SGMA 217 Chapter 4

Absolute advantage

the ability to produce a specific product more efficiently than any other competing business or country

Comparative advantage

the ability to produce a specific product more efficiently than another product

Exporting

the selling and shipping of raw materials or products to other countries

Importing

the buying of raw materials or products from other countries

Foreign-exchange control

a restriction on the amount of a particular foreign currency that can be purchased or sold

Currency devaluation

a drop in the value of one country's currency relative to other currencies

Currency exchange rate

the value of one currency in relation to another

Balance of trade

the value of exports minus the value of imports for a country for a specific time period

Trade surplus

the value of exports is greater than the value of imports

Trade deficit

the value of exports is less than the value of imports

Balance of payments

the total flow of money into a country minus the total flow of money out of that country over some period of time, usually every quarter or calendar year

Tariffs

tax on a particular foreign product being imported into a country; often used interchangeably with customs or import duty

Quotas

limit on the number or value of products a country can import or export during a given period of time

Embargo

a complete halt to trading with a particular country or in a particular product

World Trade Organization (WTO)

powerful successor to the General Agreement on Tariffs and Trade (GATT) that incorporates trade in goods, services, and ideas

International Monetary Fund (IMF)

an international bank that makes short-term loans to developing countries experiencing balance-of-payment deficits

World Bank

the most familiar type of multilateral development bank; provides low-interest loans, interest-free credit, and grants to developing countries

Economic community

organization of countries formed to promote the free movement of resources and products among its members (also referred to as regional economic integration)

International direct investment

method for entering international business that provides complete control over operations; options for international direct investment include acquisitions, joint ventures, and creation of totally owned facilities in foreign markets

Strategic alliance

a partnership formed to cooperate in manufacturing, development, sales, or other business activities while each party maintains its independence

Joint venture

the creation of a separate company that will be operated jointly by partnering companies

Acquisition

purchase of an existing company