BBB4M CHAPTER 1. 1.1 Evolution of Global Trade Business - The manufacturing and/or sale of goods...

BBB4M

CHAPTER 1

1.1 Evolution of Global Trade

• Business - The manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit.

• Transaction - An exchange of things of value. $


• Domestic business - A business that makes most of its transactions within the borders of the country in which it is based.

• A domestic business in Canada is: owned by Canadians, relies on Canadian products and services, sells products and services to Canadians

• International business - The economic system of transactions conducted between businesses located in different countries.

Chapter 1: WHAT IS TRADE?


Domestic transactions are made between two Canadian companies.

International transactions involve a Canadian company and a non-Canadian company.



• Domestic market - The customers of a business who live in the country where the business operates.

• Foreign market - The customers of a business who live in a different country than the one where the business operates.

• Trading partner - When a business in Canada develops a relationship with a business in another country, that country becomes a trading partner with Canada



Five ways for a business to be consideredan international business:

1. Own a retail or distribution outlet in another country

2. Own a manufacturing plant in another country

3. Export to businesses in another country

4. Import from businesses in another country

5. Invest in businesses in another country


• SELF-SUFFICIENCY – The abiity to provide for all your basic needs, such as food, clothing, shelter, and water, without relying on anyone else.

• intentional communities, are set up to be somewhat self-sufficient. There are over 500 in the world; they include Eco-villages, student co-ops, and urban housing cooperatives. They are often based on shared values or themes such as environmentally sustainable living.


• Trade had been free for the most part

• Guilds (associations of merchants and/or craftspeople) : they controlled the manufacturing and sale of the products made by the people of the town

• No goods could be imported into town if they competed with local products and foreign merchants/traders had to pay a fee to trade un town


1.2 History of Canadian Trade

• Explorers from France and England landed in what is now Canada in the 1600s

• Traded with First Nations people, especially the Ojibwa and the Cree, for fur and food, then sent goods back to Europe

• The success of this international business led to the establishment of colonies and outposts in Canada, notably the Hudson’s Bay Company and the North West Company



Trade with the United States

• United States declared independence from Britain in late 1700s

• Needed to become self-reliant

• Invention of steam engine, cotton gin helped rapid growth of American industry

• Canada supplied raw materials that were needed in the United States

• United States became Canada’s largest trading partner—this remains true today



Trade with Asia

• Canada began trading with Japan after

World War II

• Japan became known for high-quality

electronics and automobiles

• China has more recently become a trading

partner

• Chinese-made products are inexpensiveand well made, and popular with North American retailers


History of Canadian Trade

Trade with Mexico

• Developed since signing NAFTA in 1993

• Goods made in Mexico and the United States now enter Canada duty-free

• Mexico has become one of Canada’s top five trading partners since 2000



Trade with Emerging Markets

The Middle East

• Has traditionally centred on oil, but this commodity is not sustainable

• Political instability, lack of industrialization in much of the region has limited trade

• United Arab Emirates (Dubai), Israel, and Egypt have established trading relationships with Canadian businesses that do not depend on oil




India• Population of over one billion people• Workforce generally young and well

educated• Has become major centre of

outsourcing and manufacturing• Lack of infrastructure and widespread

corruption are persistent problems• Indian companies are aggressively

expanding into international markets

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Africa

• African imports to Canada are very low• Business opportunities limited by unstable

governments, lack of infrastructure, rural economies

• Rich in primary resources• Some countries (Morocco, South Africa) are

beginning to emerge as major trading partners

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1.3 Canada’s Economic Identity

• Interdependence - The reliance of two or more nations on each other for products or services.

• Three main areas of interdependence:1. Primary/Extracting industries2. Secondary/Manufacturing industries3. Tertiary/Service industries



Primary industries

The sector of the economy characterized by the extraction of natural resources from the earth or sea.

Five major primary industries:• agriculture• fishing, hunting, and trapping• forestry and logging• energy• Mining

In Canada, water is sometimes included in this list as well



Secondary Industries

Industries that create a finished, usable product.

Secondary manufacturing produces capital goods (products used by businesses) and consumer goods (products purchased by individuals).

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Tertiary industries (service sector)

Industries that do not make a product or extract resources from the earth, but provide necessary services to consumers and other businesses.

Examples include banking, construction, communications, transportation, and retail sales.


1.4 Advantages of International

Trade• Meeting Needs

• Job Creation

• Attracting Investment

• New Technology & Materials

• Diverse Products & Services

1.4 Disadvantages of International trade

• Support of Non-Democratic Systems

• Cultural Identity Issues

• Social Welfare Issues

• Environmental Issues

• Political Issues

1.5 Barriers to International Trade

• TARIFFS

• CURRENCY FLUCTUATION

• INVESTMENT REGULATIONS

• ENVIRONMENTAL RESTRICTIONS

• FOREIGN RELATIONS AND TRADE SANCTIONS

1.5 Barriers to International Trade

• SAFETY REGULATIONS

• IMMIGRATION POLICIES

BBB4M CHAPTER 1. 1.1 Evolution of Global Trade Business - The manufacturing and/or sale of goods...

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