Term
| All global exports exceeded ? trillion in 2008 |
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Definition
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Term
| The dollar volume of world exports is greater than the GNP of every nation in the world except the |
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Definition
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Term
| how many % made or grown world-wide is exported? |
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Definition
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Term
| how many % of developed nations exports go to other industrialized nations, not developing countries |
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Definition
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Term
| how many % of african proportion of world trade has decreased? |
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Definition
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Term
Manufactured goods
Direction of trades |
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Definition
To developing nations for raw materials
To other industrialized nations |
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Term
| what relatively favorable? |
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Definition
| Business climate in the importing nation |
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Term
However, regional
trade agreements may
shift the direction |
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Definition
ASEAN in SE Asia
Mercosur in South America
EU in Europe
NAFTA in North America |
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Term
| Theory based on __________ __________ states that international and interregional differences in production costs occur because of differences in the supply of production factors. |
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Definition
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Term
| Advantages of focusing attention on a nation that is already a sizable purchaser of goods from the would-be exporter’s country include |
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Definition
1. Business climate in the importing nation is relatively favorable.
2. Export and import regulations are not insurmountable.
3. There should be no strong cultural objections to buying that nation’s goods.
4. Satisfactory transportation facilities have already been established.
5. Import channel members are experienced in handling import shipments from the exporter’s area.
6. Foreign exchange to pay for the exports is available.
7. The trading partner’s government may be applying pressure on importers to buy from countries that are good customers for that nation’s exports |
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Term
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Definition
| Export and import regulations |
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Term
| major trading partners of the United States |
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Definition
| Canada and Mexico because geographic proximity |
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Term
| Asian countries are becoming major importers of American goods because |
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Definition
1. their rising standards of living (they can afford more imports)
2. purchasing large amounts of capital goods for industrial expansion
3. they import raw materials and components to assemble goods
4. their governments, sometimes under pressure from the U.S. government, sent buying mission to US seek to imports |
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Term
| New international business opportunities are identified by |
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Definition
| studying the general growth and direction of trade, analyzing major trading partners to identify where the trading activity is |
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Term
| Understanding economics of specific market areas gives |
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Definition
| insight into future government actions impacting trade |
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Term
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Definition
1. One of the first economic doctrines (1550 to 1800).
2. Central idea–countries having no sources for precious metals could accumulate these precious metals by exporting more goods than they import.
3. Governments should control foreign trade because individuals might trade precious metals for imports. Only the government was in a position to assure that only local products were purchased |
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Term
| Theory of Absolute Advantage |
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Definition
1. Dissatisfaction with excessive government controls prompted many writers to advocate less government control of foreign trade.
2. Adam Smith (The Wealth of Nations – 1776) attacked mercantilism and said that to trade in order to accumulate gold and other precious metals was foolish |
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Term
| Theory of Comparative Advantage |
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Definition
1. Ricardo (1817) showed that if a nation were less efficient in the production of two products, it could still gain from international trade if it were not equally less efficient in the production of both goods.
2. Smith’s and Ricardo’s theories considered labor as the only important factor in calculating production costs and no thought was given to the possibility of producing the same goods with different combinations of factors. |
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Term
| How Money Can Change the Direction of Trade |
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Definition
1. Traders must know a price in domestic currency to determine if is better to produce locally or import.
2. Exchange Rate is the price of one currency stated in terms of the other.
3. Countries can regain a competitive position through currency devaluation. |
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Term
| Differences in Resource Endowments |
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Definition
a. Some countries have more abundant resources than others, which can result in different opportunity cost of producing these resources and bringing them to market.
b. Difference in resource endowments suggest that developed countries would more likely trade with developing countries rather than other developed countries with similar factor endowments |
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Term
| Some Newer Explanations for the Direction of Trade |
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Definition
1.Differences in Resource Endowments
2.Overlapping Demand
3.National Competitive Advantage from Regional Clusters |
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Term
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Definition
a.Consumers’ tastes, preferences, and their nation’s per capita income affect market demand in any country.
b.Customers in countries with similar levels of per capita demand will demand similar goods and services. |
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Term
| Monopolistic Advantage Theory |
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Definition
| based on the premise that FDI is made by firms in oligopolistic industries possessing technical and other advantages over indigenous firms. These advantages could be economies of scale, superior technology, or superior knowledge of marketing, management, or finance, giving the MNE competitive advantage over local firms. |
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Term
| Internationalization Theory |
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Definition
| to obtain a higher ROI, a firm will transfer its superior knowledge to a foreign subsidiary and not sell it in the open market. Firms transfer knowledge across borders without it leaving the firm |
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Term
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Definition
| ownership of specific knowledge or resources is necessary but not sufficient enough for success in FDI, but firm must also develop distinctive competitive advantages to complement their knowledge or resources |
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Term
| Eclectic Theory of International Production |
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Definition
states that for a firm to invest overseas, it must possess 3 types of advantages: Ownership specific
Location specific
Internalization |
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Term
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Definition
| tangible and intangible assets not available to competitors but can be transferred abroad (e.g., a recognizable brand name). |
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Term
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Definition
| foreign market offers economic, social or political advantages which will let the firm exploit its ownership specific advantages (market size, tariff or nontariff barriers, or transportation cost advantages) |
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Term
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Definition
| firms have choice as to the way to enter foreign markets, ranging from arm’s length market transactions to hierarchy via a wholly owned subsidiary. It is in the firm’s interest to exploit ownership specific advantages through internalization in those situations where either the market does not exist or it functions inefficiently. |
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Term
| what explains MNEs’ choice of foreign production facilities? |
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Definition
| Eclectic Theory (also referred to as OLI Model) |
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Term
| the reason why these companies find it profitable to invest overseas |
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Definition
| FDI is typically made by large, research-intensive firms in oligopolistic industries |
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