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25 Cards in this Set

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  • Back

New trade theory

Suggests that nations may benefit from trade, even when they do not differ in resource endowments or technology, and that a country may predominate in the export of a good, simply because it was lucky enough to have one or more firms among the first to produce that good

Economies of scale

A proportionate saving in costs gained by an increased level of production

Ownership advantages

Advantages that arise from the accumulation of intangible assets, technological capacities or innovations

Location advantages

Advantages that arise from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets

Internalisation advantages

Factors associated with a firm deciding to keep the production of a good or service within the firm rather that outsourcing it to other firms

Market economy

An economic system in which the interaction of individual decision makers on questions of supply and demand determines the quantity in which goods and services are provided

Centrally planned economy

The assumption is that the government is a better judge of how resources should be allocated than is the market

Mixed economies

In some cases, the degree of government intervention is difficult to quantify

Macro-economic indicators

Geography, population, income, industrial structure

Culture is

Learned, shared, adaptive, integrated

Competitive advantage

the practical outcome of cultural understanding and competency

Practical outcome of cultural

Cost savings, access to quality staff, marketing advantage, different problem solving approaches, effective management control

High cultural context

Communicate as much by the context as the content.

Low cultural Context

Communicate explicitly and more overtly via the content of the message

Political motives for government intervention

Production of jobs, national security, retaliation, protection of consumer welfare, maintain cultural differences

Economic motives for government intervention

Infant industry agreement, strategic trade policy

Infant industry agreement

This calls for the protection of an emerging industry until it becomes efficient enough to compete in the world market

Strategic trade policy

Government policy aimed at helping the country's domestic firms gain first-mover advantages or overcome the first-mover advantages of foreign firms in global markets that will profitably support only a few firms

Foreign direct investment

When a firm invests resources in business activities outside its home country, giving it some control over those activities.

First-mover advantage

The economic and strategic advantages that accrue to early entrants into an industry

Common market

A group of countries committed to eliminating trade barriers, adopting a common external trade policy, and allowing factors of production to move freely between members

Comparative advantage

The theory that countries should specialise in the production of goods and services they can produce relatively more efficiently

Country of origin effects

The extent to which the place of a product's manufacturing influences its evaluations in the market

External economies

Cost efficiencies in production and marketing that a firm employs as a result of the action of others external to the firm


The shift towards a more integrated and interdependent world economy