Introduction to International Business & Trade

This flashcard set covers the fundamental definitions, classical and modern trade theories, and internationalization models discussed in the Introduction to International Business & Trade lecture.

International Trade

The exchange of goods and services across national borders, primarily concerning buying and selling products.

International Business

A broad concept covering production, marketing, finance, and management across borders, including investment, licensing, and trade.

Imports

Products bought from businesses in other countries.

Exports

Products sold to other countries.

Trade Barriers

Restrictions that reduce free trade among countries such as import taxes, quotas, or laws.

Quotas

A trade barrier that restricts the number of imports allowed into a country.

Mercantilism

A classical trade theory (16th–18th Century) stating that national wealth depends on accumulating gold and silver through a favorable balance of trade.

Absolute Advantage

A theory proposed by Adam Smith (1776) suggesting countries should specialize in producing goods they can produce more efficiently than others.

Comparative Advantage Theory

A theory by David Ricardo (1817) where countries specialize in goods they produce at the lowest opportunity cost, even if they aren't the most efficient producers.

Heckscher–Ohlin Theory

Also known as the Factor Endowment Theory; it argues countries export goods that intensively use their abundant factors of production (labor, capital, land).

Product Life Cycle Theory

A theory by Raymond Vernon (1966) where production locations shift as products mature through New Product, Growth, Maturity, and Decline stages.

New Trade Theory

Proposed by Paul Krugman and Kelvin Lancaster; it suggests trade arises from economies of scale and consumer demand for product variety.

National Competitive Advantage (Porter's Diamond Model)

A model by Michael E. Porter (1990) identifying four determinants of competitiveness: Factor Conditions, Demand Conditions, Related Industries, and Firm Strategy.

Internalization Theory

A theory stating companies expand abroad when conducting activities internally is more efficient than using external market contracts.

Eclectic Paradigm (OLI Framework)

Proposed by John H. Dunning, identifying three advantages for foreign investment: Ownership (O), Location (L), and Internalization (I).

Uppsala Internationalization Model

A model by Johanson and Vahlne suggesting firms internationalize gradually as they gain knowledge and experience.

Born Globals

Firms that expand internationally much more rapidly than the gradual stages suggested by the Uppsala model.

Domestic Business

Business operations carried out within a single country using one currency and one legal system.

Foreign Direct Investment (FDI)

A major form of international business involving the direct investment into production or business in another country.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, often achieved by increasing production and lowering costs.