International Business Chapter 5 - international trade - terms

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 the 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 -- an ability of the 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 holding that countries produce 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 holding that a company will begin by exporting its product, and later undertake foreign direct investment as a product moves through its life cycle.
New trade theory -- trade theory holding that #1 -- there are games to be made from specialization in increasing economies of scale, #2 -- the company's 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 holding that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade