unit 4 world markets

Why do nations trade?

Trading increases economic growth, new market for products and acces to different resources. Makes distribution and production systems more efficient.

balance of trade

the difference between a country's total exports and total imports

balance of payments

overall money flow into and out of a country

exchange rate

value of a countries currency in terms of the other countries currency

Devaluation

reduction in a currency's value relative to other currencies or to a fixed standard

Infastructure

the basic systems of a country's communication, transportation and energy facilities

tarifs

Taxes on imported goods

Quota

limit set on the amounts of particular products that countries can import during specified time periods

Dumping

selling products in a foreign country at lower prices than those charged in the producing country

Embargo

total ban on importing specific products or a total halt to trading with a particular country

exchange control

restriction on importation of certain products or against certain companies to reduce trade and expenditures of foreign currency

World Bank

an organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries

European Union

a 28-nation European economic alliance

counter trade

barter agreement whereby trade between two or more nations involves payment made in the form of local products instead of currency

foreign licensing agreement

An international agreement in which one firm allows another firm to produce or sell its product, or use its trademark, patent, or manufacturing processes, in a specific geographical area, in return for royalties or other compensation

Subcontracting

international agreement that involves hiring local companies to produce, distribute, or sell goods or services in a specific country or geographical region

multinational corporation (MNC)

a firm with many operations and marketing activities outside its home country

global business strategy

offering a standardized, worldwide product and selling it in essentially the same manner throughout a firm's domestic and foreign markets

multidomestic business strategy

a plan to develop and market products to serve different needs and tastes in separate national markets