copyright © cengage learning. all rights reserved. 3 | 1 the extent of international business...
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The Extent of International Business
• Although the worldwide recessions of 1991, 2001-2002, and 2008 slowed the rate of growth, globalization is a reality of our time
• In the U.S., international trade accounts for over ¼ of GDP
• Trade barriers are decreasing, more competitors are entering the global marketplace, creating more choices for consumers and new job opportunities
• International business will grow with the expansion of commercial use of the Internet
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The World Economic Outlook for Trade
• Economic performance among nations is not equal; growth in advanced countries has slowed, while emerging and developing economies continue to grow rapidly
• At the current rate of global economic growth, world production of goods and services will double by 2025.
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Global Growth Remains Strong
Source: International Monetary Fund: World Economic Outlook by International Monetary Fund. Copyright 2008 by International Monetary Fund. Reproduced with permission of International Monetary Fund via Copyright Clearance Center.
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U.S. Goods Export and Import Shares in 2007
Source: Federal Reserve Bank of St. Louis, National Economic Trends, September 2008, p. 18.
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Value of U.S. Merchandise Exports and Imports, 2007
Source: U.S. Department of Commerce, International Trade Administration, http://www.census.gov/foreign-trade/statistics/highlights/top/top0712.html, accessed September 22, 2008.
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Ten Largest Foreign and U.S. Multinational Corporations
Source: Fortune Global 500, July 1, 2008, p. 165. Copyright © 2006 Time, Inc., www.fortune.com. All rights reserved.
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The General Agreement on Tariffs and Trade and the World Trade Organization
• General Agreement on Tariffs and Trade (GATT)– International organization of 153 nations dedicated to
reducing or eliminating tariffs and other trade barriers
– Most-favored-nation status (MFN)—Each member of GATT was to be treated equally by all other members
– Kennedy Round, Tokyo Round, Uruguay Round, Doha Round
• World Trade Organization (WTO)– Created in the Uruguay Round of GATT negotiation as
a successor to GATT
– WTO oversees GATT provisions, has judicial powers to meditate trade disputes arising from GATT rules and exerts more binding authority than GATT
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International Economic Organizations Working to Foster Trade
• Economic community– An organization of nations formed to promote
the free movement of resources and products among its members and to create common economic policies
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The Evolving European Union
Source: http://europa.eu/abc/european_countries/index_en.htm, accessed November 29, 2008.
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International Economic Organizations Working to Foster Trade (cont’d)
North American Free Trade Agreement (NAFTA)
United States
Canada
Mexico
Chile is expected
to become the 4th
member
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International Economic Organizations Working to Foster Trade (cont’d)
Central American Free Trade Agreement (CAFTA)
El Salvador
Guatemala
Honduras
Nicaragua
3 | 12
International Economic Organizations Working to Foster Trade (cont’d)
Association of Southeast Asian Nations (ASEAN)
Brunei
Myanmar
Cambodia
Indonesia
Laos
Malaysia
Philippines
Singapore
Thailand
Vietnam
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