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globalization
The shift toward a more interdependent and integrated global economy fueled by declining trade and investment barriers and new technologies
international business
all cross-border exchanges of goods, services, or resources between two or more nations
importer
a person or organization that sells products and services that are sourced from other countries
exporter
a person or organization that sells products and services in foreign countries that are sourced from their home country
foreign direct investment
the investment of foreign assets into domestic structures, equipment, and organizations
intellectual property
refers to creations of the mind - inventions, literary, and artistic works, and symbols, names, and images used in commerce
SWOT analysis
A strategic management tool that helps an organization take stock of its internal strengths and weaknesses and external opportunities and threats
Open sourcing
the practice of making source code, design documents, or content available to the public for use, study, modification, and redistribution
insourcing
When a company assigns a project or task to an internal team or department instead of an outside contractor
offshoring
the practice of basing some of a company’s processes or services overseas to take advantage of lower costs
outsourcing
a business practice in which a company hires a third party to perform tasks, handle operations, or provide services for the company
mercantilism
One of the oldest trade theories in which a country’s wealth is determined by its holdings of gold and silver. The objective of each country was to have a trade surplus and avoid a trade deficit
neo-mercantilism
a combination of protectionist policies and restrictions and domestic-industry subsidies
trade deficit
when the value of imports is greater than the value of exports
trade surplus
when the value of exports is greater than the value of import
Index of Democracy
A tool utilized by the Economist to analyze and rate countries based on their openness and adherence to democratic principles. Uses a detailed questionnaire of 60 indicators to provide a snapshot of the current state of democracy worldwide for 165 independent countries.
anarchism
a political ideology that contends that individuals should control political activities, and that public government is both unnecessary and unwanted
totalitarianism
a political ideology that contends that every aspect of an individual’s life should be controlled and dictated by a strong central government
pluralism
a political ideology that asserts that both public and private groups are important in a well-functioning political system
democracy
a form of government that derives its power from the people
capitalism
an economic system in which the means of production are owned and controlled privately
planned economy
an economic system in which the government or state directs and controls the economy, including the means and decision making for production
currency control
Governments may limit the convertibility of one currency into others, usually in an effort to limit imports. Some governments will manage the exchange rate at a high level to disincentivize imports
subsidy
a form of government payment to a producer including tax breaks or low-interest loans
dumping
occurs when a company sells product below market price, often to win market share and weaken a competitor
specific tariffs
Taxes or tariffs that are levied as a fixed charge, regardless of the value of the product or service
ad valorem tariffs
Tariffs that are calculated as a percentage of the value of the product or service
Gross Domestic Product (GDP)
the value of all goods and services produced by a country in a year
per capita GDP
the value of the GDP divided by the population of the country
purchasing power parity
an economic theory that adjusts the exchange rate between countries to ensure that a good is purchased for the same price in the same currency
GDP at Purchasing Power Parity (PPP)
the value of a country’s goods and services adjusted for price difference between countries
Human Development Index (HDI)
A summary composite index that measures a country’s average achievements in three basic aspects of human development: health, knowledge, and standard of living
Gender Development Index (GDI)
measures gender inequalities in three important aspects of human development - reproductive health, empowerment, and economic status
Multidimensional Poverty Index (MPI)
a composite index that uses indicators of the most basic dimensions of deprivation: a short life, a lack of basic education, and a lack of access to public and private resources
General Agreement on Trades & Tariffs (GATT)
A series of rules governing trade that were first created in 1947 by twenty-three countries. It remained in force until 1995, when it was replaced by the WTO.
Most-favored nations clause (MFN)
A GATT provision that required member countries to automatically extend to all member countries the same benefits, usually tariff reductions, they agreed on with any other countries.
World Trade Organization (WTO)
the only global, international organization dealing with the rules of trade between nations, its primary purpose is to serve as a negotiating forum for member nations to dispute, discuss, and debate trade-related manners
General Agreement on Trade in Services (GATS)
As part of the WTO, this agreement seeks to reduce the barriers to trade in services. It requires member nations to treat foreign service companies as they would domestic ones
Trade-Related Intellectual Property Rights (TRIPS)
Seeks to protect intellectual property between countries and ensure that the creator of the property has the right to financially benefit from their creation
free-trade area
the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves, but are free to independently determine trade policies with nonmember nations.
customers union
Barriers to trade are removed between member countries, and members agree to treat trade with non member countries in a similar manner.
common market
allows for the creation of an economically integrated market between member countries. Trade barriers and any restrictions on the movement of labor and capital between member countries are removed. There is a common trade policy for trade with nonmember nations, and workers no longer need a visa or work permit to work in another member country
economic union
created when countries enter into an economic agreement to remove barriers to trade and adopt common economic policies
power distance
degree to which people accept an unequal distribution of power across institutions, organizations, and people
individualism
tendency for people to look after themselves and their immediate family
collectivism
how people in certain cultures subordinate their individual needs for the greater good of a group
masculinity vs femininity
How a society views traits that are considered masculine or feminine; Assertiveness, materialism and less concern for others over relationships and quality of life
uncertainty avoidance
a culture’s comfort level with risk and ambiguous situations
indulgence
extent to which people try to control their desires and impulses
long-term orientation
a cultural value that emphasizes future-oriented virtues like perserverance and thriftiness
short-term orientation
a cultural value that prioritizes the present and values tradition, social hierarchy, and fulfilling social obligations
