Chapter Five Powerpoint Presentation

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    27-May-2015

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  • 1. Chapter 5 Learning Objectives
    • After studying this chapter you should be able to:
  • Use the resource- and institution-based views to explain why nations trade
  • Understand classical and modern theories of international trade
  • Realize the importance of political and economic realities governing international trade
  • Participate in two leading debates on international trade
  • Draw implications for action

2. Trade terms

  • exporting -Selling abroad
  • importing -Buying from abroad
  • merchandise physical goods
  • services -acts, efforts, or performances exchanged from producer to user without ownership rights
  • trade deficit -An economic condition in which a nation imports more than it exports
  • trade surplus -An economic condition
  • in which a nation exports more than it imports
  • balance of trade -The aggregation of buying (importing) and selling (exporting) by both sides leads to the country-level trade surplus or deficit.

3. 4. REALITIES OF INTERNATIONAL TRADE

  • import tariff-A tax imposed on imports
  • nontariff barriers( NTBs )restrict imports but are not in the usual form of a tariff:
  • subsidies, import quotas, export restraints, local content requirements, administrative policies, antidumping duties, over-elaborate or inadequate infrastructure, buy national" policy, bribery and corruption, unfair customs procedures, restrictive licenses, etc.
  • deadweight costs -Net losses that occur in an economy as the result of tariffs

5. REALITIES OF INTERNATIONAL TRADE

  • import quotas -Restrictions on the quantity
  • of imports for specific period of time
  • voluntary export restraints (VRAs) -superficial policy to show that exporting countriesvoluntarily
  • agree to restrict their exports
  • local content requirements -A requirement that a certain - proportion of the value of the goods made in one country originate from that country.
  • antidumping duties -Costs levied on imports that have been dumped (selling below costs or below exporters home market price to unfairly drive domestic firms out of business)

6. 7.