International Business - Chapter 5

Front 1

International Trade

Back 1

the purchase, sale, or exchange of goods and services across national borders

Front 2

Mercantilism

Back 2

trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports

Front 3

trade surplus

Back 3

condition that results when the value of a nation's exports is greater that the value of its imports

Front 4

trade deficit

Back 4

condition that results when the value of a country's imports is greater than the value of its exports

Front 5

absolute advantage

Back 5

ability of a nation to produce a good more efficiently than any other nation

Front 6

comparative advantage

Back 6

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

Front 7

factor proportions theory

Back 7

trade theory holding that countries produce and export goods that require resources that are abundant and import goods that require resources in short supply

Front 8

international product life cycle theory

Back 8

theory holding that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle

Front 9

new trade theory

Back 9

trade theory holding that
1) there are gains to be made from specialization and increasing economies of scale
2) the companies first to market can create barriers to entry
3) government may play a role in assisting its home companies

Front 10

first-mover advantage

Back 10

economic and strategic advantage gained by being the first company to enter an industry

Front 11

national competitive advantage theory

Back 11

trade theory holding that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade

Front 12

free trade

Back 12

pattern of imports and exports that occurs in the absence of trade barriers

Front 13

subsidy

Back 13

financial assistance to domestic producers in the form of cash payments, low-interest loans, tax, breaks, product price supports, or some other form

Front 14

foreign trade zone (FTZ)

Back 14

designated geographic region in which merchandise is allowed to pass through with lower customs duties and/or fewer customs procedures

Front 15

tariff

Back 15

government tax levied on a product as it enters or leaves a country

Front 16

ad valorem tariff

Back 16

tariff levied as a percentage of the state price of an imported product

Front 17

specific tariff

Back 17

tariff levied as a specific fee for each unit of an imported product

Front 18

compound tariff

Back 18

tariff levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit

Front 19

quota

Back 19

restriction on the amount of a good that can enter or leave a country during a certain period of time

Front 20

voluntary export restraint (VER)

Back 20

unique version of export quota that a nation imposes on its exports, usually at the request of an importing nation

Front 21

tariff-quota

Back 21

lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota

Front 22

embargo

Back 22

complete ban on trade in one or more products with a particular country

Front 23

administrative delays

Back 23

regulatory controls or bureaucratic rules designed to impair the flow of imports into a country

Front 24

currency controls

Back 24

restrictions on the convertibility of a currency into other currencies

Front 25

normal trade relations

Back 25

requirement that WTO members extend the same favorable terms of trade to all members that they extend to any single member

Front 26

dumping

Back 26

exporting a product at a price either lower than the price that the product normall commands in its domestic market or lower than the cost of production

Front 27

antidumping duty

Back 27

additional tariff placed on an imported product that a nation believes is being dumped on its market

Front 28

countervailing duty

Back 28

additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy