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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


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.


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.


U.S. Goods Export and Import Shares in 2007

Source: Federal Reserve Bank of St. Louis, National Economic Trends, September 2008, p. 18.


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.


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.


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


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


The Evolving European Union

Source: http://europa.eu/abc/european_countries/index_en.htm, accessed November 29, 2008.


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



Central American Free Trade Agreement (CAFTA)

El Salvador

Guatemala

Honduras

Nicaragua

3 | 12


Association of Southeast Asian Nations (ASEAN)

Brunei

Myanmar

Cambodia

Indonesia

Laos

Malaysia

Philippines

Singapore

Thailand

Vietnam

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