1 4 T H E D I T I O N P H I L I P R. C A T E O R A M A R Y C. G I L L Y J O H N L . G R A H A M
SUNDAY, JANUARY 31, 2010
CHAPTER 2: The Dynamic Environment of International Trade
What Should You Learn?
i) The basis for the reestablishment of world trade following World War II
ii) The importance of balance-of-payment figures to a country’s economy
iii) The effects of protectionism on world trade
iv) The seven types of trade barriers
v) The importance of GATT and the World Trade Organization
iv) The emergence of the IMF and the World Bank.
Global Perspective Trade Barriers – An International Marketer’s Minefield :-
1. Countries take advantage of U.S. open markets while putting barriers in the way of U.S.
2. Tariff and nontariff barriers to trade are major issues confronting international marketers.
3. To realize the benefits of the social, political, and economic changes, free trade must
prevail throughout the global marketplace.
4. WTO (World Trade Organization)
Balance of Payments
1. The system of accounts that records a nation’s international finance transactions
2. Transactions recorded annually
3. Must always be in balance
4. A record of condition, not determinant of condition
A balance of payments statement includes three (3) accounts :-
a ) Current account
b) Capital account
c) Reserves account
1. Tariffs, quotas, and nontariff barriers are designed to protect markets from intrusions by
2. Nations utilize barriers to restrain entry of unwanted goods :-
d) Private market
Protection Logic and Illogic
1. Arguments concerning protectionism on trade
2. Protection of infant industry
3. Protection of the home market
4. Need to keep money at home
5. Encouragement of capital accumulation
6. Maintenance of the standard of living and... [continues]
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