International Business - Chapter 6: International Trade and Investment Theory

"Chapter 6: International Trade and Investment Theory" understand the motivation for international trade, summarize and discuss the differences among the classical country-based theories of international trade, use the modern firm-based theories of international trade to describe global strategies adopted by businesses.
Nội dung trích xuất từ tài liệu:
International Business - Chapter 6: International Trade and Investment Theory Chapter 6: International Trade and Investment Theory International Business, 4th Edition Griffin & Pustay6-1 ©2004 Prentice Hall Chapter Objectives_1 Understand the motivation for international trade Summarize and discuss the differences among the classical country-based theories of international trade Use the modern firm-based theories of international trade to describe global strategies adopted by businesses6-2 ©2004 Prentice Hall Chapter Objectives_2 Describe and categorize the different forms of international investment Explain the reasons for foreign direct investment Summarize how supply, demand, and political factors influence foreign direct investment6-3 ©2004 Prentice Hall International Trade Trade: voluntary exchange of goods, services, assets, or money between one person or organization and another International trade: trade between residents of two countries6-4 ©2004 Prentice Hall Figure 6.2 Sources of the World’s Merchandise Exports, 2001 37% 40% European Union United States Japan Canada Other countries 4% 12% 7%6-5 ©2004 Prentice Hall The largest component of the annual $1.5 trillion trade in international services is travel and tourism6-6 ©2004 Prentice Hall Classical Country-Based Trade Theories Mercantilism Absolute Advantage Comparative Advantage Comparative Advantage with Money Relative Factor Endowments6-7 ©2004 Prentice Hall Mercantilism A country’s wealth is measured by its holdings of gold and silver A country’s goal should be to enlarge holdings of gold and silver by – Promoting exports – Discouraging imports6-8 ©2004 Prentice Hall Modern Mercantilism Neomercantilists or protectionists – American Federation of Labor-Congress of Industrial Organizations – Textile manufacturers – Steel companies – Sugar growers – Peanut farmers6-9 ©2004 Prentice Hall Disadvantages of Mercantilism Confuses the acquisition of treasure with the acquisition of wealth Weakens the country because it robs individuals of the ability – To trade freely – To benefit from voluntary exchanges Forces countries to produce products it would otherwise not in order to minimize imports6-10 ©2004 Prentice Hall Absolute Advantage Export those goods and services for which a country is more productive than other countries Import those goods and services for which other countries are more productive than it is6-11 ©2004 Prentice Hall Table 6.1 The Theory of Absolute Advantage: An Example OUTPUT PER HOUR OF LABOR France Japan Wine 2 1 Clock 3 5 radios6-12 ©2004 Prentice Hall Absolute Advantage’s Flaw What happens to trade if one country has an absolute advantage in both products? No trade would occur6-13 ©2004 Prentice Hall Comparative Advantage Produce and export those goods and services for which it is relatively more productive than other countries Import those goods and services for which other countries are relatively more productive than it is6-14 ©2004 Prentice Hall Differences between Comparative and Absolute Advantage Absolute versus relative productivity differences Comparative advantage incorporates the concept of opportunity cost – Value of what is given up to get the good6-15 ©2004 Prentice Hall Table 6.2 The Theory of Comparative Advantage: An Example OUTPUT PER HOUR OF LABOR France Japan Wine 4 1 Clock 6 5 radios6-16 ©2004 Prentice HallComparative Advantage with Money One is better off specializing in what one does relatively best Produce and export those goods and services one is relatively best able to produce Buy other goods and services from people who are better at producing them6-17 ©2004 Prentice Hall Table 6.3 The Theory of Comparative Advantage with Money: An Example Cost of Goods in France Cost of Goods in Japan French Japanese French Japanese Made Made Made MadeWine €3 €8 ¥375 ¥1,000Clock €3 €1.6 ¥250 ¥200Radios6-18 ©2004 Prentice Hall Relative Factor Endowments Heckscher-Ohlin Theory What determines the products for which a country will have a comparative advantage? – Factor endowments vary among countries – Goods differ according to the types of factors that are used to produce them6-19 ©2004 Prentice Hall Relative Factor Endowme ...