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International business

International business. BBB4M – Ms. DiMarco . World Trade Simulation Debrief . Pleas of the Poor Fall on Deaf Ears. Discrimination, Wealth and Poverty?. Crime and Defense. Labour Specialization. You May Have Noticed…. Resource use/wastage Idle capital Leadership effectiveness

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International business

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  1. International business BBB4M – Ms. DiMarco

  2. World Trade Simulation Debrief

  3. Pleas of the Poor Fall on Deaf Ears

  4. Discrimination, Wealth and Poverty?

  5. Crime and Defense

  6. Labour Specialization

  7. You May Have Noticed… • Resource use/wastage • Idle capital • Leadership effectiveness • Innovation and entrepreneurship

  8. So… Why Did We Do This Simulation? • Welcome to international trade and how the real world that YOU LIVE IN functions…

  9. Is it possible to “win” as Bangladesh? • What does Bangladesh have? • Labour • Some capital (paper, broken pencils) • What does Bangladesh need? • Leadership (some direction, a strategy) • Quality capital investments (scissors would be nice)

  10. Determinants of Economic Growth Demographics Immigration Economic Policies Social Policies Sociocultural Factors Labour Force Growth Economic Growth (ΔGDP) K Quality K + L Combined improvements (technological progress) Productivity Growth

  11. Long-Run Growth Long-run growth can be achieved by investing in inputs (capital and labour) • Population growth, demographics, immigration (larger work force) • Capital Accumulation: output increases from more/better machines to work with

  12. Long-Run Growth Technological capabilities and innovation support the key drivers of economic growth • Productivity increases even when capital and labour input is held constant • New knowledge creation through R&D (innovation), learning by doing, EDUCATION

  13. Long-Run Growth Entrepreneurial environment is key to innovation • Requires political and social institutions that encourage private sector risk-taking and formation of new firms • “Silicon Valleys” are built on complex networks of labour and capital institutions which take long to develop

  14. Real-World Success Story SINGAPORE

  15. Singapore 1965

  16. Singapore Today

  17. So… What Happened to Singapore??? • Now it’s your turn to find out • Worksheet & Video online • Research the economic history of Singapore, answer questions about country’s development • Discussion

  18. Law of Supply and Demand Economics 101

  19. Intro to Economics • Law of Supply & Demand • Measuring economic activity • Trade: comparative & absolute advantage

  20. What is Economics? • The studyof what constitutes rational human behaviourin the endeavour to fulfill needs and wants • The rationale behind how and why people spend their money the way that they do • Economists are interested in your purchase decisions (i.e., why you would still buy coffee if the price increased by $2.00/cup)

  21. Macro versus Micro Economics • Macroeconomics: looks at the total output of a nation and the way the nation allocates its limited resources an attempt to maximize production levels and promote trade and growth (TOP DOWN APPROACH) • Microeconomics: looks into similar issues, but on the level of the individual people and firms within the economy (BOTTOM-UP APPROACH)

  22. Law of Supply & Demand • The effect that the availability of a particular product and the desire for that product has on price • Supply Curve • Demand Curve • Equilibrium 

  23. Supply Curve

  24. Demand Curve

  25. Equilibrium 

  26. Measuring Economic Activity GDP

  27. Measuring Economic Activity Gross Domestic Product

  28. GDP GDP = C + I + G + (X – M) C = Private Consumption (food, clothing etc.) I = Gross Investment (houses, factories etc.) G = Government Spending (role of state) X = Exports (foreigner spending) M = Imports (spending abroad)

  29. Pitfalls of GDP • GDP does NOT consider… • Underground Economy • Harmful Side Effects • Non-Market Production • Distribution of Wealth

  30. Why do we care… • GDP (economic indicator) is directly AFFECTED BY TRADE • The “(x – m)” portion of the equation • A country’s imports and exports factor in to their economic performance

  31. Economics and Trade

  32. WHY DO WE TRADE THEN? • Not every country has the resources it needs to provide all of the goods that their population wants/needs • To make up for this lack of resources, a country will TRADE the resources it has for resources it needs

  33. Comparative Advantage • The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another • Example: France is more efficient at producing cheese than Germany, and Germany is more efficient at producing beer than France… SO they each produce what they can for lower cost and TRADE for what they lack

  34. Absolute Advantage • The ability to produce more of a good or service than competitors, using the same amount of resources • Example: China can produce more toys per day than any other country in the world, they then have the absolute advantage in toy manufacturing

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