27 terms

Chapter 2

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Terms in this set (...)

international business
all commercial transactions, both private and public between nations of the world
trade
the two-way flow of exports and imports of goods (merchandise trade) and services (service trade)
foreign direct investment
inflows of capital from abroad for investing in domestic plant and equipment for the production of goods and/or services as well as for buying domestic companies
outsourcing
the corporate practice of acquiring or producing quality goods or services abroad at a lower cost thereby eliminating domestic production
mercantilism
a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade surplus
factors of production
endowments used to produce goods and services: land (quantity, quality, and mineral resources beneath it), labor (quantity and skills), capital (cost), and technology (quality)
trade surplus
when the value of exports exceeds the value of imports; the opposite of a trade deficit
absolute advantage
the ability of one country to produce a good or service more efficiently than another
comparative advantage
the ability of one country that has an absolute advantage in the production of two or more goods (or services) to produce one of them relatively more efficiently than the other
trade policy
all government actions that seek to alter the size of merchandise and/or service flows from and to a country
tariffs
taxes on imports; also known as custom duties in some countries
custom duties
taxes on imports that are collected by a designated government agency responsible for regulating imports
specific tariff
an import tax that assigns a fixed dollar amount per physical unit
ad valorem tariff
a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good
preferential duties
an especially advantageous or low import tariff established by a nation for all or some goods of certain countries and not applied to the same goods of other countries
generalized system of preferences (GSP)
an agreement where a large number of developed countries permit duty-free imports of a selected list of products that originate from specific countries
export subsidy
a negative tariff or tax aimed at boosting exports
export taxes
taxes meant to raise export cost and divert production for home consumption
most favored nation (MFN)
an agreement among WTO countries in which any tariff concession granted by one member to any other country will automatically be extended to all other countries of WTO
import quotas
also known as Quantitative Restrictions (QRs are regulations that limit the amount or number of units of products that can be imported to a country
voluntary export restraint (VER)
a non-tariff barrier in which an efficient exporting nation agrees to limit exports of a product to another country for a temporary period
domestic content provisions
regulations requiring that a certain percentage of the value of import be sourced domestically
managed trade
agreements, sometimes temporary, between countries (or a group of countries) that aim at achieving certain trade outcomes
countertrade
agreement in which an exporter of goods or services to another country commits to import goods or services of corresponding value from that country
export cartel
a group of countries that could effectively control export volume to keep their export prices, revenues, and economic growth stable or high
infant industry argument
temporary provision of protection to nascent industries that have good prospects of becoming globally competitive in the medium term
embargoes
trade sanctions which are imposed upon a nation to restrict trade with that country