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Module 9 International Business and Trade

The document discusses key concepts in international business and trade, including the three main functions of foreign exchange markets: transfer, credit, and hedging functions. It then defines and compares the concepts of comparative advantage and absolute advantage. Comparative advantage refers to an economy's ability to produce a good or service at a lower opportunity cost than trading partners, while absolute advantage refers to superior ability to produce more or better goods without regard to opportunity cost.

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Elle Legaspi
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145 views7 pages

Module 9 International Business and Trade

The document discusses key concepts in international business and trade, including the three main functions of foreign exchange markets: transfer, credit, and hedging functions. It then defines and compares the concepts of comparative advantage and absolute advantage. Comparative advantage refers to an economy's ability to produce a good or service at a lower opportunity cost than trading partners, while absolute advantage refers to superior ability to produce more or better goods without regard to opportunity cost.

Uploaded by

Elle Legaspi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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National University- Baliwag

School of Business and Accountancy

MODULE 9:
GLOBAL COMPETITIVE ADVANTAGE

BAINBUSX: INTERNATIONAL BUSINESS AND TRADE


Financial Market Functions
Transfer Function
• basic and the most visible function of foreign exchange market is the transfer of
funds (foreign currency)
• conversion of one currency to another

Credit Function
• short-term credit to importers

Hedging Function
• to hedge foreign exchange risks
•
What Is Comparative Advantage?
 Comparative advantage is an economy's ability to produce a particular
good or service at a lower opportunity cost than its trading partners.

 The theory of comparative advantage introduces opportunity cost as a


factor for analysis in choosing between different options for production.

 Comparative advantage suggests that countries will engage in trade with


one another, exporting the goods that they have a relative advantage in.
What Is Absolute Advantage?

• Absolute advantage
refers to the uncontested
superiority of a country to
produce a particular good
better.
Comparative Advantage vs. Absolute Advantage

Comparative
advantage refers to Absolute advantage
the ability to produce refers to the ability to
goods and services produce more or
at a lower opportunity better goods and
cost, not necessarily services than
at a greater volume somebody else.
or quality.
THANK YOU!

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