What is Trade ppt
Chapter Overview
Title: Elements of International Trade
Source: Fundamentals of International Business, 2nd Edition (Copyright © 2018)
Key Terms
Business: Organization producing goods/services for profit.
Transaction: Exchange of value.
Domestic Business: Transactions within a country.
International Business: Transactions between businesses in different countries.
Trade: Exchange of goods/services between countries.
Interdependence: Reliance on others for goods/services.
Trading Partner: A country involved in trade with another.
Imports/Exports: Goods/services brought in/out of a country.
Balance of Trade: Difference between exports and imports.
Trade Surplus/Deficit: Surplus when exports > imports; deficit when imports > exports.
Foreign Direct Investment (FDI): Investment in businesses in another country.
Globalization: Integration of economies and cultures through trade and investment.
Protectionism: Government actions to restrict imports and support domestic industries.
Chapter Objectives
Understand key concepts in international business.
Explain evolution of Canada’s international relationships.
Describe the interdependence developed through international business.
Evaluate international trade benefits/drawbacks for Canada.
Comprehend globalization's impact on international business.
Analyze how the global market impacts consumer demand.
Introduction to Business and Trade
Business Definition: Organization that provides goods/services for profit.
Transactions involve exchanges of value.
Domestic Business: Operates mainly within the country.
International Business
Involves economic systems of transactions between countries.
Can include companies, government, and non-profits.
Methods to engage internationally:
Exporting: Selling to another country (e.g., Canada Goose).
Importing: Buying from another country (e.g., Canadian Tire).
Investing: Involvement in foreign business (e.g., Fiat-Chrysler).
Retail/Distribution: Operating stores overseas (e.g., Amazon).
Manufacturing: Owning plants abroad (e.g., Magna).
Why Trade?
Trade allows acquiring goods unavailable domestically.
Interdependence grows through trade relationships.
Countries engaging in these relationships are trading partners.
Balance of Trade
Difference between exports and imports.
Trade Surplus: Exports > imports.
Trade Deficit: Imports > exports.
History of Canadian Trade
Trading Partners: Key relationships with global regions.
Europe: Major partner; growth expected (CETA).
United States: Largest consumer market, biggest partner.
Asia: Key players include Japan (2nd largest), China (largest), South Korea, and India.
Mexico: Top 5 partner; trade deficit increase.
South America: Strong ties with Brazil; issues with Venezuela; agreements with Chile and Colombia.
Africa: Strong ties with South Africa and Morocco.
Advantages of International Trade
Product Diversity: Wider variety of goods.
Lower Prices: Competitive pricing from different markets.
Foreign Markets: Access to new consumer bases.
Auto Industry: Significant contributor to the economy.
Cultural Development: Enhanced through international exchange.
Foreign Investment Growth: Increases in FDI and portfolio investment.
Disadvantages of International Trade
Cultural Impact: Loss of cultural identity (e.g., Americanization).
Foreign Ownership Concerns: Job losses, revenue outflow, reduced local economic control.
Globalization Overview
Definition: Integration of economies and cultures via global communication and trade.
Effects of Globalization
Positive:
Outsourcing and innovation.
Lower prices and poverty reduction.
Better job opportunities and resource utilization.
Negative:
Job losses and productivity decline.
Exploitation of labor and environmental concerns.
Rising income gaps and multinational influence.
Social and Political Issues of Globalization
Challenges include financial crises, data leaks, and rising populism and protectionism.