International Business - Chapter 5
International Business - Chapter 5 MGMT 4710
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This 1 page Class Notes was uploaded by Anna Notetaker on Friday September 16, 2016. The Class Notes belongs to MGMT 4710 at Middle Tennessee State University taught by Cheryl Ward in Fall 2016. Since its upload, it has received 24 views. For similar materials see International Business in Management at Middle Tennessee State University.
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Date Created: 09/16/16
International Business Week 4 Chapter 5 Trade Deficit – nation imports more than it exports. Trade Surplus – nation exports more than it imports. Balance of Trade – a country has a trade surplus or deficit. Exporting – selling abroad. Importing – buying abroad. Mercantilism – main goal was to increase the nation’s wealth by imposing government regulation concerning all of the commercial interests. Maximized by limiting imports via tariff and maximizing exports. Wealth of a nation depends primarily on the possession of precious metals such as gold or silver. This cannot be maintained forever because global economy would become stagnant – since countries would export, but not import. Absolute Advantage: nation gains by specializing in economic activities in which it has an advantage. o Free trade – buying/selling of goods and services with little or no government intervention. Comparative Advantage: advantage in one economic activity that a nation enjoys over others. o Opportunity Cost – what you have to give up in order to make a choice. o The theory of Comparative Advantage – nation should specialize in producing the good in which they have the lowest opportunity cost. International Product Life Cycle Theory – introduction, growth, maturity, and decline. Dynamic theory that accounts for changes in the pattern of trade over time. o Product is introduced to a country and growth begins. As more want the items, demand and sales fall off over time, which is maturity. Soon, the sales will decline. Tariff Barriers – discouraging imports by placing a tax on imported goods. o Non-Tariff Barriers – discourages imports by other taxes: Subsidies Import Quotas Voluntary Export Restraints Local Content Requirements Administrative Policies Anti-dumping Duties
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