The World of International Trade

International Trade and Finance

• Subsidy is a form of financial assistance provided by the government to producers to lower their prices and regain competitiveness in the market.
• Dumping is the practice of charging less than the actual costs or less than the home-country price for goods sold in other countries.

Regional Organizations

• A regional organization promotes trading among member nations.

Trade Restrictions

• Quota is the practice of limiting the amount of particular goods that countries allow to be imported during a year.
• Embargo is a complete ban on the import or export of certain products or even all trades between countries.

International Business

• Import is the buying of goods and services from a supplier in another country.
• Export is the selling of goods and services to a client in another country.
• Licensing is an agreement to produce and market another company's product in exchange for a royalty or fee.

International Trade Organizations

• The World Trade Organization (WTO) is one of the world's most famous international trade organizations.

Reasons for International Trade

• Countries trade internationally because of differences in costs, availability of resources, and market sizes.

International Finance

• Economies of scale refer to the savings from buying parts and materials, manufacturing or marketing in large quantities.
• Balance of trade is the measurement of a nation's total exports minus its total imports over a period of time.
• Exchange rate is the rate at which the money of one country is traded for the money of another.
• Net inflow of capital is the total flow of money into a country minus the total flow of money out of the country during a specific period of time.

Free Trade

• Free trade refers to international trade that takes place without restrictive measures.

Business Ethics

• Ethics refers to the rules or standards governing the conduct of a person or group.
• Transparency refers to the degree to which affected parties can observe relevant aspects of transactions or decisions.
• Insider trading is the use of undisclosed information that someone gains via his job to benefit from fluctuations in the stock market.
• Code of ethics is a written statement that establishes the principles that guide an organization’s decisions.
• Whistleblowing is the disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization.
• Ethical dilemma is a situation in which an individual or a group makes a decision that is immoral, illegal or unethical.
• Moral hazard is a situation in which more than one side of an issue can be supported with valid arguments.
• Conflict of interest is a situation in which competing loyalties can lead to ethical lapse.
• Corporate social responsibility (CSR) is the idea that business has obligations to society beyond the pursuit of profits.
• Philanthropy is the donation of money, time, goods or services to charitable or educational institutions.
• Strategic CSR is a long-term investment in social and environmental initiatives that benefits both the business and society.

NGOs and Sustainability

• NGOs (Non-Governmental Organizations) are organizations that operate independently of any government.
• Cap and trade is a system that limits the amount of pollution allowed and permits companies to buy and sell the right to pollute.
• Sustainable development is defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs.
• Consumerism is the practice of promoting the purchase of goods and services.
• Identity theft is the unauthorized use of another person's personal information.
• Discrimination is the unfair treatment of a person or group based on certain characteristics.