How the World of Business Works Global Trade How the World of Business Works

Nations trade because… Economic gain, make money $$ Get access to new markets Develop international relationships Help allies Creates jobs at home Take advantage of our special situation Comparative Advantage Resources, Skills But, not all nations benefit equally… Some gain more $$ than others, depends on WHAT they trade Tech = ↑ $$ Agriculture = ↓ $$

How do nations seek advantage? Specialization = Produce what we are best at & have resources for Gov’t creates barriers & advantages such as… Tariffs = tax on imports Subsidy = $$ paid to help their own industries Quotas = Limits on imports

How did Today’s Global Trade System Emerge? FREE TRADE movement = open competition, no gov’t barriers Protectionism failed in 1930s >> Great Depression, led to WW2 WW2 brought change: US gave $ / supplies, rebuild world = US #1 Rebuilding = ↑ US $$ , economic boom IMF + World Bank created = access to $$ for nation Trading Blocs created, created allies & partners GATT = ↑ co-operation between nations

What is the global export trend. Why What is the global export trend? Why? What is the global impact on industry?

Globalization: What? Good and Bad? THE GOOD World Economy ↑ Prices of goods ↓ Opportunity ↑ Developing Nations ↑ $$ THE BAD US dominance ↓↓ US trade deficit & debt ↑↑ Industry Winners & Losers Job Security ↓↓ Culture Blending ??

How do Nations Manage Global Trade? Trade Agreements BILATERAL = 2 Nations MULTILATERAL = 3+ Nations REGIONAL = Continent, Area Specialize NAFTA, EU = No Tariffs, etc. GLOBAL = WTO = 150+ nations ↓ barriers, dumping ↑ fairness, opportunity for all Fair Trade Movement = Opportunity for Big & Small Nations, Rich & Poorer Nations ↓Gov’t Subsidy, Tariff Wants EQUAL CHANCES for all to benefit

What path should the US follow?