1. International Trade & Globalization Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

2. International Business 5e Chapter 5 - 2 What is Globalization?

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

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

5. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 5 International Trade Purchase, sale, or exchange of goods and services across national borders People have larger selection of products Important engine for job creation

6. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 6 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.

7. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 7 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

8. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 8 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.

9. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 9 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.

10. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 10 World’s Top Exporters

11. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 11 Trade Patterns Merchandise trade among: Western European trade is mostly intra- regional trade Low- and middle-income nations High-income nations High-income and low- and middle-income nations North America imports twice as much from Asia as it exports to Asia

12. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 12 Who Trades with Whom?

13. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 13 Trade and the Dependent Nation Total dependence Potential effects of dependence: + Infuses needed capital + Creates jobs and raises wages + Imports technology and skills – Economic problems transferred – Political turmoil can spill over Total independence

14. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 14 Absolute Advantage Ability of a nation to produce a good more efficiently than any other nation (greater output using same or fewer resources) Specialization and trade allows each to produce and consume more 1 resource unit = 1 ton rice or 1/5 ton tea Riceland 1 resource unit = 1/6 ton rice or 1/3 ton tea Tealand

15. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 15 Trade Gains: Absolute Advantage

16. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 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 Specialization and trade allow each to produce and consume more 1 resource unit = 1 ton rice or 1/2 ton tea Riceland 1 resource unit = 1/6 ton rice or 1/3 ton tea Tealand

17. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 17 Trade Gains: Comparative Advantage

18. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 18

19. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 19

20. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 20

21. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 21

22. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 22

23. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 23 NAFTA

24. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 24 NAFTA

25. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 25 Mapping U.S. Clusters

26. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 26 http://www.netstate.com/economy/nc_economy.htm

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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 5 - 27

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