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importing
buying products from another country
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exporting
selling products to another country
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free trade
the movement of goods and services among nations without political or economic barriers
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comparative advantage
- theory that states that a country should sell to other countries those products that it produces most efficiently,
- and buy from other countries those products that it cannot produce as effectivey or efficiently
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absolute advantage
the advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries
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balance of trade
the total value of a nation's exports compared to its imports measured over a particular period
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trade surplus
a favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports
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trade deficit
an unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports
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balance of payments
the difference between money coming into a country (from exorts) and money leaving the country (for imports) plus money flows from ohter factors such as tourism, foreign aid, military expenditures, and foreign nvestment
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dumping
selling products in a foreign country at lower prices than those charged in the producing country
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licensing
a global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produe its product in exchange for a fee (a royalty)
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contract manufacturing
a foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark, part of the broad category of outsourcing
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joint venture
a partership in which two or more companies (often from different comapnies) join to undertake a moajor project
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strategic alliance
a long term partnernership between two or more companies established to help each company build competitive market advantages
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foreign direct investment (FDI)
the buying of permanent property and businesses in foregin nations
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foreign subsidiary
a company owned by another company in another country, called the parent company
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multinational corporation
an organization that manufactures and markets products in many different countris and has multinational stock ownership and multinational management
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sovereign wealth funds(SWF)
investment funds controlled by governents holding large stakes in foreign companies
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exchange rate
the value of one nation's currency relative to currencies of other countries
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devaluation
lowering the value of a nation's currency relative to other countries
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countertrading
a complex form of bartering in which several countries may be invoved, each trading goods for goods or services for services
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trade protectionism
the use of govt regulations to limit the import of goods and services
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tariff
a tax imposed on imports
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import quota
a limit on the number of products in certain categories that a nation can import
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embargo
a complete ban on import or export of a certain product, or the stopping of all trade with a particular country
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General Agreement on Tariffs and Trde (GATT)
a 1948 agreement that established an international forum for negotiating mutual reductios in trade restrictions
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World Trade Organization(WTO)
The international organization that replaced General Agreement on Tariffs and Trade (GATT), and was assigned the duty to mediate trade disputes among nations
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common market
a regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. i.e., the European Union
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North American Free Trade Agreement (NAFTA)
Agreement that created a free-trade area among the United States, Canada, and Mexico
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