International Business Practice国际商务练习精华.pptVIP

1.1 International business What’s itn’l business? Itn’l trade transaction: people/services Funds transfer: FDI, remittances Rationale on itn’l buseness Specialization: national division of labor, mass production, assembly line Absolute advantage:ability to produce a special goods with fewer resources than Comparative advantage: advantage:ability to produce a specific goods with lower opportunity cost than 1.2 itn’l trade International trade, also known as world trade, foreign trade or overseas trade, is the fair and deliberate exchange of goods and services across national boundaries It concerns trade operations of both import and export and includes the purchase and sale of both visible and invisible goods, the former of which is called trade in goods while the latter of which is called trade in services in the word of WTO. 1.2.2 Rationales for International Trade The Different Distribution of the World s Resources Some countries or regions are abundant in natural resources, climate and terrain, the skilled workers and capital resources; elsewhere, reserves are scarce or nonexistent. Thus, to obtain these through trading is an absolute necessity. Reasons for International Trade Economic Benefit It was found that a country benefits more by producing goods it can make most cheaply and buying those goods that other countries can make at lower costs than by producing everything it needs within its own border. This is often explained by the theory of comparative advantage ,also called the comparative cost theory, which was developed by David Ricardo, in the nineteenth century. Reasons for International Trade To Satisfy a Large Domestic Demand; Innovation or Style Some nations are unable to produce enough products of a certain item. Thus, they have to import some to satisfy a large domestic demand. Moreover, the preference for innovation or style also leads to international trade, which makes available a greater variety of products and offers a wider r