International Business and Trade PDF

INTERNATIONAL BUSINESS AND TRADE NORMA DY LOPEZ-MARIANO, Ph.D., FRIEDr  Chapter 1 Evolution of International Trade WWW.REX.COM.PH LESSON 1/CHAPTER 1 Introduction World Trade Organization (WTO) - the only global international organization dealing with...

INTERNATIONAL BUSINESS AND TRADE NORMA DY LOPEZ-MARIANO, Ph.D., FRIEDr  Chapter 1 Evolution of International Trade WWW.REX.COM.PH LESSON 1/CHAPTER 1 Introduction World Trade Organization (WTO) - the only global international organization dealing with the rules of trade between nations Roles of WTO: 1. It operates a global system of trade rules. 2. It acts as a forum for negotiating trade agreements. 3. It settles trade disputes between its members. 4. It supports the needs of developing countries. WWW.REX.COM.PH LESSON 1/CHAPTER 1  Lesson 1.1 Evolution of International Trade: A Glimpse WWW.REX.COM.PH LESSON 1.1/CHAPTER 1  The main historical theories are called classical and are from the perspective of a country, or country- based. The theory is a classical, country-based international trade theory that states that a country’s wealth is determined by its holdings of gold and silver. WWW.REX.COM.PH LESSON 1.1/CHAPTER 1  Division of labor is the separation of a work process into a number of tasks, with each task performed by a separate person or group of persons to boost productivity and efficiency and enhance specialization. Trade surplus is the amount by which the value of a country’s exports exceeds the cost of its imports. WWW.REX.COM.PH LESSON 1.1/CHAPTER 1  In a free trade system, individuals benefit from a greater choice of affordable goods, while mercantilism restricts imports and reduces the choices available to consumers. Absolute advantage is the country’s inherent ability to produce specific goods efficiently and effectively at a relatively lower marginal cost. WWW.REX.COM.PH LESSON 1.1/CHAPTER 1  Comparative advantage refers to the country’s capability to produce the specific good at a lower marginal cost and opportunity cost. Marginal cost is the cost incurred on producing an additional unit of a product. Opportunity cost means the value you will get from an alternative that you did not choose. WWW.REX.COM.PH LESSON 1.1/CHAPTER 1  Lesson 1.2 Barter WWW.REX.COM.PH LESSON 1.2/CHAPTER 1  Bartering involves a direct trade or exchange of goods and services. Advantage - It does not involve money and is very simple. However, it is difficult to find people who need what other people have, and there is no standard measure of value. Even today, there are swap markets, online auctions, and numerous websites that offer online bartering arrangements. WWW.REX.COM.PH LESSON 1.2/CHAPTER 1  The history of bartering can be traced back to 6000 BC, when the barter system was introduced by the tribes of Mesopotamia, then adopted by the Phoenicians, and improved by the Babylonians. Salt was so valuable at that time that the salary of Roman soldiers was paid in salt. WWW.REX.COM.PH LESSON 1.2/CHAPTER 1  Lesson 1.3 Origin of Money WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  The first recognizable metal coins appeared in China in 1000 BC. Sometime around 770 BC, miniature replicas of tools and weapons cast in bronze were used by the Chinese as a medium of exchange. The small bronze celts and bronze rings played a monetary role. Objects in the shape of circles became some of the first coins. Around 700 BC, the Chinese moved from coins to paper money. WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  The first mint, an industrial facility to manufacture coins, was established in Lydia (now western Turkey). Minting is the process of making a coin by stamping metal. In 600 BC, around the time China started using paper money, Lydia’s King Alyattes minted the first official currency. King Croesus installed the first bimetallic monetary system. WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  Silver and copper coins designed especially for the colonies were minted in 1670. During the mid-1600s, Spanish dollars (piastres) represented the first distinctive Canadian coins. WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  The livre (French for “pound’) was the currency of the Kingdom of France and its predecessor state of West Francia from 1781 to 1794. In 1685, Jacques de Meulles, Intendant of Justice, Police, and Finance, came up with the temporary issuance of paper money printed on playing cards. Card money served as money in Canada, just as coin did in France. WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  Copper coins were introduced in 1722, but they were not well received by merchants. Bills of exchange drawn on the Treasury were used for payments of expenses in Canada. The advent of paper money led to an increase in international trade. WWW.REX.COM.PH LESSON 1.3/CHAPTER 1  Lesson 1.4 History of the Philippine Currency WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  Barter was the means of trade long before the Spaniards came to the Philippines. Cowries are marine gastropods having glossy, often colorful patterned shells. Barter rings, made of gold called piloncitos for personal adornment, were the first local form of coinage. These had a flat base that bore an embossed inscription of the letters “MA” or “M,” believed to be the name by which the Philippines was known to Chinese traders. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  The cobs or macuquinas (silver coins) were the earliest coins brought in by the galleons from Mexico and other Spanish colonies. The barrilla, a crude bronze or copper coin worth about one centavo, was the first coin struck in the country as ordered by the Royalty of Spain. The Filipino term “barya,” referring to small change, had its origin in barrilla. