Introduction To Business Ch 3

Front 1

absolute advantage

Back 1

The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product.

Front 2

balance of payments

Back 2

A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries.

Front 3

balance of trade

Back 3

The difference between the value of a country’s exports and the value of its imports during a specific time.

Front 4

buy-national regulations

Back 4

Government rules that give special privileges to domestic manufacturers and retailers.

Front 5

contract manufacturing

Back 5

The practice in which a foreign firm manufactures private-label goods under a domestic firm’s brand name.

Front 6

countertrade

Back 6

A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services.

Front 7

devaluation

Back 7

A lowering of the value of a nation’s currency relative to other currencies.

Front 8

direct foreign investment

Back 8

Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign country.

Front 9

dumping

Back 9

The practice of charging a lower price for a product in foreign markets than in the firm’s home market.

Front 10

embargo

Back 10

A total ban on imports or exports of a product.

Front 11

European integration

Back 11

The delegation of limited sovereignty by European Union member states to the EU so that common laws and policies can be created at the European level.

Front 12

European Union

Back 12

Trade agreement among 28 European nations.

Front 13

exchange controls

Back 13

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.

Front 14

exporting

Back 14

The practice of selling domestically produced goods to buyers in another country.

Front 15

exports

Back 15

Goods and services produced in one country and sold to other countries.

Front 16

floating exchange rates

Back 16

A system in which prices of currencies move up and down based upon the demand for and supply of the various currencies.

Front 17

free trade

Back 17

The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions.

Front 18

free-trade zone

Back 18

An area where the nations allow free, or almost free, trade among each other while imposing tariffs on goods of nations outside the zone.

Front 19

G20

Back 19

Informal group that brings together 19 countries and the European Union—the 20 leading economies in the world.

Front 20

global vision

Back 20

The ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers.

Front 21

import quota

Back 21

A limit on the quantity of a certain good that can be imported.

Front 22

imports

Back 22

Goods and services that are bought from other countries.

Front 23

infrastructure

Back 23

The basic institutions and public facilities upon which an economy’s development depends.

Front 24

International Monetary Fund (IMF)

Back 24

An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations.

Front 25

joint venture

Back 25

An agreement in which a domestic firm buys part of a foreign firm or joins with a foreign firm to create a new entity.

Front 26

licensing

Back 26

The legal process whereby a firm agrees to allow another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty.

Front 27

Mercosur

Back 27

Trade agreement between Peru, Brazil, Argentina, Uruguay, and Paraguay.

Front 28

multinational corporations

Back 28

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.

Front 29

nationalism

Back 29

A sense of national consciousness that boosts the culture and interests of one country over those of all other countries.

Front 30

North American Free Trade Agreement (NAFTA)

Back 30

A 1993 agreement creating a free-trade zone including Canada, Mexico, and the United States.

Front 31

outsourcing

Back 31

Sending work functions to another country, resulting in domestic workers losing their jobs.

Front 32

preferential tariff

Back 32

A tariff that is lower for some nations than for others.

Front 33

principle of comparative advantage

Back 33

The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.

Front 34

protectionism

Back 34

The policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas.

Front 35

protective tariffs

Back 35

Tariffs that are imposed in order to make imports less attractive to buyers than domestic products are.

Front 36

tariff

Back 36

A tax imposed on imported goods.

Front 37

trade deficit

Back 37

An unfavorable balance of trade that occurs when a country imports more than it exports.

Front 38

trade surplus

Back 38

A favorable balance of trade that occurs when a country exports more than it imports.

Front 39

Uruguay Round

Back 39

A 1994 agreement originally signed by 117 nations to lower trade barriers worldwide.

Front 40

World Bank

Back 40

An international bank that offers low-interest loans, as well as advice and information, to developing nations.

Front 41

World Trade Organization (WTO)

Back 41

An organization established by the Uruguay Round in 1994 to oversee international trade, reduce trade barriers, and resolve disputes among member nations.