International Economics

global labor arbitrage

Global Labor Arbitrage

lobal labor arbitrage is where, as a result of the removal or reduction of barriers to international trade, jobs move to nations where labor and the cost of doing business (such as environmental regulations) is inexpensive and/or impoverished labor moves to nations with higher paying jobs. Two common barriers to international trade are tariffs (politically imposed)…

non-availability approach

The Non-Availability Approach

he Non-Availability Approach explains why a country imports the goods that are not available at home. It was conceptualized by Irving Kravis. There are two kinds of unavailability – absolute and relative.   Absolute Unavailability The presence or absence of natural resources could easily be fitted into the Heckscher-Ohlin model. The Heckscher-Ohlin model stresses the differences in relative…

trade finance

Trade Finance

anks involved in commercial lending provide a wide range of financing packages for international trade, commonly called trade finance. Trade finance not only assists the buyer in financing its purchase but also provides immediate cash to the seller for the sale. This is profitable for the lending institution. This mechanism is an important financing or credit…

Introduction to Bill of Exchange

Introduction to the Bill of Exchange

 bill of exchange is a specialized type of international draft used to expedite foreign money payments in many types of international transactions. In addition, a draft is commonly used in the U.S. while a bill of exchange is primarily used outside the U.S. A negotiable instrument is a signed writing, containing an unconditional promise or order to…

letters of credit

Letters of Credit

etters of credit are an obligation of a bank, usually irrevocable, issued on behalf of their customer and promising to pay a sum of money to a beneficiary upon the happening of a certain event or events. Letters of credit are the substitution of the credit and good name of a bank for that of their customer,…

exchange rate

Exchange Rate

he exchange rate of a currency is the price a currency expressed in terms of another currency. Ex: $1 is worth €0.82 (07/15/12). The foreign exchange market is a market where currencies are exchanged for other currencies. In this market, all buyers are also sellers since they are buying in one currency and selling another. Types…

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