AFM131 Lecture Notes - Lecture 1: Free-Trade Area, General Agreement On Tariffs And Trade, Devaluation

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: David H A

Document Summary

Why trade with other countries: no country can produce all goods that its population needs. Some countries have an abundance of natural resources but limited technology, other countries vice versa: allows for free trade: the movement of goods and services among nations without political or economical barriers. Workers must accept pay cuts from employers who threaten to move their jobs to lower cost global markets. Moving operations overseas = loss of service & white collar jobs. Domestic companies can lose their comparative advantage. Productivity improves if country has a competitive advantage. Access to foreign investments: keeps interest rates low. Canadian import facts: 2. 4% of world merchandise trade, 1. 7% of world services trade, account for one in three canadian jobs, can be sold abroad directly as export or indirectly as foreign located subsidiary of a canadian company. Licensing: a global strategy in which a firm (licensor) allows a foreign company (licensee) to produce its product in exchange for a fee (royalty)