Global Trade

Chapter 1
Globalization

Apple Oppo Vivo Symphony

Samsung Xiaomi Sony We
Nokia Walton Blackberry Motorola
-------- Set up of Mind (Cultural) (Positive contribution of Globalization)

COVID – 19 CASINO RANA PLAZA TAZREEN FASHION

---------- Misconception of Globalization

Topic # 1: Globalization:

Bangladesh USA

 RMG RMG

 More order Loosing

 More Job Less

 More Income Low

 Spending more Less/High

 Savings more Low/More

 Economic development More M/H GDP

A. Definition
B. Benefits ----- Micro and Macro

C. Transformation from Local to International Context:

C (i). Globalization of Market:

Pran Food and beverage ltd. co.

International Global

Globalization of
Market

Multi-domestic Perspective Global perspective

C (ii). Globalization of Production:

India --- Pran frooto ; Maaza,,, XYZ ABC

 Cost Minimization approach

Topic # 2: Drivers of Globalization:
 Privatization
 Trade liberalization/relaxation
 Service sector
 Deregulation
 Cross border opens due to declining trade barriers
 Advancement in Technology

Chapter 4 and 5 Compiled Together

Differences in Culture and Ethics in International Business

Topic # 1: Definition of Culture:

DO NOT
DO
Topic # 3: Hofstede’s Dimensions of Culture:

1. Power distance:
High vs. Low Power Distance
2. Individualism - I versus collectivism-WE
3. Uncertainty avoidance:
High UAI vs. Low UAI
4. Masculinity versus femininity
5. Time orientation:
LTO vs. STO

Chapter 6
International Trade Theories

Topic # 1: The Impact of Free Trade and Globalization:

Or, Benefits for a country to engage in International Trade:

Developing Nations:
Gain / Benefits:
RMG Sector of Bangladesh – More order from foreign – More production (income) – More Job
– Stimulates economic growth.
Sacrifice / Cost:
 Environment Pollution
 Inflation due to more income at hand

Developed Nations:

Benefits:
Consumer purchase product at a reasonable rate

Cost:
 High-cost local garments producers are suffering as their local consumers are purchasing
foreign (Bangladesh) brands.
 Deflation due to low income at hand

Topic # 2: Different Theories of International Trade:

Or, The Pattern of Export and Import of Goods and services in
between Countries:

First Theory: Mercantilism Theory: Zero- Sum Game

 In England in the Mid-16th century

 Gold and Silver
 Trade Surplus – More export and less import (Promoting export and limiting Import)
 Government Intervention is required to maintain trade surplus by subsidizing exports and
limiting imports by tariffs and quotas.
 Country would accumulate gold and silver and increase its national wealth, prestige, and
power.
 Core benefit is thus increase overall national wealth by foreign trade.

Limitation of Mercantilism Theory by David Hume in 1752 –

 - Trade Surplus will generate inflation in one country and deflation in another country.
- Hence trade will be a zero-sum game, in which a gain by a country results in a loss by
another.

Presence of Mercantilism theory:

- No longer exist – as by foreign trade all countries can benefit, and trade is a positive-sum
game.
- Exception is as per critics – China (it has adopted this theory to rule the world)

Second Theory: Absolute Advantage Theory: Positive - Sum Game

 Adam Smith in 1776
 Specialization and Efficiency and productivity

Third Theory: Comparative Advantage Theory: Positive- Sum

Game
 David Ricardo in 1817
 Comparative advantage based on labor productivity

Fourth Theory: Heckscher – Ohlin Theory:

 Comparative advantage based on differences in relative national factor endowments

 The more abundant a factor, the lower its cost.

The Leontief Paradox: Advance factor vs. Basic Factor

Fifth Theory: Product Life Cycle Theory

 Different phases of PLC

Sixth Theory: New Trade Theory

  Economies of Scale by specialized employee and physical equipment
 Varieties of consumer goods
 Decrease average costs of these goods

Seventh Theory: National Competitive Advantage Theory

 Michael Porter’s four factors