Introduction to Business Group Summary

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1. The Contemporary Global Economy

From time to time, the world economy is fast becoming an interdependent system through a process. This process is called Globalization. To make it simple, the definition of globalization is a worldwide movement towards economic through international trades, investments, etc.

Speaking of international trades, exports and imports are one of the most basic things to understand because a country can’t fulfill its own needs. Exports means selling product / service that was made domestically to other countries/abroad. Imports means buying product / service from other countries. So, exports and imports are one of the dominating factor in economical world.

A.1 The Major World Marketplaces

To be involved in international businesses, we need to examine some fundamental economic distinctions between countries based on :

• WEALTH

1. High-income countries :  >$11.500 per-capita annually
2. Upper-middle-income countries : $3.595 < x > $11.500 per-capita annually
3. Lower-middle-income countries : $905 < x > $3.595 per-capita annually
4. Low-income countries : >$905 per-capita annually 

• GEOPGRAPHIC CLUSTERS

1. North America : Largest marketplace, stable economy, major manufacturing center, etc.
2. Europe : integrated economic system, largest software exporter, center of biotech start-up, etc.
3. Pacific Asia : automobile, electronics, banking industries, etc.

A.2 Trade Agreements and Alliances

There are a few trade agreements and alliances in this world. Mainly it was divided by the region, such as :

1. North American Free Trade Agreement
2. The European Union
3. The Association of Southeast Asian Nations
4. The World Trade Organization

1. INTERNATIONAL TRADE

International trades occurs when an exchange takes place across national boundaries. It gives many benefits towards the economic of a nation, but it may be a disadvantage if the country can’t maintain an acceptable balance between exports and imports.

In deciding whether an overall balance exist between exports and imports, economists use 2 measures : balance of trade and balance of payments.

B.1 Balance of Trade

 Balance of trade means the economic value of all products a country exports minus the economic value of all products of it imports. A positive balance happened when a country exports more than imports. And a negative balance of trade results when a country imports more than exports.

A trade deficit occurs when a country has a negative balance of trade, and a trade surplus  occurs when it has a negative balance of trade.