Management and Entrepreneurship January 22, 2016 Finish Supply and Demand Activity Global Economy Notes – Lesson 2-2 Global Economy Activity

Entrepreneurship & the Economy 2 Entrepreneurship & the Economy Section 2.2 Thinking Globally, Acting Locally

Thinking Globally, Acting Locally 2.2 Thinking Globally, Acting Locally Define the global economy Identify factors that affect entrepreneurs in international trade Describe relationships between the global economy and the local economy

The Global Economy The global economy is the flow of goods and services around the whole world. Exporting is the business activity in which goods or services are sent from a country and sold to foreign consumers. Scarcity, among other factors, forces countries to buy goods and services from other countries. Most nations have developed supply specialties which allows them to make the most efficient use of their natural and human resources. Export opportunities for entrepreneurs will depend on the type of economy.

The Global Economy Importing is the business activity in which goods and services are brought into a country from foreign suppliers. Modern technology connects suppliers and consumers around the world. The Internet, in particular, has made international trade easier, faster, and more convenient than ever before. Countries track their trade balance.

Entrepreneurs and International Trade Entrepreneurs benefit from international trade by exporting goods or services that are in demand in foreign countries and importing foreign goods and materials to their own country. Entrepreneurs must learn about the economic and monetary systems of the foreign countries in which they wish to do business They must also learn about government regulations relating to importing and exporting. In addition to financial and political challenges, there are also cultural factors to consider.

Entrepreneurs and International Trade A trade barrier is a governmental restriction on international trade. Countries are protective of the resources within their borders Even market economies put restrictions on international trade to give domestic businesses a competitive advantage and protect consumers from foreign goods that may be unsafe or of poor quality. NAFTA Transatlantic Free Trade Area / Transatlantic Trade and Investment Partnership Trans Pacific Partnership

Entrepreneurs and International Trade The foreign exchange rate is the value of one currency unit in relation to another. Foreign exchange rates change daily and must be monitored by entrepreneurs

Entrepreneurs and International Trade Fair trade policies ensure that small producers in developing nations earn sufficient profit on their exported goods to improve their working, environmental, and social conditions. When engaging in foreign trade, companies must be culturally sensitive and respect social rules and customs practiced where they want to business.

The Local Economy A local economy covers a limited area, such as a community or town. Entrepreneurs can benefit their local economies by: Purchasing materials and supplies from local merchants Opening an account at a local bank, credit union, or other financial institution Joining a local business association, trade group, or civic organization that supports local economic development Paying local taxes that benefit schools and other public services Investing money in local businesses Donating money, time, or goods to local charities and organizations Hiring local employees Supplying goods and services to local consumers