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CHAPTER 1
AN OVERVIEW OF INTERNATIONAL BUSINESS, CHAPTER 4
INTERNATIONAL…
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WORLD BANK GROUP
The International Development Association (IDA)
established in 1960 to criticism from poorer countries that world bank policies favoured countries well along the path to economic development
offers soft loans - those bear significant risk not being repaid to least developed countries
The International Finance Corporation (IFC)
created in 1956 responsible promoting development of private sector in developing countries it acts as investment banker by providing debt and equity financing for promising commercial activities IFC work together with private investors
The Multilateral Investment Guarantee Agency (MIGA)
build in 1988 aims encouraging direct investment in developing countries also aims to overcome private sector reluctance to invest in developing countries by offering insurance against non-commercial risk to private sectors
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EXPORTING AND IMPORTING
DIVIDED 2 GROUPS:
- visible trade - merchandise
- invisible trade - service
IB TRANSACTION
- buying materials in one country and shipping them
to another for processing or assembly
- shipping finished products from one country to another
- building plant in foreign country to capitalize on lower labour costs
organization which involved in ib is organization that engages in commercial transaction across borders but organizations may limit their activities to different categories
ongoing process which regional economies, societies, and cultures become integrated with and interdependent on one another
European Free Trade Association (EFTA)
members: norway, iceland, switzerland
North American Free Trade Agreement (NAFTA)
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this theory useful in explaining trade in differentiated goods
eg automobiles, expensive electronics equipment and personal care products which play important role in consumer decision making
WHAT IS EXCHANGE RATE
the price of one currency in terms of second currency
under gold standard par value of currency is its official price in terms of gold
HOW GOLD STANDARD IS USED
19th century countries agree to buy or sell their paper currencies in exchange for gold on request of any individual or firm
eg UK pledged to buy or sell ounce of gold for 4.247 pounds US agreed to buy or sell an ounce of gold for par value of $20.67
in 1944 representatives of 44 countries met to construct post-war international monetary system that create environment of worldwide peace and prosperity at resort in bretton woods, new hampshire. representatives agreed to renew gold standard on modified basis