INTERNATIONAL
BUSINESS AND
TRADE
GERONIMO JR. L. PEREZ, LPT
Course Instructor
LESSONS
• Evolution of International Trade Theory: A Glimpse
• Barter
• Origin of Money
• History of the Philippine Currency
• Mobile Payments and Internet Payments
• Virtual Currency
International Business and Trade: Chapter I 2
INTRODUCTION
World Trade Organization (WTO)
the only global international
organization dealing with the rules
of trade between nations
to ensure that trade flows as
smoothly, predictably, and freely
as possible and to help producers
of goods and services, exporters,
and importers conduct their
business
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INTRODUCTION
World Trade Organization (WTO)
there have been constant efforts
made to unite countries to create
more markets, to standardize
tariffs and trade laws, as well as to
remove trade barriers in trying to
create free markets
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INTRODUCTION
Below are some of the many roles of
WTO:
1. It operates a global system of trade
rules.
2. It acts as a forum for negotiating
trade agreements.
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INTRODUCTION
Below are some of the many roles of
WTO:
3. It settles trade disputes between
its members.
4. It supports the needs of
developing countries.
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WORLD TRADE ORGANIZATION
• functions primarily as the forum for trade negotiations between
countries
• to open trade for the benefit of all
• precursor of the General Agreement on Tariffs and Trade (GATT), which
was established by a multilateral treaty of 23 countries in 1947 after
World War II in the wake of other new multilateral institutions dedicated
to international economic cooperation
• head quartered in Geneva, Switzerland
• 164 members
• each council, committee, or working party elects its own chairperson
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NGOZI OKONJO-
IWEALA
• Director General of the WTO effective
March 1, 2021
• 7th director-general of the WTO
becoming the first woman and the
first African to serve as director-
general
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NGOZI OKONJO-
IWEALA
• Bridging the broken trust amongst
members of the WTO and updating
the rules to meet the twenty-first
century realities are the priorities of
Ngozi Okonjo-lweala
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Lesson 1
EVOLUTION OF
INTERNATIONAL
TRADE AND
THEORY: A
GLIMPSE
INTERNATIONAL TRADE THEORIES
The evolution of the international trade theories reflects the
ways nations were addressing basic economic problems
due to unequal distribution of natural resources or
difference in geographical locations. Economists have
developed theories to address these economic problems and
explain the mechanisms of international business and trade.
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Sample Footer Text 12
INTERNATIONAL TRADE THEORIES
Other theories
• Liberalism
• Professionalism
• Free trade theory
• Leontiff Paradox
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Standard Theory of
International Trade
• Adam Smith’s Wealth
of Nations (1776) and
David Ricardo’s
Principles of
Economics (1951)
were published
• One of the earliest
efforts to develop an
economic theory
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Standard Theory of
International Trade
• A country’s wealth is
determined by its
holdings of gold and
silver
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THEORY OF FREE TRADE
• The works of Smith and Ricardo herald the formulation of a
theory of free trade
• Smith considered division of labor, as observed in the
nascent large-scale industries of his homeland England, as
the base for lowering labor costs, which ensured effective
competition across countries
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THEORY OF FREE TRADE
• It was left to Ricardo to sort out the basic premises of a theory
of free trade, which Smith had initiated
• Industrial capitalism was the second phase of capitalism in
which industries/factories became the dominant factor in the
production of goods. Imports of wage goods (corn) had a
special role by cheapening wage goods; hence, labor cost
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THEORY OF FREE TRADE
• Free trade, as opposed to the mercantilist policies of
protection, was championed by both Smith and Ricardo as a
route to achieve production efficiency at a global level
• Free trade system, individuals benefit from a greater choice of
affordable goods
• Mercantilism restricts imports and reduces the choices
available to consumers
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Absolute advantage
country’s inherent ability to produce specific goods efficiently
and effectively at a relatively lower marginal cost, lesser
workforce, lesser time, and lesser cost without compromising
the quality
Comparative advantage
country’s capability to produce the specific good at lower
marginal cost and opportunity cost compared to other
countries
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Lesson 2
BARTER
BARTERING
• Involves a direct trade/exchange of
goods and services.
• People exchanged their goods or
services for other goods or services
other people have in return
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BARTERING
• Bartering is the process of trading
services or goods between two
parties without using money in the
transaction
• A service can be exchanged for an
item, an item exchanged for a
service, or an item can be
exchanged for some other item
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ADVANTAGES
1. It does not involve money
2. Very simple such that issues confronted in international trade
like foreign exchange and unbalanced economic power are
virtually nonexistent
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DISADVANTAGES
1. It is difficult to find people who need what the other people
have
2. It is difficult to find the value of what one has versus the value
of what the other one has
3. There is no standard measure of value
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DISADVANTAGES
4. It is time-consuming
5. Parties in the bartering transaction will need to spend time
agreeing on the terms of the deal
6. If someone’s goods are perishable, it is hard to preserve it
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