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Transcript
International Trade International Trade Exports goods and services that a country sells to other nations Imports goods and services that a country buys from other nations Reasons for International Trade Possession of Special Resources Economic Advantages Politics Special Resources Unique climate or terrain Valuable raw materials Skilled labor force Capital resources Favorable geographic location Economic Advantages Politics Economic Advantages Absolute advantage ability to produce a product at a lower cost control of the natural resource provide cheaper than the others Comparative advantage ability to produce a product more efficiently than another specialization concentration on what one can do best import the other goods it needs • Japan - electronics • Cuba - sugar Politics Human Rights Violations vs. Favored Nation Status Should we trade with those we have been to war with in the past? Embargoes and human needs Multi-National Corporations Enormous in size wide distribution of goods and services World wide economic decision making Trade Agreements Nafta North American Free Trade Agreement Involves U.S. Mexico and Canada. Reduction and eventual end to tariffs between each nation Gatt General agreement on trade and tariffs between 44 countries attempting to continue to reduce trade tariffs. Difficult because each nation tries to protect their key resources. Barriers to Trade Tariffs Tax placed on imports (a duty) revenue tariff • a tax to raise money for the government protective tariff • a tax to protect the home countries products over foreign products Import Quotas limits amount of a product which can be imported Reasons for Tariffs Favorable Balance of Trade Buy American Military Preparedness Infant Industries List the names of as many types of Foreign Currency as you can! Foreign Currency Exchange and the U.S. dollar An increase in the value of the dollar makes imports cheaper exports more expensive increases the trade deficit The value of the dollar has increased in the 1990s because of growth of the U.S. economy economic and political stability Tourism and the Exchange Rate It is very expensive for Americans to travel to Europe. the value of the dollar was down when compared to the Euro. The peso drops over 40% in 1 1/2 weeks during the 90’s United States Congress intervenes with large loan to stabilize Mexico’s economy Trade Deficits The United States has had a negative trade balance since 1976