ch.1 introducionch.1 introductionch.1 introductionch.1 introduction.pptVIP

One service may be supplied in four ways Through an office maintained in the client’s country Through a visit to him by his foreign client By mail By a personal visit to that country Services of a professional adviser Others by their nature cannot: A tourist can only enjoy a foreign country’s beach by going there. Street cleaning services must be supplied on the spot. 2. Favorable balance of trade and unfavorable balance of trade The difference between the monetary value of EXPORTS and IMPORTS of output in an economy over a certain period. Favourable balance of trade: trade surplus, positive balance of trade, EXPORTS IMPORTS. Unfavorable balance of trade: trade deficit, negative balance of trade, EXPORTS IMPORTS. Balance of trade: important part of the current account of a nation’s balance of payment. Factors that can affect the balance of trade: The cost of production in the exporting economy relative to those in the importing economy; Exchange rate movements; Multilateral, bilateral and unilateral taxes or restrictions on trade; Non-tariff barriers such as environmental, health or safety standards; The availability of adequate foreign exchange with which to pay for imports, etc. Business cycle: during an economic expansion. In export led growth (such as oil and early industrial goods), the balance of trade will improve. With domestic demand led growth (as in the United States and Australia), the trade balance will worsen. A higher savings rate generally corresponds to a trade surplus. China, a high growth economy, has tended to run merchandise trade surpluses. Favorable trade balance for nearly two decades in succession since 1994. (Table 1-2) The United States has a lower savings rate and has had a growing deficit in tradable goods since the mid-1980s. Especially with Asian nations (China and Japan) which now hold large sums of U.S debt