Chapter 10
Business in a Global
Economy
If the demand for coffee in
the United States is so high,
why can we not simply
produce the coffee beans
in the US?
Chapter 10.1
The Global Marketplace
The Global Economy
The
connected economies of
all countries in the world.
International
 Fuels
trade
the global economy
 The exchange of goods and
services between nations.
 Referred to as globalization
Multi-National Corporation
A
company that conducts business
in many countries and has facilities
set up around the world.
 Examples?
Balance of Trade
 Imports
are greater than exports =
 Exports
are greater than imports =
Deficit
Surplus
 The
difference in value between a
country’s imports and exports over
a period of time = Balance of Trade
 Australia
 France
= Favorable trade balance
= Unfavorable trade
balance
Specialization
 Specific
 Builds
focus on one area
and sustains a market economy
 Countries
specialize in producing
certain goods.
 Comparative
Advantage – producing
a product more efficiently than
another country.
Currency
 Money
 Different
 Foreign
countries = different currency
Exchange Market
 Exchange
Rate – Price at which one
currency can buy another.
If you had $100 (US), how
much would you have in
your country?
Use Google Exchange Rate
Questions?
 What
factors have increased the demand
for U.S. ice cream in other countries?
 What
obstacles might an ice cream
exporter encounter when doing business
in other countries?
Chapter 10.2
Global Competition
Protectionism
 The
practice of the government putting
limits on foreign trade to protect
businesses at home.
 Efforts
to keep out foreign competitors
Reasons to restrict trade:
 Lower
demand for products made at home
 Possible
unfair foreign competition
 Industries
related to national defense need to
be protected (aircraft, satellites, weapons)
 Cheap
labor in other countries can lower
wages or eliminate jobs at home
 Risk
of becoming too dependent on countries
 Environmental
standards and human rights may
not be the same as ours
Trade Barriers
 Tariff
– tax placed on imports to increase their
price in the domestic market.
 Quota
– limit placed on the number of a
product that can be imported.
 Embargo
– ban on the import or export of a
product. Rare
Trade Alliances
 Several
countries merge their economies into one
huge market
 Free
Trade System
 Due
to global economy
 Used
to reduce limits on trade
 Ex’s:
NAFTA (North American Free Trade
Agreement) – US, Canada, & Mexico

Also, European Union and Association of Southeast
Asian Nations
Free Trade
 Occurs
when there are few or no limits on trade
between countries.
 Trade
Alliances formed
Extending Activity
 Trade



Alliance Activity
List 10 countries in this alliance
Describe any trade restrictions between these
countries.
Two interesting facts about the alliance.
 Girls
– Research the European Union (EU)
 Boys – Research the Association of Southeast
Asian Nations (ASEAN)
 Be
prepared to share!