GEB 3373 Lecture Notes - Lecture 28: Absolute Advantage, Foreign Direct Investment, Comparative Advantage

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Trade: voluntary exchange of goods, services, assets, or money. > voluntary meaning both parties of transaction believe they will gain from exchange, or exchange will not occur. International trade: involves exchange between residents of two countries. > residents may be individuals, firms, nonprofits, or other types of associations. > indirectly pressure domestic suppliers to cut prices & improve competitiveness. Whether or not your biz engages in international trade, chances are someone in your industry does. Governments use trade theory to design policies that affect consumers, businesses, and entire industries. Managers can use them to identify & justify promising markets & profitable internationalization strategies. Developed with rise of european nation-states during 16th century (1500s) Focused on individual country in examining patterns of exports & imports. Useful for describing trade in commodities standardized undifferentiated goods (oil, sugar, lumber) which as typically bought on basis of price, not brand name. A (cid:272)ou(cid:374)t(cid:396)(cid:455)"s (cid:449)ealth is (cid:373)easu(cid:396)ed (cid:271)(cid:455) its holdi(cid:374)gs of gold & sil(cid:448)e(cid:396)

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