International Monetary System and Trade Policy
Value Creation Activities
Activities in the value chain, including planning, research, development, manufacturing, distribution, sales, and service.
First-Mover Advantages
Advantages gained by being the first to introduce a product or service to the market.
Milton Friedman
American economist and statistician, Nobel laureate in Economic Sciences.
Confucianism
Ancient Chinese belief system emphasizing personal ethics and morality.
Straw Men Approach to Ethics
Approaches demonstrating inappropriate guidelines for ethical decision making.
Bretton Woods Agreements
Unified rules establishing fixed international currency exchange rates.
Common Law
Unwritten laws based on legal precedents established by courts.
Fiscal Policy
Use of government revenue and expenditure to influence the economy.
Exchange Rates
Value of one currency in terms of another for conversion.
Subsidy
Government payment or privilege to promote a public objective.
Balance-of-Trade Equilibrium
Situation where a country's imports equal its exports over time.
Speed Money
Small bribe to expedite routine actions or services.
Product Life-Cycle Theory
Stages of product introduction, growth, maturity, and decline.
Transaction Exposure
Uncertainty faced by companies involved in international trade due to currency fluctuations.
Gold Standard
A currency convertible into gold at a fixed price.
Absolute Advantage
Ability to carry out an economic activity more efficiently than others.
Comparative Advantage
Ability to produce a good or service at a lower opportunity cost than trading partners.
Corporate Social Responsibility
Business model promoting social accountability to stakeholders and the public.
Three Forms of Economic System
Command, market, and mixed systems.
Vehicle Currency
Currency used as a unit of account, medium of exchange, and store of value.
Kantian Ethics
Deontological ethical theory based on the notion of a good will.
Entry Modes
Direct exporting, licensing, joint venture, strategic acquisition, FDI, greenfield venture.
Mixed Economy
Economic system combining private and public enterprise.
Market Economy
Economic system guided by supply and demand signals.
Internalization Theory
Economic theory analyzing international business behavior.
Heckscher-Ohlin Theory
Economic theory proposing countries export what they can produce efficiently.
Command Economy
Economy where production and prices are centrally determined by the government.
Clean Float
Exchange rate determined purely by supply and demand.
Fixed Float
Exchange rate regime where a country pegs its currency to a stable currency.
Pegged Exchange Rate
Exchange rate regime where currency value is fixed against another currency or measure.
Location Economies
Factors influencing the location of economic activity and distribution.
FDI
Federal Direct Investment - Purchase of an asset in another country, giving direct control to the purchaser.
FX Risk
Foreign Exchange Risk- Potential losses in international financial transactions due to currency fluctuations.
Dirty Float
Foreign currency regime where a central bank intervenes to manipulate supply and demand.
Economic Exposure
Foreign exchange exposure affecting a company's cash flows, investments, and earnings.
Currency Swap
Foreign exchange transaction trading principal and interest in different currencies.
Uruguay Round
GATT round resulting in trade-liberalizing agreements and new rules.
Inflation
General increase in prices of goods and services in an economy.
Karl Marx
German philosopher, economist, and political theorist.
Four Basic Strategies in Global Markets
Global standardization, localization, transnational, international.
World Bank
International development organization lending to improve economies and living standards.
Capital Flight
Large-scale exodus of financial assets from a nation due to instability or devaluation.
Private Action
Legal proceeding initiated by an individual or entity to enforce rights or seek redress.
Porter's Diamond
Model explaining competitive advantage in national economies.
International Monetary Fund
Organization fostering global monetary cooperation and economic growth.
International Monetary System
Organization that has agreed rules for facilitating international trade and capital allocation.
Monetary Policy
Policy adopted by a nation's monetary authority to affect financial conditions.
Ethical Considerations
Principles guiding research design and practices, including voluntary participation and informed consent.
Turnkey Projects
Projects constructed for sale as completed products.
PPP
Purchasing Power Parity- Macroeconomic metric comparing productivity and living standards between countries.
Apartheid System
Racial segregation in South Africa under white government.
Noblesse Oblige
Responsibility of privileged people to act with generosity and nobility.
Translation Exposure
Risk of value changes in a company's equities, assets, or income due to exchange rate fluctuations.
Civil Law
System of law concerning private relations within a community.
Seven Main Instruments of Trade Policy
Tariffs, subsidies, quotas, restraints, content requirements, policies, and antidumping duties.
GATT
The General Agreement on Tariffs and Trade- Multilateral agreement regulating trade among 153 countries.
WTO
The World Trade Organization - Intergovernmental organization regulating and facilitating international trade.
Law of One Price
Theory that an economic good or asset has the same price in different markets.
Veil of Ignorance
Thought experiment to envision a fair society by pretending ignorance of personal circumstances.
NAFTA
Trade agreement creating a trilateral bloc in North America.
Privatization
Transfer of government-owned assets to private ownership.
Nationalization
Transfer of private industry to state ownership or control.
Foreign Corrupt Practices Act
US law prohibiting bribery of foreign government officials.
