Glossary
Business, 8e
Chapter 3: Exploring Global Business




absolute advantage the ability to produce a specific product more efficiently than any other nation






balance of payments the total flow of money into the country minus the total flow of money out of the country over some period of time

balance of trade the total value of a nation’s exports minus the total value of its imports over some period of time

bill of lading issued by a transport carrier to an exporter to prove merchandise has been shipped






comparative advantage "the ability to produce a specific product more efficiently than any other product"

countertrade an international barter transaction

currency devaluation the reduction of the value of a nation’s currency relative to the currencies of other countries






draft "issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer’s bank"

dumping exportation of large quantities of a product at a price lower than that of the same product in the home market






economic community an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies

embargo a complete halt to trading with a particular nation or in a particular product

Export-Import Bank of the United States an independent agency of the U.S. government whose function it is to assist in financing the exports of American firms

exporting selling and shipping raw materials or products to other nations






foreign-exchange control a restriction on the amount of a particular foreign currency that can be purchased or sold






General Agreement on Tariffs and Trade (GATT) an international organization of 132 nations dedicated to reducing or eliminating tariffs and other barriers to world trade






import duty (tariff) a tax levied on a particular foreign product entering a country

import quota a limit on the amount of a particular good that may be imported into a country during a given period of time

importing purchasing raw materials or products in other nations and bringing them into one’s own country

international business all business activities that involve exchanges across national boundaries

International Monetary Fund (IMF) an international bank with more than 150 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits






letter of credit issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary

licensing a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation






multilateral development bank (MDB) an internationally supported bank that provides loans to developing countries to help them grow

multinational enterprise a firm that operates on a worldwide scale without ties to any specific nation or region






nontariff barrier a nontax measure imposed by a government to favor domestic over foreign suppliers






strategic alliance a partnership formed to create competitive advantage on a worldwide basis






trade deficit a negative balance of trade

trading company provides a link between buyers and sellers in different countries






World Trade Organization (WTO) "powerful successor to GATT that incorporates trade in goods, services, and ideas"