Lesson 2

• Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross- border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.
• multinational corporation is a company that does business in a select few countries around the world and operates facilities such as warehouses or distribution centres in at least one foreign country
• International Trade Is an exchange involving a good or service conducted between at least two different countries.
• Import refers to a good or service brought into the domestic country.
• Export refers to a good or service sold to a foreign country.
• EXPORT TRADE - selling of goods and services out of the cou
• The creation of the World Trade Organization was considered as the biggest change in international trading system since the end of the World War II.
• IMPORT TRADE- goods and services flowing into the country
• ENTREPOT TRADE- importing goods from one country & exporting it to another country after adding some value to it
• PRICE- If foreign companies can produce goods and services more cheaply, then it may be beneficial.
• QUALITY- If the companies abroad can offer good and services of superior quality.
• AVAILABILITY- If its impossible to produce a product domestically
• DEMAND- If demand for product/services is more in country than what it can domestically produce, then it goes for import.
• ADVANTAGES

  • Comparative Advantage

  • Economies of Scale, Competition

  • Transfer of Technology

  • More job creation
• DISADVANTAGES

  • Over-dependence

  • Unfair to new companies

  • A threat to National Security

  • Pressure on natural resources
• TARIFFS- It is a tax or duties paid for a particular class of imports or export
• In July 1944, the Bretton Woods Conference was conducted and started the new international economic framework.
• It was participated by delegates from 44 countries at Bretton Woods, Hampshire, United States and created the two international economic organizations, namely, International Monetary Fund (IMF) and World Bank.
• The Bretton Woods System is a set of unified rules and policies that provided the framework necessary to create fixed international currency exchange rates.
• The International Monetary Fund fundamental mission is to ensure the stability of the international monetary system.
• The World Bank is also known as the International Bank for Reconstruction and the Development. Its primary purpose is to provide long-term loans for the economic development of developing countries and reconstruction of those affected countries caused by the war.
• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The goal is to ensure that trade flows as smoothly, predictably, and freely as possible.