1. International Trade & Globalization
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2. International Business 5e
What is Globalization?
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International Business 5e

3. International Business 5e
Globalization
The expansion of economic, political, and cultural processes to the point that they become global in scale and impact.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e

4. International Business 5e
Terms to Know
Imports – Bringing goods or services into a country for sale.
Exports – Sending goods or services to another country for sale.
Exchange rates – The price of a nation’s currency in terms of another nation’s currency.
Balance of Trade – The difference in value between a country’s imports and exports.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e

5. International Business 5e
International Trade
Purchase, sale, or exchange of goods and services across national borders
People have larger selection of products
Important engine for job creation
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International Business 5e

6. Economic Interdependence International Business 5e
A consequence of specialization or the division of labor. The participants in any economic system must be part of a trading network to obtain the products they cannot produce efficiently for themselves.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e

7. International Business 5e
Trade and World Output
World trade
80% merchandise
20% services
World output impacts trade
Growing output = growing trade
Sluggish output = sluggish trade
World trade grows faster
than world output
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e

8. International Business 5e
Terms to Know
Free Trade – International trade left to its natural course without tariffs, quotas, or other restrictions.
Tariff – Tax on imported goods or services.
Quota – A numerical limit on imports or exports.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e

9. International Business 5e
Terms to Know
Sanction – A trade penalty imposed by one nation onto one or more other nations.
Embargo – The partial or complete prohibition of commerce and trade with a particular country or a group of countries.
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International Business 5e

10. International Business 5e
World’s Top Exporters
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International Business 5e

11. Trade Patterns Merchandise trade among:
Western European trade is mostly intra-regional trade
Low- and middle-income nations
High-income nations
North America imports twice as much from Asia as it exports to Asia
High-income and low- and middle-income nations
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International Business 5e

12. International Business 5e
Who Trades with Whom?
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International Business 5e

13. Trade and the Dependent Nation
Total
dependence
Total
independence
Potential effects of dependence:
Infuses needed capital
Creates jobs and raises wages
Imports technology and skills
Economic problems transferred
Political turmoil can spill over
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International Business 5e

14. Absolute Advantage Riceland Tealand
Ability of a nation to produce a good more efficiently than any other nation (greater output using same or fewer resources)
1 resource unit = 1 ton rice or
1/5 ton tea
Riceland
Tealand
1 resource unit = 1/6 ton rice or
1/3 ton tea
Specialization and trade allows each to produce and consume more
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International Business 5e

15. Trade Gains: Absolute Advantage
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International Business 5e

16. Comparative Advantage
Inability of a nation to produce a good more efficiently than other nations, but an ability to produce that good more efficiently than it does any other good
1 resource unit = 1 ton rice or
1/2 ton tea
Riceland
Tealand
1 resource unit = 1/6 ton rice or
1/3 ton tea
Specialization and trade allow each to produce and consume more
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International Business 5e

17. Trade Gains: Comparative Advantage
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International Business 5e

18. International Business 5e
U.S. Imports
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International Business 5e

19. International Business 5e
U.S. Exports
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International Business 5e

20. International Business 5e
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International Business 5e

21. International Business 5e
U.S. Trading Partners
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International Business 5e

22. International Business 5e
U.S. Trade Balance
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International Business 5e

23. International Business 5e
NAFTA
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International Business 5e

24. International Business 5e
NAFTA
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International Business 5e

25. International Business 5e
Mapping U.S. Clusters
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International Business 5e

26. What does NC specialize in? International Business 5e
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International Business 5e

27. Research Triangle Park
7000 acres
Largest research park in the U.S.
170+ companies
39,000+ high-tech workers
22.5 million sq. ft. of built space
1,800 start-up companies created since 1970
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International Business 5e

28. International Business 5e
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e