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The Dynamic Environment of International Trade

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The Dynamic Environment of International Trade ... Arial Tahoma Wingdings Ocean The Dynamic Environment of International Trade History of World Trade History ... – PowerPoint PPT presentation

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Title: The Dynamic Environment of International Trade


1
The Dynamic Environment of International Trade
  • Chapter 2

2
History of World Trade
  • Early Twentieth Century
  • Great Depression
  • World War II
  • Late Twentieth Century
  • Marshall Plan
  • Decolonization
  • Lowering of trade restrictions

3
History of World Trade
  • Problems with internationalization in 1960s
  • Resistance to U.S. investment
  • Increasing competition
  • U.S. Balance of Trade
  • 1888-1971 Trade surplus
  • Since 1971 Trade deficit
  • Free trade
  • NAFTA
  • Asian markets

4
History of World Trade
  • Recent Trends
  • Rise of other economies
  • Smaller companies going global

5
Balance of Payments
  • What is it?
  • Receipts from other countries (plus side)
  • Export sales
  • Money spent by foreign tourists
  • Foreign investments into the U.S.
  • Foreign government payments
  • Payments to other countries (negative side)
  • Imports
  • Spending by American tourists overseas
  • New overseas investments
  • Cost of economic and military aid

6
Balance of Payments
  • Three types of accounts
  • Current account
  • Capital account
  • Reserves account
  • If a countrys expenditures gt income, its
    citizens must reduce standard of living, or its
    money will lose value against other countries.
  • Deficit Loss of value for the dollar

7
Protectionism
  • Acts to protect a countrys markets from
    foreign competitors
  • Why?
  • Infant industry
  • National defense
  • Industrialization of underdeveloped countries

8
Protectionism
  • Tariffs
  • A tax on imported goods
  • Quotas
  • A unit or dollar limit placed on a good
  • Sometimes paired with tariffs
  • Voluntary Export Restraints
  • Boycotts and Embargoes
  • Whats the difference?

9
Protectionism
  • Monetary Barriers
  • Blocked currency
  • Differential exchange rate
  • Government approval to secure foreign exchange
  • Standards
  • Antidumping Penalties

10
Easing Trade Restrictions
  • Market access
  • Allows US to retaliate against protectionism
  • Export expansion
  • Easier to gain an export license
  • Government responsible for exporter needs
  • Import relief
  • Offers assistance to companies impacted by
    imports

11
Easing Trade Restrictions
  • General Agreement on Tariffs and Trade
  • U.S. and 22 other countries
  • Reduces tariffs
  • Set up an organization to monitor trade
  • Resulted in deep cuts of tariffs

12
Easing Trade Restrictions
  • World Trade Organization
  • Began in 1995
  • Governs trade
  • Settles disputes and issues penalties against
    countries practicing protectionism

13
Easing Trade Restrictions
  • International Monetary Fund
  • Stabilize exchange rates
  • Lends money to member countries
  • Special drawing rights
  • Average base of value to counter fluctuations in
    world gold values

14
Easing Trade Restrictions
  • World Bank Group
  • Lend money and provide assistance to developing
    countries
  • Mediate between investors and foreign governments
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