1.
absolute advantage: the advantage that exists when a country has a monopoly on producing or is able to produce it more efficiently than all other countries
2.
balance of payment: the difference between money coming into a country from exports and money leaving the country from imports, plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment
3.
balance of trade: the total value of nations exports compared to its imports measured over a particular period
4.
central american free trade agreement [CAFTA]: created a free-trade zone with central american nations; costa rica, dominican republic, el salvador, guatemala, honduras and nicaragua
5.
common market: a regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. ex. is the european union
6.
comparative advantage theory: theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently
7.
contract manufacturing: a foreign country's production of private-label goods to which a domestic company the attaches its brand name or trademark
8.
counter-trading: a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services
9.
devaluation: lowering the value of a nations currency relative to other currencies
10.
dumping: selling products in a foreign country at lower prices than those charged in the producing country
11.
embargo: a complete ban on the import or export of a certain product or stopping all trade with a particular country
12.
ethnocentricity: an attitude that one's own culture is superior to all others.
13.
exchange rate: the value of one nations currency relative to the currencies of other countries
14.
exporting: selling products to another country
15.
expropriation: should relations with a host country faulter; the firms assets could be taken by the foreign government in which its invested
16.
foreign direct investment: the buying of permanent property and businesses in foreign nations
17.
foreign subsidiary: a company owned in a foreign country by another company [ called the parent company ]
18.
free trade: the movements of goods and services among nations without political or economic barriers
19.
general agreement on tariffs and trade [GATT]: a 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions
20.
import quota: a limit on the number of products in certain categories that a nation can import
21.
importing: buying products from another country
22.
joint venture: a partnership in which two or more companies [ often from different countries ] join to undertake a major project
23.
licensing: a global strategy in which a firm [ the licensor ] allows a foreign company to produce its product in exchange for fee [a royalty]
24.
multinational corporation: an organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
25.
north american free trade agreement [NAFTA]: agreement that created a free-trade area among the united states, canada and mexico
26.
strategic alliance: a long-term partnership between two or more companies established to help each company build competitive market advantages
27.
tariff: a tax imposed on imports
28.
trade deficit: an unfavorable balance of trade; occurs when the value of a country's imports exceeds that of exports
29.
trade protectionism: the use of government regulations to limit the import of goods and services
30.
world trade organization [WTO]: the international organization that replaced the General Agreement on Tariffs and Trade, and was assigned the duty to mediate trade disputes among nations
