International Business Environment

Government financial assistance to a domestic producer

Systematic risk-
Movements in a stock portfolio’s value attributable to
macroeconomic forces affecting all firms in an economy,
rather than factors specific to an individual firm.

Tax haven-
A country with exceptionally low, or no, income taxes.

Tax treaty-
An agreement specifying what items of income will be
taxed by the authorities of the country where the income
is earned.

Temporal method-
Translating assets valued in a foreign currency into the
home currency using the exchange rate that existed when
the assets were originally purchased.

Transaction exposure-
The extent to which income from individual transactions
is affected by fluctuations in foreign exchange values.

Transnational corporation-
A firm that tries to simultaneously realize gains from
experience curve economies, location economies, and
global learning, while remaining locally responsive.

Treaty of Rome-
This 1957 treaty established the European Community.

Turkney project-
A project in which a firm agrees to set up an operating
plant for a foreign client and hand over the “key” when
the plant is fully operational.

Vehicle currency-
A currency that plays a central role in the foreign
exchange market (e.g., the U.S. dollar and Japanese yen).

Voluntary export restraint (VER)-
A quota on trade imposed from the exporting country’s
side, instead of the importer’s; usually imposed at the
request of the importing country’s government

World Bank-
International institution set up to promote general
economic development in the world’s poorer nations.

World Trade Organization (WTO)-
The organization that succeeded the General Agreement
on Tariffs and Trade (GATT) as a result of the successful
completion of the Uraguay round of GATT negotiations.

Zero sum game-
A situation in which an economic gain by one country
results in an economic loss by another.

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