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Chapter 5

Chapter 5 - Competing in Global Markets

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Rita Cossa

thCommerce Textbook February 9 2012Chapter 5Competing in Global Markets The dynamic global marketExporting selling goods and services to another country Importing buying goods and services from another country Why trade with other nationsNo country can produce all of the products that its people want and needEven if a country did become self sufficient other nations would seek to trade with that country to meet the needs of their own peopleSome nations have an abundance of natural resources and a lack of technological knowhow while others have sophisticated technology but few natural resources Free trade the movement of goods and services among nations without political or economic obstructionTheories of comparative and absolute advantage Comparative advantage theory states that a country should sell to other countries those products that it produces most effectively and efficiently and buy from other countries those products that it cannot produce as effectively or efficientlyAbsolute advantage the advantage that exists when a country has the ability to produce a particular good or service using fewer resources than another country Getting involved in global tradeWant a job in global businesssmall businesses Measuring global trade In measuring the effectiveness of global trade nations carefully follow two key indicators Balance of trade a nations ratio of exports to imports A trade surplus occurs when the value of the countrys exports exceeds that of its importsTrade deficit unfavorable balance of trade occurs when the value of a countrys imports exceeds that of its exportsBalance of payments the difference between money coming into a country from exports and money leaving the country from imports plus money flows from other factors such as tourism foreign aid military expenditures and foreign investmentCanadas priority markets Technological advances in most fields primarily in the area of transmission and storage of information have shattered the archaic notions of how things ought to function from production and trade to war and politics To encourage a stronger Canadian presence in the global marketplace include tax cuts increased support for research and development and critical investments in infrastructure at CanadaUS border crossings and Canadas AsiaPacific gateway
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