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The advantage that exists when a country has the ability to produce a particular good or service using fewer resources (and therefore at a lower cost) than another country. Absolute advantage in natural resources does not last forever.
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The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
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A nation’s ratio of exports to imports.
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A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange.
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Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently. In practice, this theory application does not work so neatly.
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A foreign country’s production of private-label goods to which a domestic company then attaches its brand name or trademark; also called outsourcing.
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A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
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The set of values, beliefs, rules, and institutions held by a specific group of people.
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Lowering the value of a nation’s currency relative to other currencies.
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Selling products in a foreign country at lower prices than those charged in the producing country.
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A complete ban on the import or export of a certain product or the stopping of all trade with a particular country.
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An attitude that one’s own culture is superior to all others.
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The value of one nation’s currency relative to the currencies of other countries.
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Selling goods and services to another country.
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The buying of permanent property and businesses in foreign nations.
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A company owned in a foreign country by the parent company.
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The movement of goods and services among nations without political or economic obstruction.
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A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.
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A limit on the number of products in certain categories that a nation can import.
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Buying goods and services from another country.
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An international bank that makes short-term loans to countries experiencing problems with their balance of trade.
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A partnership in which two or more companies (often from different countries) join to undertake a major project or to form a new company.
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A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).
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An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
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Agreement that created a free-trade area among Canada, the United States, and Mexico.
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Organizations of commodity-producing countries that are formed to stabilize or increase prices to optimize overall profits in the long run.
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A long-term partnership between two or more companies established to help each company build competitive market advantages.
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A tax imposed on imports.
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Occurs when the value of a country’s imports exceeds that of its exports.
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The use of government regulations to limit the import of goods and services.
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Occurs when the value of the country’s exports exceeds that of its imports.
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An autonomous United Nations agency that borrows money from the more prosperous countries and lends it to less-developed countries to develop their infrastructure.
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The international organization that replaced the General Agreement on Tariffs and Trade, and was assigned the duty to mediate trade disputes among nations.
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