Transcript International Trade

International Trade
International Trade
Exports
goods and services that
a country sells to other
nations
Imports
goods and services that
a country buys from
other nations
Reasons for International Trade
Possession of Special
Resources
Economic Advantages
Politics
Special Resources
Unique climate or terrain
Valuable raw materials
Skilled labor force
Capital resources
Favorable geographic location
Economic Advantages
Politics
Economic Advantages
Absolute advantage
ability to produce a
product at a lower
cost
control of the natural
resource
provide cheaper than
the others
 Comparative advantage
ability to produce a
product more
efficiently than
another
specialization concentration on what
one can do best
import the other goods
it needs
• Japan - electronics
• Cuba - sugar
Politics
Human Rights
Violations vs. Favored
Nation Status
Should we trade with
those we have been
to war with in the
past?
Embargoes and
human needs
Multi-National
Corporations
Enormous in size
wide distribution of goods and services
World wide economic decision making
Trade Agreements
Nafta
North American Free
Trade Agreement
Involves U.S. Mexico
and Canada.
Reduction and eventual
end to tariffs between
each nation
Gatt
General agreement on
trade and tariffs
between 44 countries
attempting to continue
to reduce trade tariffs.
Difficult because each
nation tries to protect
their key resources.
Barriers to Trade
Tariffs
Tax placed on imports (a duty)
revenue tariff
• a tax to raise money for the government
protective tariff
• a tax to protect the home countries products over
foreign products
Import Quotas
limits amount of a product which can be
imported
Reasons for Tariffs
Favorable Balance of Trade
Buy American
Military Preparedness
Infant Industries
List the names of
as many types of Foreign
Currency as you can!
Foreign Currency Exchange
and the U.S. dollar
An increase in the
value of the dollar
makes imports
cheaper
exports more
expensive
increases the trade
deficit
The value of the
dollar has increased
in the 1990s
because of
growth of the U.S.
economy
economic and
political stability
Tourism and the
Exchange Rate
It is very expensive
for Americans to
travel to Europe.
the value of the dollar
was down when
compared to the
Euro.
The peso drops over
40% in 1 1/2 weeks
during the 90’s
United States
Congress intervenes
with large loan to
stabilize Mexico’s
economy
Trade Deficits
The United States has had a negative
trade balance since 1976