Nations and companies trade internationally for any of six reasons: focusing on their relative strengths (producing the goods and services in which they excel and trading for other products they need); expanding into new markets to increase sales revenues; pursuing economies of scale to achieve lower production costs; acquiring materials, goods, and services not available at home; tending to the needs of multinational customers; and keeping up with competitors that are expanding internationally. Two primary measures of a country’s international trade are its balance of trade, which is exports minus imports, and its balance of payments, a broader measure that includes all incoming payments minus all outgoing payments
The root cause of trade conflict is that every country has a natural interest in protecting its own security and supporting its industries, workers, and consumers. The result is that countries often deviate from the notion of free trade by intervening in various ways, including the use of tariffs, import quotas, embargoes, restrictive import standards, export subsidies, antidumping measures, and sanctions.
Major organizations that facilitate trade include the World Trade Organization (WTO), the International Monetary Fund (IMF), and, at least indirectly, the World Bank. Major regional trading blocs include NAFTA (Canada, Mexico, and the United States), the European Union (more than two dozen countries across Europe), and APEC (21 countries around the Pacific Rim).
Elements of culture include language, social values, ideas of status, decision-making habits, attitudes toward time, use of space, body language, manners, religions, and ethical standards. Awareness of and respect for cultural differences is essential to avoiding communication breakdowns and fostering positive working relationships. Understanding differences in legal systems and specific laws and regulations in other countries is another vital aspect of successful...