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Chapter 3

QuestionAnswer
International business All business activities that involve exchanges across national boundaries
Absolute advantage The ability to produce a specific product more efficiently than any other nation
Comparative advantage The ability to produce a specific product more efficiently than any other product
Exporting Selling and shipping raw materials or products to other nations
Importing Purchasing raw materials or products in other nations and bringing them into one’s own country
Balance of trade The total value of a nation’s exports minus the total value of its imports over some period of time
Trade deficit A negative (unfavorable) balance of trade—imports exceed exports in value
Balance of payments The total flow of money into a country minus the total flow of money out of that country over a period of time
Import duty (tariff) A tax levied on a particular foreign product entering a country
Dumping The exportation of large quantities of a product at a price lower than that of the same product in the home market
Nontariff barriers A nontax measures imposed by a government to favor domestic over foreign suppliers
Import quota A limit on the amount of a particular good that may be imported during a given time
Embargo A complete halt to trading with a particular nation or in a particular product
Foreign exchange control A restriction on amount of foreign currency that can be purchased or sold
Currency devaluation The reduction of the value of a nation’s currency relative to the currencies of other countries
General Agreement of Tariffs and Trade (GATT) International organization of 153 nations dedicated to reducing or eliminating tariffs and other trade barriers
World Trade Organization (WTO) Powerful successor to GATT that incorporates trade in goods, services, and ideas
Economic community An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies
Licensing A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation
Letter of credit Issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary
Bill of lading Issued by a transport carrier to an exporter to prove merchandise has been shipped
Draft Issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer’s bank
Strategic alliances Partnerships formed to create competitive advantage on a worldwide basis
Trading companies Firms that provide a link between buyers and sellers in different countries
Countertrade An international barter transaction
Multinational enterprise A firm that operates on a worldwide scale without ties to any specific nation or region
The Export-Import Bank of the United States (Eximbank) An independent agency of the U.S. government whose function it is to assist in financing the exports of American firms
Multilateral Development Bank (MDB) An internationally supported bank that provides loans to developing countries to help them grow
The International Monetary Fund (IMF) An international bank with 186 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits
Created by: 100004996631600
 

 



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