The Global Economy
“Its All Relative”
Copyright © Texas Education Agency, 2015. All rights reserved.
OBJECTIVES:
Students will
• Understand the impact of global trade on the U.S. economy
• Explain the role of balance of trade in relation to imports & exports
• Compare & contrast emerging economies with existing economies
• Evaluate the growth of multinational companies
• Discuss preindustrial and postindustrial economic systems
• Explain the importance of finding the right mix for foreign markets
Copyright © Texas Education Agency, 2015. All rights reserved.
TERMINOLOGY:
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NAFTA: North American Free Trade Agreement
WTO: World Trade Organization
EU: European Union
International Trade:
The sale of products/services to people in other countries
Imports: Products/services purchased from another country
Exports: Products/services sold to another country
Indirect Exporting:
Marketers with exporting experience represent the exporting company;
arranges for the sale of products in other countries.
Direct Exporting:
Company handles all responsibilities to market products in other countries.
Copyright © Texas Education Agency, 2015. All rights reserved.
• Balance of Trade
The difference between a country’s imports and exports
• Foreign Production
A company owns and operates production facilities in another country
• Joint Venture
Two or more companies in different countries with common interests develop
a relationship to join in common business activities
• Multinational Companies
Businesses that have operations all over the world and conduct planning for
worldwide markets
• Pre-industrial economy
Based on agriculture & raw material development; low standard of living
• Post-industrial economy
Based on mix of business and consumer products/services produced &
marketed in the global marketplace
• Gross Domestic Product
The total $ value of all good/services produced within a country in one year
• Gross National Product
The total $ value of all goods/services produced
Copyright © Texas Education Agency, 2015. All rights reserved.
• Quota
Limits on the numbers of certain types of products foreign companies can sell
in a country.
• Tariffs
Taxes placed on imported products to increase the selling price.
• Subsidy
Money provided to a business to help in the development and sale of products.
• Standard of Living
A measure of the quality of life for the citizens of a country.
• Productivity
The average output by workers for a specified period of time.
• Purchasing Power
The amount of goods/services that can be bought with a specific $ amount of
money.
• Consumer Price Index
The variance in the cost of a specified set of goods over time.
• Business Cycle
Consists of four stages: Prosperity, Recession, Depression and Inflation.
Copyright © Texas Education Agency, 2015. All rights reserved.
I. U.S. and International Trade
• World Interdependence
– Approximately 1/3 of world-wide production is
sold outside of the “home” country
– The bulk of products Americans use daily are
imported
– U.S. exports music, movies, cars, airplanes, and
food items
Copyright © Texas Education Agency, 2015. All rights reserved.
• International Trade is Changing
– Raw materials once were an abundant commodity;
today makes up less than 1/3 of world’s exports
– Manufactured goods/services are most popular
• Services (communications, travel, education & financial)
are most popular exchanges between countries
• Data is transferred via phone, fiber optics, or satellite on
daily basis
Copyright © Texas Education Agency, 2015. All rights reserved.
II. Businesses are Going Global
• Markets are changing
– Foreign markets are enticing to domestic businesses
who experience dropping sales & profit
– Another way to expand competition
– Increasing worldwide demand for products
• Benefits of international marketing
– Government support is available
Copyright © Texas Education Agency, 2015. All rights reserved.
III. Printing and Imaging Globally?
(some factors to consider)
• Culture and Customs
– Images and even hand gestures have different meanings in
different cultures
– Colors also have varying meanings and significance
– Research is essential to going global
• Language
– Translating words is one thing, but language is tied to culture and
knowing local phrases and speech patterns increases credibility
– The direction some languages are read may change the images
used in printing and imaging projects
• Resources
– It may be necessary to print in another country
– This may alter projects that require specific types of printing
Copyright © Texas Education Agency, 2015. All rights reserved.
Importance of International Trade
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U.S. economy: over 250,000 businesses export products
Accounts for over 11% of GNP
95% of U.S. exporting businesses are small to medium sized
Manufacturers export over $500 billion of products
Wholesalers export over $100 billion
U.S. is second largest exporter
Germany is #1 exporter
U.S. is #1 importer of products
Germany is #2 importer of products
U.S. had 1st trade deficit of 20th Century in 1971
(imports exceeded exports by over $1 billion that year)
Copyright © Texas Education Agency, 2015. All rights reserved.
Interpreted:
• Global 2000 companies study:
– Include 63 countries
– $38 trillion in revenues
– $159 trillion in assets
– Employ 87 million worldwide
– Country Ranking:
• U.S. (543 members)
• Japan (251 members)
• China (136 members)
Copyright © Texas Education Agency, 2015. All rights reserved.