POBF: Intro to Business: Chapter 3 - Business in the Global Economy

quota

A limit on the quantity of a product that may be imported and exported within a given period.

infrastructure

A nation's transportation, communication, and utility systems. like transportation, communication, and utilities.

free-trade zone

A selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing.

tariff

A tax that a government places on certain imported products.

International business

All business activities that involve exchanges across national boundaries

joint venture

An agreement between two or more companies from different countries to share a business project.

Trade surplus

An economic measure of a positive balance of trade, where a country's exports exceeds its imports. A trade surplus represents a net inflow of domestic currency from foreign markets, and is the opposite of a trade deficit, which would represent a net outflow.

multinational company (MNC)

An organization that conducts business in several countries.

World Trade Organization (WTO)

Created in 1995 to promote trade around the world. With over 150 member countries, this organization settles disputes and enforces free-trade agreements between its members.

global stratagy

Global strategy, as defined in business terms, is an organization's strategic guide to globalization. Learning Objective. Explain the concept of global strategy within the context of international business and a globalized economy. like using the same commercial through the world

imports

Goods and services bought from another country.

exports

Goods and services sold to another country.

trade barrier

Government restrictions to reduce free trade.

International Monetary Fund (IMF)

Helps promote economic cooperation among its 150 nations and maintains an orderly system of world trade and exchange rates. It was established in 1946 when the economic interdependence among nations was growing at a greater pace than ever before in history.

International Development Association (IDA)

Makes loans to help developing countries.

free-trade agreement

Member countries agree to remove duties and trade barriers on products traded among them. This results in increased trade between the members.

franchise

Right to use a company name of business process in a specific way.

licensing

Selling the right to use some intangible property like production process, trademark, or brand name for a fee or royalty. Example: The Gerber Company started selling its baby food products in Japan by this means.

embargo

Stopping the importing or exporting of a certain product or service.

Trade deficit

a nation's negative balance of trade, which exists when that country imports more products than it exports

political instability

as the propensity of a government collapse, and we estimate a model in which political instability and economic growth are jointly determined.

180+

how many countries does the U.S. conduct trade with

key effects on a country's level of economic development

literacy level, and technology

Comparative advantage

Exists when a country specializes in the production of a good or service at which it is relatively more efficient.

World Bank

The International Bank for Reconstruction and Development and is commonly called ____ _____. It was created in 1944 to provide loans for rebuilding after World War II. Today, its key function is to give economic aid to less developed countries.

balance of trade

The difference between a country's total exports and total imports of goods.

balance of payments

The difference between a country's total payments to other countries and its total receipts from other countries.

literacy rate

The rate of how many people can read or write

exchange rate

The value of money of one country expressed in terms of the money of another country.

Absolute advantage

the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group. Example: South American countries have an absolute advantage in coffee production, and Saudi Arabia has an absolute advantage in oil production.

interest rate

the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan out standing