International Trade
Purchase, sale, or exchange of goods and services across national borders
Mercantilism
Trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports
Trade Surplus
Condition that results when the value of a a nation's exports is greater than the value of its imports
Trade Deficit
Condition that results when the value of a country's imports is greater than the value of its exports
Absolute Advantage
Ability of a nation to produce a good more efficiently than any other nation
Comparative Advantage
Inability of a nation to produce a good more efficiently than other nations but an ability to produce that good more efficiently than it does any other good
Factor Proportions Theory
Trade theory stating that countries pro due and export goods that require resources (factors) that are abundant and import goods that require resources in short supply
International Product Life Cycle Theory
Theory stating that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle
New Trade Theory
Trade theory stating that 1. there are gains to be made from specialization and increasing economies of scale 2. the companies first to market can create barriers to entry 3. government may play a role in assisting its home companies
First-Mover Advantage
Economic and strategic advantage gained by being the first company to enter an industry
National Competitive Advantage Theory
Trade theory stating that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade