The Main Idea – Chapter 7 This chapter discusses how business is conducted internationally. 7.1 discusses the trading of goods and services between countries and how governments protect their producers 7.2 describes the growing economic interdependence among countries
The Main Idea – Chapter 7. This chapter discusses how business is conducted internationally. 7.1 discusses the trading of goods and services between countries and how governments protect their producers 7.2 describes the growing economic interdependence among countries. Objectives:. - PowerPoint PPT Presentation
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The Main Idea – Chapter 7This chapter discusses how business is conducted internationally.
7.1 discusses the trading of goods and services between countries and how governments protect their producers
7.2 describes the growing economic interdependence among countries
Go to www.bls.gov/oohResearch and discover at least three jobs that deal with international businessOn a piece of paper, list the three jobs and tell me:1. Summarize the nature of the work2. What the job outlook is3. Summarize what the earnings (hourly wage or salary) are for the position.4. Put in bin when finished.
Absolute and Comparative Advantage•Absolute Advantage-
•Exists when a country can produce a good/service at a lower cost than other countries. •Examples – South America has AA with coffee production and Saudi Arabia has AA in oil production. What do we have an AA in?
Absolute and Comparative Advantage•Comparative Advantage-
•A situation in which a country specializes in the production of a good/service at which it is relatively more efficient at producing•Example - A 7’ tall rabbi and a 5’ tall priest walk into a strawberry field lined with apple trees. They must harvest both crops before they can meet their maker. Who picks what?
Comparative advantageProducers should produce the goods they are most efficient at producing and purchase from others the goods they are less efficient at producing.
Individuals, companies, and countries should specialize in what they do best.
*1 of every 6 jobs in the US depends on international business!
Some things the US exports:Factory/farm machinery, food, agricultural products, chemicals, fertilizers, medicines, plastics, movies, tv shows, books, magazines.
Why do we work and have jobs?With that money we buy goods/services that we need. If we spend more than we earn, we get into financial troubles (debt)….nothing different than with countries.
If a country exports (sells) more than it imports (buys), it has a trade If a country imports more than it exports, it has a trade , which is unfavorable
Balance of tradeThe difference between the value of a country’s total exports and total imports
Trade barriersGovernment actions can create restrictions to free trade
Formal trade barriers are political actions by the governmentInformal trade barriers are when the culture, traditions, and religion of a country hinder trade
As of October, 2007, the United States has sanctions (embargos) against:
– Colombia, no drug-related exports, since 1972 (see Colombia-United States relations)
– Côte d'Ivoire/Ivory Coast, since 1986 (see Côte d'Ivoire – United States relations) – Cuba, since 1962 (see United States embargo against Cuba) – Democratic Republic of the Congo, since 1998 (see
Democratic Republic of the Congo – United States relations) – Iran, since 1979 (see Sanctions against Iran) – Republic of the Congo (see Republic of the Congo-United States relations) – Somalia, since 1990 (supplies arms to the Transitional Federal Government, but no
general trade. See Somalia-United States relations) – Myanmar, since 1997 (see Burma – United States relations) – North Korea, since 1950 (see North Korea – United States relations) – Sudan, since 2002 (see Sudan – United States relations) – Syria, since 1986 (see Syria – United States relations)