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International business - Coggle Diagram
International business
Concept
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Main ideas:
- recognized the benefits of participating in global trade
- Economic interdependence brings mỏe opportunity and cooperation
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Adam Smith - Theory of absolute advantage
- A country has an absolute advantage when it can produce a goods more efficiently than another country.
David Ricardo - Theory of comparative advantage
- A country has a comparative advantage when it can produce a goods at a lower cost than another country, even it is not the most efficient producer globally.
GOV involvement in trade
Restricting imports:
- Use tariffs and quotas -> protect domestic industries
- Protectionism
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Import tariffs
Definition: a tax imposed on imported goods to raise their price and reduce demand for foreign products
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Tariff & Quotas
Tariff: increase the price of imported product raise GOV revenue, not limit supply directly
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Multinational corporations: large company that owns or controls production facilities or subsidiaries in more than 1 counntry
Balance of payments: measure money flow in and flow out of a country from trade and other transactions
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