Economic globalization

The increasing integration and interdependence of national economies around the world

Economies of scale

Savings from buying parts and materials, manufacturing, or marketing in large quantities

Benefits of international trading

Focusing on relative strengths Expanding markets Pursuing economies of scale Acquiring materials, goods, and services Keeping up with customers Keeping up with competitors

Balance of trade

Total value of the products a nation exports minus the total value of the products it imports, over some period of time.

Trade deficit

An unfavorable trade balance is created when a country imports more than it exports

Balance of payments

The sum of all payments a country receives from other countries minus the sum of all payments it makes to the other countries, over some specified period of time

Exchange rate

The rate at which the money of one country is traded for the money of another

Free trade

International trade unencumbered by restrictive measures. Supporters of generally acknowledge that it produces winners and losers but that the winners gain more than the losers lose, so the net effect is positive.

Protectionism

Government policies aimed at shielding a country’s industries from foreign competition

Tariffs

Taxes levied on imports

Import quotas

Limits placed on the quantity of imports a nation will allow for a specific product

Embargo

A total ban on trade with a particular nation (a sanction) or of a particular product

Export subsidies

A form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the global market

Dumping

Charging less than the actual cost or less than the home-country price for goods sold in other countries

World trade organization (W T O)

Permanent forum for negotiating, implementing, and monitoring international trade procedures, and for mediating trade disputes among the 160 plus member countries

International monetary fund (I M F)

Formed to monitor global financial developments, provide technical advice and training, provide short-term loans to countries that are unable to meet their financial obligations, and work to alleviate poverty in developing economies

World Bank

Founded to finance reconstruction after World War II and is now involved in hundreds of projects around the world aimed at addressing poverty, health, education, and other concerns in developing countries. Is a United Nations agency owned by its 187 member nations

Trading blocs

Organizations of nations that remove trade barriers among their member countries and establish uniform barriers to trade with nonmember nations

North american free trade agreement (N A F T A)

Formed by the united states, canada, and mexico to pave the way for the free flow of goods, services, and capital within the bloc through the phased elimination of tariffs and quotas

European union (E U)

Constitutes more than two dozen countries and a half billion people. Now accounts for the world’s largest economy. E U nations have eliminated hundreds of local regulations, variations in product standards, and protectionist measures that once limited trade among member countries.

Asia-pacific economic cooperation (A P E C)

An organization of 21 countries working to liberalize trade in the pacific rim. Has a long-term goal of liberalizing and simplifying trade and investment among member countries and helping the region as a whole achieve sustainable economic growth

Culture

A shared system of symbols, beliefs, attitudes, values, expectations, and norms for behavior

Stereotyping

Assigning a wide range of generalized attributes, which are often superficial or even false, to an individual based on his or her membership to a particular culture or social group

Ethnocentrism

Judging all other groups according to the standards, behaviors, and customs of one’s own group

Cultural pluralism

The practice of accepting multiple cultures on their own terms

Tax haven

A country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business

Importing

Purchasing goods or services from another country and bringing them into one’s own country

Exporting

Selling and shipping goods or services to another country

Licensing

Agreement to produce and market another company’s product in exchange for a royalty or fee

Foreign direct investment (F D I)

Investment of money by foreign companies in domestic business enterprises

Multinational corporations (M N cs)

Companies with operations in more than one country

Multidomestic strategy

A decentralized approach to international expansion in which a company creates highly independent operating units in each new country

Global strategy

A highly centralized approach to international expansion, with headquarters in the home country making all major decisions

Transnational strategy

A hybrid approach that attempts to reap the benefits of international scale while being responsive to local market dynamics

Multidomestic

Decentralized control, with individual divisions or subsidiaries in various countries free to pursue strategies that align with local markets

Global

Centralized control and single approach, applied as uniformly as possible around the world

Machine translation

Any form of automated translation