International Trade & Globalization Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e What is Globalization? Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Globalization The expansion of economic, political, and cultural processes to the point that they become global in scale and impact. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Terms to Know Imports – Bringing goods or services into a country for sale. Exports – Sending goods or services to another country for sale. Exchange rates – The price of a nation’s currency in terms of another nation’s currency. Balance of Trade – The difference in value between a country’s imports and exports. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e International Trade Purchase, sale, or exchange of goods and services across national borders People have larger selection of products Important engine for job creation Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Economic Interdependence International Business 5e A consequence of specialization or the division of labor. The participants in any economic system must be part of a trading network to obtain the products they cannot produce efficiently for themselves. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Trade and World Output World trade 80% merchandise 20% services World output impacts trade Growing output = growing trade Sluggish output = sluggish trade World trade grows faster than world output Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Terms to Know Free Trade – International trade left to its natural course without tariffs, quotas, or other restrictions. Tariff – Tax on imported goods or services. Quota – A numerical limit on imports or exports. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Terms to Know Sanction – A trade penalty imposed by one nation onto one or more other nations. Embargo – The partial or complete prohibition of commerce and trade with a particular country or a group of countries. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e World’s Top Exporters Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Trade Patterns Merchandise trade among: Western European trade is mostly intra-regional trade Low- and middle-income nations High-income nations North America imports twice as much from Asia as it exports to Asia High-income and low- and middle-income nations Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Who Trades with Whom? Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Trade and the Dependent Nation Total dependence Total independence Potential effects of dependence: Infuses needed capital Creates jobs and raises wages Imports technology and skills Economic problems transferred Political turmoil can spill over Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Absolute Advantage Riceland Tealand Ability of a nation to produce a good more efficiently than any other nation (greater output using same or fewer resources) 1 resource unit = 1 ton rice or 1/5 ton tea Riceland Tealand 1 resource unit = 1/6 ton rice or 1/3 ton tea Specialization and trade allows each to produce and consume more Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Trade Gains: Absolute Advantage Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Comparative Advantage Inability of a nation to produce a good more efficiently than other nations, but an ability to produce that good more efficiently than it does any other good 1 resource unit = 1 ton rice or 1/2 ton tea Riceland Tealand 1 resource unit = 1/6 ton rice or 1/3 ton tea Specialization and trade allow each to produce and consume more Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Trade Gains: Comparative Advantage Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e U.S. Imports Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e U.S. Exports Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e U.S. Trading Partners Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e U.S. Trade Balance Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e NAFTA Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e NAFTA Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Mapping U.S. Clusters Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
What does NC specialize in? International Business 5e http://www.netstate.com/economy/nc_economy.htm Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
Research Triangle Park 7000 acres Largest research park in the U.S. 170+ companies 39,000+ high-tech workers 22.5 million sq. ft. of built space 1,800 start-up companies created since 1970 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e
International Business 5e Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e