BUS613: Advanced International Business

3a. Assess how country specific infrastructure and partnerships support international trade 

• What specific advantages do countries with good or modern infrastructure have over developing countries with less advanced infrastructure systems?
• How can a partnership between companies, countries, or organizations from different parts of the world play a part in supporting international trade?
• What role do trade agreements play in providing certain positive and negative impacts to the parties involved?
  

Infrastructure is vital for a country to advance and grow its economy. Wealthier nations have played a role in financing international organizations that provide loans or grants to developing nations to update their infrastructure. It can play a positive role in enhancing international trade for everyone. Trade barriers have decreased over the past few decades, and the ease with which international commerce is conducted online has created a very connected global economy. National competitive advantage plays a major role in a free market system in which countries trade with others in industries where they have an advantage in producing or operating. As international trade expands, it creates some winners and losers, which can result in protectionism in certain countries as citizens begin to lose jobs and politicians seek to shelter this constituency.
 
To review, see Ports and Shipping, Trade Agreements, and Trade Capacity.
 

3b. Examine International Trade Theory and interpret the various elements of it

• What role would understanding National Competitive Advantage play in an economic advisor drafting a new trade policy?
• What comparative advantages does the United States have over much of the world? How valuable is this for future and sustainable economic growth?
  

Several prominent trade theories were established generations ago. However, they are still very relevant in our global economy today. Mercantilism, which is the belief in profitable trade, has existed for centuries. Countries must have a realistic view of why they are competitive in certain areas and lack in others to effectively create trade partnerships that put their nation in the best possible position. Comparative advantage is when a country can produce at a lower cost than others, while absolute advantage is a country that can produce an economic activity much more efficiently than others, such as Saudi Arabia with oil. You must understand why certain advantages exist for countries and what efforts can be placed to overcome challenges when disadvantages are present.
 
To review, see National Competitive Advantage, Absolute and Comparative Advantage, and Free Trade vs. Mercantilism.
 

3c. Explain why some nations develop trade surpluses or deficits with other countries and evaluate whether the outcome is positive or negative for each country 

• What is a trade surplus, and how is that generally viewed in the greater context of an economy's health and competitiveness in the global economy?
• Why might a trade deficit be unavoidable and not necessarily a negative?
  

Nations with an economy that relies on commodities such as oil will generally benefit and find large trade surpluses when those commodities are valued high in the world market. Meanwhile, other nations may need access to resources and materials to produce, creating trade deficits. A country may develop a trade surplus, in which they are exporting more than importing, or a trade deficit, in which they are importing at a higher value than the level they export. Understanding how these situations develop through trade among nations and analyzing how the data can identify positive and negative points about a nation's economy is critical.
 
To review, see Competition and Strategic Rivalries and Mercantilism.
 

Unit 3 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• absolute advantage
• comparative advantage
• mercantilism
• national competitive advantage
• protectionism
• trade deficit
• trade surplus