griffin05_06 - international business 5 th edition c hapter...

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Unformatted text preview: international business, 5 th edition c hapter 6 international trade and investment 6-2 Chapter Objectives 1 • Understand the motivation for international trade • Summarize and discuss the differences among the classical country-based theories of international trade • Use the modern firm-based theories of international trade to describe global strategies adopted by businesses 6-3 Chapter Objectives 2 • Describe and categorize the different forms of international investment • Explain the reasons for foreign direct investment • Summarize how supply, demand, and political factors influence foreign direct investment 6-4 Trade Trade is the voluntary exchange of goods, services, assets, or money between one person or organization and another. International trade is trade between residents of two countries. 6-5 Figure 6.1 Growth of World Merchandise Exports 6-6 Figure 6.2 Sources of World’s Merchandise Exports, 2004 6-7 Trade Theories Classical country-based Firm-based 6-8 Classical Country-Based Trade Theories • Mercantilism • Absolute Advantage • Comparative Advantage • Comparative Advantage with Money • Relative Factor Endowments 6-9 Mercantilism • A country’s wealth is measured by its holdings of gold and silver • A country’s goal should be to enlarge holdings of gold and silver by – Promoting exports – Discouraging imports 6-10 Disadvantages of Mercantilism • Confuses the acquisition of treasure with the acquisition of wealth • Weakens the country because it robs individuals of the ability – To trade freely – To benefit from voluntary exchanges • Forces countries to produce products it would otherwise not in order to minimize imports 6-11 Protectionism •...
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griffin05_06 - international business 5 th edition c hapter...

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