chapter two IB


Terms in this set (...)

International Business
All commercial transactions, both private and public between nations of the world
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.
The corporate practice of acquiring or production quality goods or service abroad at a lower cost thereby eliminating domestic production
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 good and services; land (quantity,quality, and mineral resource 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 no 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.
Taxes on imports; also known as custom duties in some countries.
Custom duties
Taxes on imports that are collected by a designed 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 good of certain countries and not applied to the same goods of other countries.
Export subsidy
A negative tariff or tax aimed at boosing 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.
Domestic content provisions
Regulations requiring that a certain percentage of the values of imports be sourced domestically.
Managed Trade
Agreements, sometimes temporary, between countries (or a group of countries) that aim at achieving certain trade outcomes.
Agreement in which an exporter of good 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 exports 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.
Trade sanctions which are imposed upon a nation to restrict trade with that country.