1. Introduction of International trade
Definition
Benefits
Theories
Group Members：
伦雯靖 沈墨香 陈晓卿
章彧 周思均 陈逸菲
陈鸣芝 陈晓天 邓培宁
吴潇贤

2. Definition of international trade
International trade, also known as world trade, foreign trade or overseas trade, is the fair and deliberate exchange of goods and services across national boundaries.
It concerns trade operations of both import and export and includes the purchase and sale of both visible and invisible goods,
Firms must adapt to uncontrollable environment of international
marketing by adjusting the marketing mix (product, price,
promotion, and distribution)

3. The Fields of International Trade
Foreign manufacturing
The growing services industry in areas such as transportation, tourism, banking, advertising, constructing, retailing, wholesaling, and mass communications.
Private---- in the case of private firms the transactions are for profit.
Governmental --- government-sponsored activities in international business may or may not have a profit orientation.

4. Foreign languages
Foreign laws,
Customs and
regulations.

6. To expand sales
Companies’ sales are dependent on two factors: the consumers’ interest in their products or services and the customers’ willingness and ability to buy them.
Companies may try to increase their sales by entering into international markets.

7. To acquire resources…
Manufactures and distributors seek out products, services and components produced in foreign countries.
They also look for foreign capital and technologies they can use at home. Sometimes they do this to reduce their costs.
Sometimes a company buys abroad in order to acquire a service not readily available within the company’s home country.

8. To diversify sources and supplies…
Companies usually prefer to avoid wild swings in their sales and profits; so they seek out foreign markets as a means to this end.
Thus while sales decrease in one country that is experiencing a recession, they increase in another that is undergoing recovery.

9. Benefits of international trade
Gains and benefits

10. Then Why All the Opposition to Trade?
Recall one of the Ten Principles: Trade can make everyone better off.
The winners from trade could compensate the losers and still be better off.
Yet, such compensation rarely occurs.
The losses are often highly concentrated among a small group of people, who feel them acutely.
The gains are often spread thinly over many people, who may not see how trade benefits them.
Hence, the losers have more incentive to organize and lobby for restrictions on trade.

11. Major categories of international trade
Merchandise exports and imports
Service exports and imports
Investments

12. Related Trade Theories
Mercantilism
Absolute advantage
Comparative advantage
Factor endowments
Leontief paradox
Product life-cycle theory

13. Mercantilism
Mercantilists required their governments to restrict import while try to export so as to maintain trade surplus as much as possible.

14. Major viewpoints of Mercantilism
In order to do so, governments established monopolies over their countries’ trade.
Restrictions were imposed on most imports, and many exports received subsidies.
Favorable balance of trade indicates that a country is exporting more than it is importing. An unfavorable balance of trade indicates a trade deficit.

15. Absolute advantage
When country A can produce a unit of goods with less labor than country B, we say that country A has an absolute advantage in producing that goods.
In a two-country-two-product world, one country can product a good using fewer resources, whereas the other country has absolute cost advantage in the other product.
For nations to benefit from the international trade, each nation must have a kind of goods that it is absolutely more efficient in producing than its trading partner.

16. Absolute advantage

17. Comparative advantage
A country specializes in the production of those goods it produces most efficiently and to buy the goods that it produces less efficiently from other countries, even if this means buying goods from other countries that it could produce more efficiently itself.
A country has a comparative advantage in producing a good if the opportunity cost of producing that goods in terms of other goods is lower in that country than it is in other countries.

18. Comparative advantage

19. People --- Adam Smith
He was one of the most influential classical economists, formed the theory of absolute advantage, which represent the first stage in the development of modern trade theories.
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