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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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