe benefits of international tradeGovernment involvement in international tradeBalance of tradeTrade barriersTrade agreements and alliances
3 The Global Marketplace SECTION 6.1The Global MarketplaceWhy It's ImportantThe global marketplace makes all the people and businesses in the world potential customers, as well as potential employees or employers. Many familiar products are produced by foreign-owned companies that have operations in the United States. In this chapter you will explore the key concepts that govern international trade and help create the global marketplace.
4 The Global Marketplace SECTION 6.1The Global MarketplaceKey Termsinternational tradeimportsexportsabsolute advantagecomparative advantagebalance of tradetariffquotaembargoWorld Trade Organization (WTO)North American Free Trade Agreement (NAFTA)European Union (EU)
5 The Global Marketplace SECTION 6.1The Global MarketplaceDefining International TradeInternational trade involves the exchange of goods and services between nations. Imports are goods and services purchased from other countries. Conversely, exports are goods and services sold to other countries. These exchanges occur between businesses but are controlled by the governments of the countries involved.
6 The Global Marketplace SECTION 6.1The Global MarketplaceInterdependence of NationsMost countries need to get some of their goods and services from other nations. This is called economic interdependence. There are two types of advantages in international trade:absolutecomparative
7 The Global Marketplace SECTION 6.1The Global MarketplaceAbsolute AdvantageAbsolute advantage occurs when a country has special natural resources or talents that allow it to produce an item at the lowest cost possible.Example: China produces close to 80 percent of all the silk in the world, which gives them absolute advantage.
8 The Global Marketplace SECTION 6.1The Global MarketplaceComparative AdvantageComparative advantage is the value that a nation gains by selling the goods that it produces most efficiently.Example: U.S. businesses have a comparative advantage in producing technology related goods and services.
9 The Global Marketplace SECTION 6.1The Global MarketplaceBenefits of International TradeConsumers benefit from foreign competition that encourages the production of high-quality goods with lower prices.Producers can expand their businesses by conducting operations in other countries.Workers benefit from higher employment rates both at home and abroad.
10 The Global Marketplace SECTION 6.1The Global MarketplaceGovernment Involvement in International TradeAll nations control and monitor their trade with foreign businesses. The U.S. government monitors imports through the customs division of the U.S. Treasury Department.
11 The Global Marketplace SECTION 6.1The Global MarketplaceBalance of TradeBalance of trade is the difference in value between a nation's exports and imports.A trade surplus occurs when a nation exports more than it imports.A trade deficit occurs when a nation imports more than it exports.
12 The Global Marketplace SECTION 6.1The Global MarketplaceTrade DeficitThe U.S. trade gap in August 2000 was $29 billion. One effect of a trade deficit is a weaker dollar. Should that help or hurt U.S. exporters? Why?
13 The Global Marketplace SECTION 6.1The Global MarketplaceTrade BarriersA nation's government may impose trade barriers or restrictions when it wants to limit trade. There are three main types of trade barriers:tariffsquotasembargoes
14 The Global Marketplace SECTION 6.1The Global MarketplaceTariffsA tariff (sometimes called a duty) is a tax on imports. Tariffs may be used to produce revenue for a country.Another type of tariff is a protective tariff, which is generally high. Its purpose is to increase the price of imported goods so that domestic products can compete with them.
15 The Global Marketplace SECTION 6.1The Global MarketplaceQuotasAn import quota limits either the quantity or monetary value of a product that may be imported.Example: Japan placed a quota on its auto exports to the U.S. to improve trade relations.
16 The Global Marketplace SECTION 6.1The Global MarketplaceEmbargoesAn embargo is a total ban on specific goods coming into and leaving a country. Embargoes are usually used for political reasons.Example: The United Nations imposed an embargo on Iraq during the Persian Gulf War.
17 The Global Marketplace SECTION 6.1The Global MarketplaceTrade Agreements and AlliancesGovernments make agreements with each other to set up trade alliances that establish guidelines for international trade. Some alliances in the interest of worldwide free trade are:World Trade OrganizationNorth American Free Trade AgreementEuropean Union
18 The Global Marketplace SECTION 6.1The Global MarketplaceWorld Trade Organization (WTO)The WTO is a global coalition of 135 governments that makes the rules governing international trade.The WTO was formed in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT).
19 The Global Marketplace SECTION 6.1The Global MarketplaceNorth American Free Trade Agreement(NAFTA)NAFTA is an international trade agreement among the United States, Canada, and Mexico. It went into effect on January 1, 1994.
20 The Global Marketplace SECTION 6.1The Global MarketplaceEuropean Union (EU)The EU is Europe's trading bloc. It was established by the Maastricht Treaty, which called not only for free trade among member nations, but also for a single European currency and a central European bank.
21 The Global Marketplace SECTION 6.1The Global MarketplaceInternational Trade Agreements and AlliancesDepicted on this map are two major trading blocks or markets— NAFTA and the EU. How do these trade alliances foster free trade?
22 Reviewing Key Terms and Concepts ASSESSMENT6.1Reviewing Key Terms and Concepts1. Explain the concept of economic interdependence of nations.2. Provide an example of comparative advantage and absolute advantage for two different countries.3. What benefits do consumers and nations derive from international trade?Slide 1 of 2
23 Reviewing Key Terms and Concepts ASSESSMENT6.1Reviewing Key Terms and Concepts4. Name three types of trade barriers.5. What is the common goal or purpose of the WTO, NAFTA, and the EU?Slide 2 of 2
24 ASSESSMENT Thinking Critically 6.1 What problems occur when trade between nations is not equal, as in the case of the United States and Japan? What measures could the United States take in order to reduce its trade deficit with Japan?
25 Favorable Balance of Trade 6.1Graphic OrganizerHow Exchange Rates Affect the Balance of TradeWeak CurrencyMore ExportsFavorable Balance of TradeStrong CurrencyFewer ExportsNegative Balanceof Trade