The Basis for International Business(cont'd Balance of trade a The total value of a nation's exports minus the total value of its imports over some period of time Trade deficit A negative (unfavorable)balance of trade-imports exceed exports in value ■ Balance of payments The total flow of money into a country minus the total flow of money out of that country over a period of time
The Basis for International Business (cont’d) ◼ Balance of trade ◼ The total value of a nation’s exports minus the total value of its imports over some period of time ◼ Trade deficit ◼ A negative (unfavorable) balance of trade—imports exceed exports in value ◼ Balance of payments ◼ The total flow of money into a country minus the total flow of money out of that country over a period of time
U.S. International Trade in Goods 2200 2,000 1.800 1.600 800 ports Exports 测」 Balance of trade 800 1987 992001 Source: U.S. Department of Commerce, International Trade Administration, U.S. Bureau of Economic Analysis http://bea.govlinternational/bpweb/simple.cfm?anon=78260&table_id=1&areaid=3,accessedSeptember 18.2008
U.S. International Trade in Goods Source: U.S. Department of Commerce, International Trade Administration, U.S. Bureau of Economic Analysis, http://bea.gov/international/bp_web/simple.cfm?anon=78260&table_id=1&area_id=3, accessed September 18, 2008
Restrictions to international Business The reasons for restricting trade range from internal political and economic pressures to mistrust of other nations u Nations are generally eager to export their products to provide markets for their industries and develop a favorable balance of trade Most trade restrictions are applied to imports from other nations
Restrictions to International Business ◼ The reasons for restricting trade range from internal political and economic pressures to mistrust of other nations. ◼ Nations are generally eager to export their products to provide markets for their industries and develop a favorable balance of trade. ◼ Most trade restrictions are applied to imports from other nations
Types of Trade restrictions Import duty(tariff) A tax levied on a particular foreign product entering a countrv Revenue tariffs are imposed to generate income for the government Protective tariffs are imposed to protect a domestic industry by keeping the prices of imports at or above the price of domestic products ■ umping The exportation of large quantities of a product at a price lower than that of the same product in the home market
Types of Trade Restrictions ◼ Import duty (tariff) ◼ A tax levied on a particular foreign product entering a country ◼ Revenue tariffs are imposed to generate income for the government ◼ Protective tariffs are imposed to protect a domestic industry by keeping the prices of imports at or above the price of domestic products ◼ Dumping ◼ The exportation of large quantities of a product at a price lower than that of the same product in the home market
Types of Trade restrictions(cont'd Nontariff barriers Non-tax measures imposed by a government to favor domestic over foreign suppliers a Import quota limit on the amount of a particular good that may be imported during a given time Embargo--a complete halt to trading with a particular nation or in a particular product a Foreign exchange controkrestriction on amount of foreign currency that can be purchased or sold
Types of Trade Restrictions (cont’d) ◼ Nontariff barriers Non-tax measures imposed by a government to favor domestic over foreign suppliers ◼ Import quota—a limit on the amount of a particular good that may be imported during a given time ◼ Embargo—a complete halt to trading with a particular nation or in a particular product ◼ Foreign exchange control—restriction on amount of foreign currency that can be purchased or sold