The exchange of goods and services among nations.
Goods and services purchased from other countries.
Goods and services sold to other countries.
Balance of Trade
The difference between imports and exports of a nation.
The commercial exchange between nations that is conducted on free market principles, without restrictive regulations.
A mutual need to share resources.
Is the value that a nation gains by selling what it produces most efficiently.
When a country has natural resources or talents that allow it to produce an item at the lowest cost possible.
A tax on an import which can be used to produce revenue, or protect domestic product prices.
Import limits either the quantity or the monetary value of a product.
Embargo (trade embargo)
A complete ban on specific goods coming into and leaving a country. Can be imposed for health reasons or used for a political reason.
A government’s establishment of economic policies that systematically restrict imports in order to protect domestic industries.
World Trade Organization (WTO)
A coalition of nations that makes rules governing international trade. This organization was the successor to the General Agreement on Tariffs and Trade (GATT).
North American Free-Trade Agreement (NAFTA)
An international trade agreement among the United States, Canada, and Mexico. All trade agreements are negotiated by their governments, not the individual businesses.
European Union (EU)
Europe’s trading bloc. Created so that free-trade could occur amongst member nations, a single common currency was created, and a central bank.
Letting another company (licensee) use a trademark, patent, specialized formula, company name, or some other intellectual property for a fee or royalty. (Example: Disney)
Hiring a foreign manufacturer to make your products, according to your specifications.
A business enterprise that companies set up together.
Foreign Direct Investment (FDI)
The establishment of a business in foreign country. Sometimes this may involve no more than setting up an office or a staff to maintain a presence in a country.
Large corporations that have operations in several countries.
These are midsize or smaller companies that have operations in foreign countries. The key difference between multinationals and mini-nationals apart from domestic businesses in that these companies receive funds from foreign investments for factories, offices, and other facilities abroad that are used for operations.
Selling the same product and using the same promotion methods in all countries. Example: Coca-Cola
A company’s use of an existing product and/or promotion to which changes are made to better suit the characteristics of a country or region.
Involves creating specially designed products or promotions for certain countries or regions.