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  Gold coins with the portrait of Queen Isabela were minted in Manila. The pesos fuertes, issued by the country’s first bank, the El Banco Español Filipino de Isabel II, were the first paper money circulated in the country. The Philippine Republic of 1898 issued its own coins and paper currency, backed by the country’s natural resources. Republika Filipina Papel Moneda de Un Peso and Cinco Pesos were circulated hand signed by Pedro Paterno, Mariano Limjap, and Telesforo Chuidian. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  With the coming of the Americans in 1898, the Philippines became one of the most prosperous countries in East Asia. The Americans instituted the gold standard. The gold standard is a monetary system where a country’s paper money has a value directly linked to gold; countries agreed to convert paper money into a fixed amount of gold per unit of currency. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  The US Congress approved the Coinage Act for the Philippines in 1903. The coins issued under the system bore the designs of Filipino engraver and artist, Melecio Figueroa. El Banco Español Filipino was renamed Bank of the Philippine Islands in 1912. Beginning in May 1918, treasury certificates replaced the silver certificates series, and a one-peso note was added. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  Two kinds of notes circulated in the country during the outbreak of World War II—war notes in high denominations issued by the Japanese Occupation Forces, dubbed as “Mickey Mouse” money, and guerrilla notes or resistance currencies in low denominations issued by different provinces and municipalities. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  With the establishment of the Central Bank of the Philippines in 1949, the first currencies issued were the English series notes and the coins minted at the US Bureau of Mint. The “Filipinization” of the republic coins and notes began in the late 60s. The Ang Bagong Lipunan (ABL) series notes were circulated starting in 1978. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  In 1983, the Flora and Fauna coin series was initially issued. The New Design Series of banknotes issued in 1985 replaced the ABL series. Ten years later, a new set of coins and notes was issued, carrying the logo of the new Bangko Sentral ng Pilipinas. WWW.REX.COM.PH LESSON 1.4/CHAPTER 1  Lesson 1.5 Mobile Payments and Internet Payments WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Mobile payments are money rendered for a product or service through a portable electronic device. Near field communication (NFC) payments are the technology that allows contactless payments using close- proximity radio frequency identification. WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Sound wave-based (SWB) or sound signal-based (SSB) mobile payments or pay-by-sound use an advanced, ultra- low power wireless transmission technology. Magnetic secure transmission (MST) makes use of a magnetic signal to process payment using a secure tokenization system. WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Quick response (QR) codes are the trademark of a type of matrix barcode (type 2D barcode) readable by smartphones. Short message/messaging service (SMS), or premium SMS payments, pay for products or services via text message. Direct carrier billing (DCB) is where the payment will be added to your phone bill or prepaid SIM card. WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Internet payments can be done on desktops, laptops, or even phones (as in mobile payments). Wireless application protocol (WAP) payments used to be the most common facility on smartphones, through a more limited-capacity WAP browser or app. “Autopay” is scheduled to be automatically paid on a certain date. WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Payment links or pay by link is most commonly referring to a button or link sent to process a transaction for a specified merchant. Neobank is an umbrella term for the new generation of cutting-edge, fully digital banking services classified as a type of financial technology (fintech) solution. WWW.REX.COM.PH LESSON 1.5/CHAPTER 1  Lesson 1.6 Virtual Currency WWW.REX.COM.PH LESSON 1.6/CHAPTER 1  Cryptocurrency, virtual or digital currency, “digital gold,” or “altcoins” are any type of digital unit that is used as a medium of exchange or a form of digitally stored value generated by agreement within the community of virtual currency users. WWW.REX.COM.PH LESSON 1.6/CHAPTER 1  Fiat currency or fiat money or cash is the real currency, coins, and paper money (bills) issued and printed by the central bank of a country. E-money is a digital representation of fiat currency stored in digital wallets or e-wallets. WWW.REX.COM.PH LESSON 1.6/CHAPTER 1  Virtual currency, which is stored digitally, would still need to be converted first to Philippine peso, then transferred to a destination wallet or withdrawn as cash through different mediums that are accepted in the country done through a virtual currency exchange. Cryptocurrencies use electronic coins as their form of exchange, which is nothing more than slots in the blockchain. Blockchain is a special kind of database, and it differs from traditional databases when it comes to storing data. WWW.REX.COM.PH LESSON 1.6/CHAPTER 1  Cryptocurrencies use cryptography, the process of protecting information by using codes, for security. The more users a coin has, the more useful it becomes, and the higher its price goes. But when a coin falls out of favor, there is nothing to stop it from going to zero. WWW.REX.COM.PH LESSON 1.6/CHAPTER 1