1. International Trade

2. Key Terms Economic Interdependence- because most nations are not self-sufficient, they must trade with other nations. Nations rely on each other for goods & services. Economic Interdependence- because most nations are not self-sufficient, they must trade with other nations. Nations rely on each other for goods & services. U.S. Imports: VCR’s, Rubber, Bananas, Coffee, Cars, Travel, Clothing, Consumer Electronics U.S. Imports: VCR’s, Rubber, Bananas, Coffee, Cars, Travel, Clothing, Consumer Electronics U.S. Exports: Travel, Industrial Machinery, Cars, Plastics, Airplanes, Grain, Royalties on music/movies U.S. Exports: Travel, Industrial Machinery, Cars, Plastics, Airplanes, Grain, Royalties on music/movies

3. Key Terms Absolute Advantage- occurs when a country has special resources or capabilities that allow it to produce an item more efficiently and at a lower cost than all other nations. Absolute Advantage- occurs when a country has special resources or capabilities that allow it to produce an item more efficiently and at a lower cost than all other nations. Example: China producing Silk Example: China producing Silk Comparative Advantage- a value that a nation gains by selling the goods it produces more efficiently than most other nations, with a lower opportunity cost. Comparative Advantage- a value that a nation gains by selling the goods it produces more efficiently than most other nations, with a lower opportunity cost. Examples: Colombia producing coffee, Japan producing steel and electronics Examples: Colombia producing coffee, Japan producing steel and electronics

4. International Trade Must Consider: Currency exchange rates Currency exchange rates Example: 1U.S. Dollar =.7574 Euro Example: 1U.S. Dollar =.7574 Euro 1 Dollar = 83.345 yen, 29.2123 Rubles, 12.6404 pesos 1 Dollar = 83.345 yen, 29.2123 Rubles, 12.6404 pesos Distribution of Goods Distribution of Goods Infrastructure- the system of roadways, waterways, and railways, as well as systems for technology. Infrastructure- the system of roadways, waterways, and railways, as well as systems for technology. Globalization: Auto Industry C:\Documents and Settings\mdiamond\My Documents\My Videos\RealPlayer Downloads\The Globalization of the Automobile Industry.flv Globalization: Auto Industry C:\Documents and Settings\mdiamond\My Documents\My Videos\RealPlayer Downloads\The Globalization of the Automobile Industry.flv C:\Documents and Settings\mdiamond\My Documents\My Videos\RealPlayer Downloads\The Globalization of the Automobile Industry.flv C:\Documents and Settings\mdiamond\My Documents\My Videos\RealPlayer Downloads\The Globalization of the Automobile Industry.flv

5. Additional Considerations: Culture – set of beliefs, customs and attitudes of a distinct group of people. Including: Culture – set of beliefs, customs and attitudes of a distinct group of people. Including: Values – strongly held concepts that are present in a culture. Example: U.S. values freedom. Values – strongly held concepts that are present in a culture. Example: U.S. values freedom. Norms – social rules that affect behavior and actions. Examples: are men & women equal? Greeting People: Bow vs. Handshake vs. kiss? Norms – social rules that affect behavior and actions. Examples: are men & women equal? Greeting People: Bow vs. Handshake vs. kiss? Folkways & mores – cultural customs that affect how people act socially. Example: If you’re invited to dinner at 7:00, what time do you show up? U.S. – 7:00, Great Britain – 7:30 or 8:00, Argentina – after 8:00, in Ethiopia - maybe today, maybe tomorrow Folkways & mores – cultural customs that affect how people act socially. Example: If you’re invited to dinner at 7:00, what time do you show up? U.S. – 7:00, Great Britain – 7:30 or 8:00, Argentina – after 8:00, in Ethiopia - maybe today, maybe tomorrow Foreign Exchange Students video Foreign Exchange Students video Foreign Exchange Students video Foreign Exchange Students video

6. Additional Considerations: Social Institutions – the organizations that represent the patterns of activity that express the culture of a country. Social Institutions – the organizations that represent the patterns of activity that express the culture of a country. Educational Systems – access to education for all Educational Systems – access to education for all Religious Organizations Religious Organizations Class Systems & mobility between classes Class Systems & mobility between classes Language & Communication Language & Communication Nonverbal cultural factors Nonverbal cultural factors Numbers, emblems, personal dress, colors, smells Numbers, emblems, personal dress, colors, smells Eye contact and gestures Eye contact and gestures

7. Color Meanings by Culture

10. Additional Considerations: Business Behaviors Business Behaviors Religious Holidays Religious Holidays Gift Giving Gift Giving In Japan & Asia, good manners dictate bringing a gift when meeting a business partner. However, don’t open the gift; it’s the gesture that counts, not the gift itself. In Japan & Asia, good manners dictate bringing a gift when meeting a business partner. However, don’t open the gift; it’s the gesture that counts, not the gift itself. In the U.S., gifts can be perceived as bribes and may be considered unethical In the U.S., gifts can be perceived as bribes and may be considered unethical Meeting Protocols – how meetings are conducted Meeting Protocols – how meetings are conducted Giving business cards is common in Japan Giving business cards is common in Japan Business Entertainment – what type of entertainment is acceptable and can business be discussed during entertainment. Business Entertainment – what type of entertainment is acceptable and can business be discussed during entertainment.

11. Balance of Trade Difference in the total value of goods imported versus the total value of goods exported. Difference in the total value of goods imported versus the total value of goods exported. United States is the worlds largest importer of goods and one of the largest exporter of goods. United States is the worlds largest importer of goods and one of the largest exporter of goods. Trade Surplus = Imports < Exports Trade Surplus = Imports < Exports Trade Deficit = Imports > Exports Trade Deficit = Imports > Exports Current Balance of Trade: Current Balance of Trade: $40 billion deficit $40 billion deficit

12. U.S. Trade Deficits

13. Barriers to International Trade Tariffs – taxes on imported goods. Countries use tariffs to protect domestic industries (protectionism) Tariffs – taxes on imported goods. Countries use tariffs to protect domestic industries (protectionism) Quotas – limits on the quantities of a good that can be imported. Example: Cars from Japan Quotas – limits on the quantities of a good that can be imported. Example: Cars from Japan Embargo – total ban on specific goods or trade from a particular nation, done for health or political reasons. Embargo – total ban on specific goods or trade from a particular nation, done for health or political reasons. Current Embargos? Cuba & North Korea Current Embargos? Cuba & North Korea

14. Trade Supports Financial, advisory, or other assistance to encourage trade with other nations. Financial, advisory, or other assistance to encourage trade with other nations. Types: Types: Most Favored Nation Status – reduces tariffs & quotas to encourage trade. Most Favored Nation Status – reduces tariffs & quotas to encourage trade. Foreign Trade Zones – areas of a country where foreign businesses benefit from reduced tariffs. Foreign Trade Zones – areas of a country where foreign businesses benefit from reduced tariffs. International Monetary Fund – multinational agency to help stabilize currency exchange rates. International Monetary Fund – multinational agency to help stabilize currency exchange rates. Trade Agreements: NAFTA, GATT, European Union Trade Agreements: NAFTA, GATT, European Union