3.1

Importance of Global Experience

Many companies value employees with international experience

Importing

buy product from outside

Exporting

sell product to outside

global trade types

importing and exporting

global trade

helps in selling what countries are good in and buying what they need.

US

largest importer

china

largest exporter

Why Trade with Other countries?

Not all countries can make the product

Free Trade

shipping products without political barriers.

ADV of free trade

• Access to a global market of 7.7 billion customers.

• Increased productivity from focusing on comparative advantages.

• Keeps prices down, controlling inflation.

• Encourages innovation and competitive business practices.

• Provides access to foreign investments, keeping interest rates low.

DIS of free trade

• Domestic job losses due to increased imports or shifts to low-wage markets.

• Potential pay cuts for workers due to employer threats of relocation.

• Loss of service and white-collar jobs from overseas operations.

• Domestic companies may lose comparative advantages to global competitors.

Comparative Advantage theory

comparing two countries on who does what better using less material

Absolute Advantage

country can produce a product better than others