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UNIT 7 B

BASIC FACTORS AND IDEAS IN INTERNATIONAL BUSINESS

Exercise 1

Pronunciation Practice.

Practise saying the words.

Text

Basic Factors and Ideas in International Business

Pre-reading task: Skim the text and give the headings to parts of the text.

Part I

1.Most countries realize the advantages of the world trade. Countries have developed their economies, increased production of goods, and met market demands through increased world trade. The interdependence among trading nations has provided increased business opportunities.

2. International trade develops because certain countries are able to produce some goods more efficiently than other countries. They exchange goods to satisfy their needs and wants. Efficient production may be the result of several factors. A certain climate in a particular country may allow that country to grow agricultural products in abundance, e.g., the climates in the United States and Canada. Natural resources such as oil or coal are abundant in other countries. Countries with a large pool of unskilled laborers are able to produce products which are labor intensive (requiring a lot of labor) more cheaply than countries with highly paid, skilled labor forces. Another factor is geographical location. Countries like Singapore and Panama engage in(deal with) banking and trading because they are located on world trade routes.

3. There are several reasons why governments try to control the imports and exports of a country. One reason is that a country enjoys an advantage if it exports more than it imports. Some countries have special programs to encourage exports. They may be programs that provide marketing information, establish trade missions, subsidize exports, and provide tax benefits or incentives (reduce taxes). Government subsidies(financial support) allow companies to sell products cheaply. Sometimes these subsidized companies export their products and sell them cheaply overseas(in foreign countries). This practice is known as dumping. Dumping is selling on a foreign market at a price below the cost of production.

1.On the other hand, governments impose taxes and quotas to restrict(limit) imports of certain products. For example, to protect Japanese farmers, Japan limits the amount of produce that can be imported. Sometimes governments want to protect a domestic industry because that industry provides employment for the population. The labor unions also encourage the government to enact (establish) protectionist controls.

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