Download The Global Marketplace

• international trade
• protectionism
• imports
• World Trade
• exports
• balance of trade
• free trade
Organization (WTO)
• North American Free
Trade Agreement
(NAFTA)
• tariff
• European Union (EU)
• quota
• adaptation
• embargo
• customization
• globalization
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Involves the exchange of goods and services
between nations.
Goods and services purchased from other
countries are called imports.
Goods and services sold to other countries
are called exports.
Economic interdependence happens because
each country possesses unique resources and
capabilities (labor force, raw materials,
capital, etc.)
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Absolute advantage: a country has special
natural resources or capabilities that allow
it to produce a given commodity at a lower
cost than any other nation in the world.
Comparative advantage: refers to the value
that a nation gains by selling the goods it
produces more efficiently than other goods.
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Producers have the opportunity to grow and
expand into other countries (Coca-Cola
derives 80% of its total revenues from foreign
operations.)
Workers have more opportunities. Four
million U.S. jobs are linked to foreign
investment.
Nations as a whole benefit from international
trade-increase the standard of living.
 Consumers
benefit from the
competition generated by foreign
companies.
◦ Higher quality
◦ Lower prices
◦ Wider selection
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Disadvantages include the inability for
domestic companies to compete (cheaper
labor, raw materials)
What are some implications of an unfavorable
(negative) balance of trade?
 As a debtor nation, the U.S. relies on foreign
investors who buy U.S securities.
 Another negative effect of a negative balance
of trade can be increased unemployment.
http://useconomy.about.com/od/glossary/g/s
ecurities.htm
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Tariffs are taxes on imports. They can be
either revenue generating or protective.
Revenue producing tariffs were used as a
primary source of income before income
taxes were established in 1913.
Quotas are limits on either the quantity or
monetary value of a product that may be
imported.
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Embargoes are total bans on specific goods
coming into and leaving a country.
Embargoes are often used for political
reasons.
http://en.wikipedia.org/wiki/Embargo
http://usforeignpolicy.about.com/od/introtofo
reignpolicy/a/what-are-sanctions.htm
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The practice of protecting domestic products
by restricting imports or making them too
expensive for consumers to buy (by imposing
tariffs, quotas, and embargoes).
Proponents of a pure market system oppose
protectionism.
Labor unions favor it to protect domestic
jobs.
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WTO: A global coalition of nations that make the
rules governing international trade. It was formed
in 1995 as the successor to the General Agreement
on Tariffs and Trade (GATT).
NAFTA: Went into effect January 1, 1994.
Eliminated trade barriers and investment
restrictions between U.S., Canada, and Mexico.
EU: Is Europe’s trading bloc. In 1992, the
Maastricht Treaty created the EU and established
free trade among its member nations. The treaty
also created a single European currency, the euro,
and a central bank.
globalization
 Selling the same product and using the same
promotion methods in all countries.
adaptation
 A company’s use of an existing product or
promotion from which changes are made to better
suit the characteristics of a country or region.
customization
 Creating specifically designed products or
promotions for certain countries or regions.
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http://en.wikipedia.org/wiki/List_of_countrie
s_with_McDonald%27s_franchises
http://www.mcdonalds.com.gt/
http://www.mcdonaldsegypt.com/loader.htm
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