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Theories of International Trade Investment

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Theories of International Trade Investment Erik Kramer, Sam Dickey, and Devin Drayton Comparative Advantage Theory Definition: to gain a trade advantage, countries ... – PowerPoint PPT presentation

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Title: Theories of International Trade Investment


1
Theories of International Trade Investment
  • Erik Kramer, Sam Dickey, and Devin Drayton

2
Comparative Advantage Theory
  • Definition to gain a trade advantage, countries
    should specialize in products that it can provide
    more efficiently.
  • This says that if a country can make or grow a
    product easily and at a low cost, they should
    specialize in it and trade with other countries.

3
Comparative Advantage Theory cont
  • Examples If the United States has better soil
    for growing corn, and China has better soil for
    grain. They can specialize the products and then
    trade with each other.

4
Product Life Cycle Theory
  • Definition The four stages that products or
    services go through.
  • The four stages Introduction, Growth, Maturity,
    and Decline.

5
Product Life Cycle Theory cont
  • Example The first computer it was first
    introduced and then everyone wanted one (growth).
    Then everyone had one. Then they came out with
    laptops and more advanced computers.

6
Balance of Trade
  • Balance of payments All international
    transactions are recorded in this accounting
    statement.
  • Current Account It has the records of the value
    of imports and exports from foreign nations and
    also income and payments.
  • Capital Account It has the records of the
    investment funds coming in and out of the
    country.

7
Balance of Trade cont
  • Example for Balance of payments, Current Account,
    and Capital Account.
  • We buying 200,000 iPods from Japan, this gets
    recorded in the Balance of payments and Current
    Account. Then we ask for a loan to pay for this
    import, which is Capital Account.

8
Balance of Trade cont
  • When we buy goods from other countries our
    dollars are worth more over there which means
    they make more money than we do off of the same
    products.
  • Other countries believe that we have a stable
    economy. We are buying more than we are selling
    so the dollar is losing its worth and we are
    losing money.
  • The dollar is worth a lot to other countries so
    they are buying less and we are buying more.

9
Career Opportunities in International Business
  • International competition is growing.
  • More business are going global to increase sales
    and income.

10
Career Opportunities in International Business
cont..
  • So they have to transfer their best managers
    overseas which increases costs. They have to pay
    for airfare, housing, and pre-culture training
    for managers being moved.
  • They also have to get paid more because they
    have to change their lifestyle and location.

11
Employment of International Managers
  • In order to be an international manager, you need
    these traits
  • Socially Flexible
  • Acceptant of new ideas
  • Be able to adapt to other Cultures quickly
  • It is good for managers to know the foreign
    languages because they can better communicate
    with local workers and consumers.
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