Terms used in International Business Environment


International Business Environment Terms Used

Absolute advantage-
A country has an absolute advantage when it is more
efficient than any other country at producing a product.

Balance of payments accounts
National accounts that track both payments to and
receipts from foreigners.

Bill of lading
A document issued to an exporter by a common carrier
transporting merchandise.

Common market-
A group of countries committed to the pursuit of a
common external trade policy

Comparative advantage
The theory that countries should specialize in the production of goods and services they can produce most efficiently .

Current account deficit-
The current account of the balance of payments is in
surplus when a country exports more goods and services
that it imports.

Deferral principle-
Parent companies are not taxed on the income of a
foreign subsidiary until they actually receive a dividend
from that subsidiary.

Economic risk-
The likelihood that events, including economic mismanagement, will cause drastic changes in a country’s
business environment that adversely affect the profit and
other goals of a particular business enterprise.

A bond placed in countries other that the one in whose
currency the bond is denominated.

Any currency banked outside of its country of origin.

European Monetary System (EMS)
EU system designed to create a zone of monetary stability
in Europe, control inflation, and coordinate exchange
rate policies of EU countries.

European Union (EU)
An economic group of 15 European nations: Austria,
Belgium, Great Britain, Denmark, Finland, France, Germany, Greece, the Netherlands, Ireland, Italy, Luxembourg, Portugal, Spain and Sweden

Exchange rate-
The rate at which one currency is converted into another.

Expatriate manager-
A national of one country appointed to a management
position in another country.

Sale of products produced in one country to residents of
another country.

Fixed exchange rates-
A system under which the exchange rate for converting
one currency into another is fixed.

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