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INTERNATIONAL BUSINESS

What? Why? How?

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WHAT IS INTERNATIONAL BUSINESS?

Components

Exchanging GoodsExchanging

Factors

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Exchanging Goods

Goods (Tangibles)Services

(Intangibles)

Tradeable GoodsNon- Tradeable

Goods

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Exchanging Factors

Capital Labour

Direct Route

Portfolio Route

Skilled Unskilled

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WHY?Basic Axioms

World is not uniformly "Endowed".

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RATIONALITYThe Maximizing Attitude: All economic agents have their own ‘utility’ functions.

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Caveat: Rationality is contextual – It is strictly ‘economic’ in nature.

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Caselet: Suppose your boss calls you in his office and asks you to choose one of the following options there and then:

Which one will you choose and why?

ABSOLUTE VS. RELATIVE GAIN

Option I10% increase in your salary and 100% increase in your

colleagues salary.

Option IINobody gets any increase

in salary.

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ABSOLUTE & COMPARATIVE

ADVANTAGE

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Factors of Production shall move from low return areas to high return areas.

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HOW?International Players & Mediators:WTOWorld BankIMF

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ROLE OF STATE Nationalism Vs. Internationalism Myths & Realities

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INTERNATIONAL LIQUIDITY Barter System Role of Gold Role of U.S. Dollar Exchange Rate Problems

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WHERE DO I FIT IN?

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