International Business and Global Economics

Comprehensive vocabulary flashcards covering culture, market entry methods, macroeconomic indices, trade theories, countertrade, illicit finance, international legal frameworks, antitrust policies, systemic corruption, and global choke points based on lecture notes.

Culture

Shared norms and values that cause a group of people to perceive and interpret the world in similar ways.

Glocalization

The adaptation of international products around the particularities and preferences of a local culture.

Franchise Model

A market entry strategy where the franchisee absorbs the operational risk and finances the storefront costs while operations depend on local management.

Subcontracting

Outsourcing production to a third-party manufacturer, which presents the strategic risk that the subcontractor may become a direct competitor.

Gross Domestic Product (GDP)

The total monetary or market value of all finished goods and services produced within a nation's borders over a specific time period.

Gross National Income (GNI)

An economic measurement that accounts for all goods and services produced by a nation's citizens and corporations worldwide, including foreign production.

Purchasing Power Parity (PPP)

An economic metric that assesses the relative value of currencies by measuring the amount of goods and services that can be purchased with a given amount of money in different nations.

Law of One Price

An economic theory stating that an identical good should cost the same across different locations when prices are expressed in a common currency.

Big Mac Index

An informal indicator developed to measure Purchasing Power Parity by comparing the cost of a standardized McDonald's Big Mac worldwide to determine if currencies are over- or undervalued against the US dollar.

GNI Coefficient

An economic metric used to measure the degree of inequality in the distribution of family income within a country.

Shadow Economy

Unrecorded and untaxed business activities and financial transactions that operate outside official government oversight.

Deregulation

The elimination of government legal restrictions, enterprise controls, and price controls to enable the free operation of market forces.

Privatization

The transfer of state-owned government monopolies or public enterprises into private commercial ownership.

Free Trade

A policy wherein governments place no trade restrictions, quotas, or tariffs on international commerce, enabling unrestricted market access.

Mercantilism

A 16th to 18th-century economic doctrine advocating that countries maximize national wealth by boosting exports and accumulating bullion while limiting foreign imports.

Neo-mercantilism

A contemporary trade perspective advocating that a nation should maximize its exports and strictly limit imports to protect domestic manufacturers and labor.

Absolute Advantage

Adam Smith's trade principle stating that different countries vary in their natural or acquired capacity to produce specific goods more efficiently than any other country.

Comparative Advantage

David Ricardo's economic theory demonstrating that a nation should specialize in the export of goods it can produce at the lowest relative opportunity cost.

Countertrade

International trade transactions conducted wholly or partially through the exchange of goods and services rather than convertible currency.

Barter

A form of countertrade involving the direct and simultaneous exchange of goods or services between two parties without money.

Compensation (Countertrade)

A countertrade arrangement in which payment for exported goods is settled with a combination of cash and physical merchandise.

Counterpurchase

A contractual agreement where an exporter agrees to purchase a specified value of goods from the importing nation to ensure the proceeds stimulate the local economy.

Buyback

A countertrade agreement where a supplier of industrial equipment, technology, or factory construction accepts output produced by that facility as payment.

Switch Trading

A countertrade mechanism where a third-party specialized trading house buys countertrade credits or unwanted goods and resells them along a chain to settle bilateral debts.

Tax Haven

A foreign jurisdiction characterized by minimal or zero corporate tax rates and robust financial secrecy protections for external investors.

Shell Company

A non-operational corporate entity that exists only on paper, typically established to conceal asset ownership and ensure anonymity.

Holding Company

A corporate entity formed primarily to hold controlling shares and oversee the operations of other companies.

Nested Ownership

A corporate concealment strategy where a shell company in one jurisdiction is owned by a shell company in another to obscure true beneficial ownership.

Money Laundering

The illegal process of moving and converting illicit proceeds through financial channels to disguise their criminal origins and make them appear legitimate.

Smurfing

A money laundering tactic involving the division of large volumes of illicit cash into small, structured deposits to bypass financial reporting thresholds.

Common Law

A legal system derived from historical judicial rulings and case law, where legal precedents established by courts evolve over time.

Civil Law

The most widespread legal tradition globally, based entirely on comprehensive codified statutes where judges apply written law without establishing binding precedent.

Religious Law

A legal tradition wherein the governing laws of a nation are directly derived from religious texts and ecclesiastical doctrines (such as Sharia, Halakha, or Canon Law).

Authoritarian Legality

A system within totalitarian regimes where laws are dictated arbitrarily by governing officials, often resulting in inconsistent enforcement and no formal appeal procedures.

Customary Law

A legal framework rooted in long-standing community practices and traditions rather than enacted legislation or judicial precedents.

Extraterritoriality

The practice of a sovereign government applying its domestic laws and regulatory authority to business activities conducted beyond its physical borders.

Utility Patent

A legal right granted for a novel and useful technological process, method, or functional invention, typically valid for $20\,\text{years}$.

Design Patent

A legal protection granted for the unique ornamental, aesthetic, or visual appearance of a manufactured object, typically valid for $15\,\text{years}$.

Patent Troll

An entity that acquires patents without manufacturing products, using legal teams to litigate and extract licensing revenues from active producers.

Gray Market

The trade and sale of genuine, legally manufactured products through unauthorized or unofficial distribution channels.

Counterfeiting

The illegal manufacturing and distribution of imitation products packaged with forged trademarks to deceive consumers into believing they are genuine.

Sherman Antitrust Act of 1890

US federal legislation enacted to eliminate industrial trusts, prohibit monopolies, and penalize business agreements that restrain trade.

Predatory Pricing

An exclusionary business practice where a firm deliberately sells products below cost to drive competitors out of business, then increases prices once monopoly power is secured.

Tying

An anticompetitive sales practice in which a seller conditions the sale of a desired good on the buyer's agreement to purchase a separate, secondary product.

Cartel

A formal collusive agreement among competing producers or nations (such as OPEC) designed to control supply volumes, fix market prices, and restrict competition.

Corruption

The abuse of entrusted power or public office for illegitimate private gain.

Grand Corruption

Corrupt acts committed by high-level government officials involving substantial public resources, resulting in significant distortions of national economies.

Systemic Corruption

A deeply entrenched condition where corruption operates as a functional and fundamental mechanism of an entire macroeconomic society.

State Capture

A process where commercial interests and private corporations influence and shape national legislation so that corrupt practices are made formally legal.

Foreign Corrupt Practices Act (FCPA)

A United States federal statute that makes it illegal for US companies and foreign entities listed on US exchanges to bribe foreign officials to obtain or retain business.

Choke Point

A critical geographic passage, network node, or regulatory hub through which essential trade flows or resources travel and where disruption can paralyze global systems.