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Section 6: International trade & Globalization - Coggle Diagram
Section 6: International trade & Globalization
Specialisation: individuals, firms, regions concentrate on production of a particular good or service.
Individuals: bankers, accountant, hair stylist,...
Firms: McDonald's, Burger King, KFC,... specialise in the provision of courier service.
Region: i.e Silicon Valley, specialises in provision of high-tech information communication technologies
International specialisation: when countries concentrate on the production of certain goods and service due to cost advantage
Globalisation: proces by which the world's economies become interdependent, interconnected
Multinational companies(MNC): organisation that operates in 2 or more countries. Example: Coca Cola, Apple,...
International trade: the exchange of goods and services beyond national border
Free trade: means international trade can take place without any form of protection
Protection: use of trade barriers to restrain foreign trades, thereby limiting overseas competition
Tariffs: tax on imports, it increases the costs of production to importers.
Import quota: sets a quantitative limit on sale of foreign good in a country. Quota limits the quantity imported, raise the market price on foreign goods.
Embargo: is a ban on trade with a certain country, often due to political conflict or trade dispute.
Exchange rate: the price of one currency measured in terms of other currencies
Floating exchange rate system: currency is allowed to fluctuate against other currencies according to market force, without government intervention.
Appreciation: an increase in its value relative to another currency operating in floating exchange rate system
Depreciation: a fall in value relative to another currency operating in floating exchange rate system .
Fixed exchange rate: central bank buys or sells foreign currencies, make sure value of currency stays at pegged value
Balance of payments: financial record of a country's transactions with the rest of the world of a given time period.
Current account: largest component of balance of payments
Visible balance: record of exports and imports of physical goods.
Invisible balance: a record of imports and exports of services.
Primary income: record of country's net income earned from investments abroad
Current account deficit:
Current account surplus: