Chapter 5 notes (What I used to study for final)

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15 Dec 2010
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CHAPTER 5
Globalization: the integration of markets globally
Imports: products that are made or grown abroad and sold in Canada
Exports: Products made or grown in Canada that are sold abroad
- Global trade dates back to 2000 BCE, when North Africans traded wit the Middle East
- Countries encourage international trade
- Easier access to international travel makes it more common
- Competitive pressure to keep up with competitors causes it as well
- three major world market places: North America, Europe and Asia-Pacific
Per capita income: the average income per person of a country
High income countries > 10 065 USD
10 065USD > Upper middle income > 3255 USD
3255 USD > Lower middle income > 825 USD
825 USD > Low income
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North America: America dominates the region. Canada and America are each others biggest
trading partners. Mexico plays role because of cheap labour. A lot of automotive plants are in
Mexico.
Europe: Many internet and software manufacturers throughout the continent
Asia-Pacific: Japan dominates the region. Booming electronic industries
Absolute Advantage: a nations ability to produce something more cheaply or better than any
other country
(Canadian Timber, Saudi Oil, Brazillian Coffee Beans)
Comparative Advantage: a nations ability to produce some products more cheaply or better than
it can others
(Canada has a comparative advantage in farming because of fertile land and temperate climate)
National Competitive Advantage: a country will be inclined to engage in international trade when
factor conditions, demand conditions, related and supporting industries, and
strategies/structures/rivalries are favourable.
i) factor conditions re factors of production
ii)demand conditions reflect a large domestic consumer base that promotes strong demand
for innovative products
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iii) related and supporting industries include strong local or regional suppliers and/or
industrial consumers
iv) strategies, structures, and rivalries refer to firms and industries that stress cost reduction,
product quality, higher productivity, and innovative new products
International competitiveness: the ability of a country to generate more wealth than its
competitors in world markets.
Balance of Trade: the difference in value between a countrys total exports and its total imports
Trade Surplus: occurs when a country exports more than it imports
Trade Deficit: occurs when a country imports more than it exports
Balance of Payments: the difference between money flowing in to and out of a country as a result
of trade and other transactions
(money spent by tourists, buying and selling of international currencies on the market)
- unfavourable balance is more money flowing out than in
- to have a favourable balance of payments:
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Document Summary

Imports: products that are made or grown abroad and sold in canada. Exports: products made or grown in canada that are sold abroad. Global trade dates back to 2000 bce, when north africans traded wit the middle east. Easier access to international travel makes it more common. Competitive pressure to keep up with competitors causes it as well. Three major world market places: north america, europe and asia-pacific. Per capita income: the average income per person of a country. Canada and america are each others biggest trading partners. Europe: many internet and software manufacturers throughout the continent. Absolute advantage: a nation"s ability to produce something more cheaply or better than any other country (canadian timber, saudi oil, brazillian coffee beans) Comparative advantage: a nation"s ability to produce some products more cheaply or better than it can others (canada has a comparative advantage in farming because of fertile land and temperate climate)

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