Chapter 3: Entrepreneurship
Over the past two decades, world trade has climbed from $200 billion a year to more than $11
trillion. U.S. companies play a major role in the growth in world trade.
Foreign competition in the domestic market used to be rare, but now occurs in almost every industry.
Nevertheless, the global market has created vast, new business opportunities for many U.S. firms.
International trade serves multiple purposes. It improves relationships with allied countries, helps
ease tension among nations, and bolsters economies to raise living standards, provide jobs, and
improve the quality of life.
Why do nations trade?
One might argue that the best way to protect workers and the domestic economy is to stop trade
with other nations. However, nations are good at producing different things. In that case you benefit
by exporting things you do well. Economists refer to this specialization concept as advantage.
Dumping - The practice of charging a lower price for a product in foreign markets than in the firm’s
home market.
Agreement on Agriculture (AoA): The AoA was one of the major agreements
negotiated during the Uruguay Round. It aimed to reform international
agricultural trade by reducing subsidies, tariffs, and other trade-distorting
measures in the agricultural sector.
The Uruguay Round negotiations led to significant reductions in tariffs and non-
tariff barriers to trade across various sectors, thereby increasing market access
and promoting more open and competitive international trade.
The IMF's primary purpose is to promote global monetary cooperation,
exchange rate stability, balanced international trade, and sustainable
economic growth.
The IMF provides financial assistance to member countries facing balance of
payments problems or economic crises. This assistance can take the form of
loans, credit lines, or other financial instruments designed to stabilize the
country's economy and restore confidence in its financial markets
Countertrade - A form of international trade in which part or all of the payment for goods and
services is in the form of other goods and services
Countertrade is a fast-growing way to conduct international business. Roughly 30 percent of all
international business involves countertrade.