BA CORE 6 | INT’L TRADE & AGREEMENT

2nd SEMESTER REVIEWER

The amount by which the value of a country's
LESSON 1: Evolution of exports exceeds the cost of its imports.
International Trade Implies there is high demand from overseas for a
Theory A Glimpse country's goods and services, which tends to push their prices
INTERNATIONAL TRADE up and contribute to a strengthening of the domestic currency.

INDUSTRIAL CAPITALISM

Is the exchange of goods and services across The second phase of capitalism in which industries/
international borders. This type of trade allows for a greater factories became the dominant factor in the production of
competition and more competitive pricing in the market. The goods.
competition results are more affordable products for the
consumer. MERCANTILISM

Trade theory states nations should accumulate

EVOLUTION OF INTERNATIONAL TRADE financial wealth, usually in the form of gold and by
THEORIES encouraging exports and discouraging imports is called
Mercantilism.
Reflects the ways nations were addressing basic
economic problems due to unequal distribution of natural  It also reduces the choices available to
resources or difference in geographical locations. consumers.
These are the following problems of international trade: DIVISION OF LABORS

 Exporting Licensing Breaking down processes into specific steps so one

 Import Licensing
 Import quotas.
 Other taxes to pay for imported goods.
ECONOMISTS
Have developed theories to address these economic
problems and explain the mechanisms of international
business and trade.
The main historical theories are called classical are
from the perspective of a country, or country based. But
middle of 20th Century the theories began to switch in Modern
theories which is company or firm based.
2 TYPES OF DEVELOPED THEORIES
Classical Country-Based Modern Firm-Based
person could develop a specialty.
Is the separation of a work process into a number of
tasks, with each task performed by a separate person or group
of persons to boost productivity and efficiency and enhance
specialization.
ABSOLUTE ADVANTAGE
The 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.
Defined as the ability to produce more goods or
services than competitors.
COMPARATIVE ADVANTAGE

Refers to the country's capability to produce specific

• Mercantilism • Country Similarity
goods or manufacture multiple types of goods with limited
• Absolute • Product Life Cycle resources at lower marginal cost and opportunity cost
Advantage • Global Strategic compared to other countries.
• Comparative Rivalry
Advantage • Free Trade Theory MARGINAL COST
• Heckscher-Ohlin
The cost incurred in producing an additional unit of
a product.

OPPORTUNITY COST
The evolution of what is recognized as the Standard Means the value you will get from an alternative
Theory of International Trade goes back to the years when that you did not choose.
Adam Smith's Wealth of Nations (1776) and David
Ricardo's Principles of Economics (1951) were published.

WEALTH OF NATIONS

These are the Three (3) ideas that Popularized economic

concept.

1. Division of Labor

2. Productivity

3. Free trade
LESSON 2 & 3: BARTER, PH
TRADE SURPLUS HISTORY, 21ST CENTURY
BARTERING
 BA CORE 6 | INT’L TRADE & AGREEMENT
Bartering is the act of trading one good or service
for another without using a medium of exchange such as
money. A bartering economy differs from a monetary
economy in a variety of ways.
Example:
A service can be exchange for an item exchanged
for a service, or an item can be exchanged for some other
item.
Europeans started traveling across the globe and
used barter services to trade their goods like Fur and Craft to
the East. In exchange for perfumes and silk.
The people of colonial America used wheat, skin of
male deer, and Musket balls to do business.
In the initial years of Oxford and Harvard
Universities, students used to pay their fees in terms of food
items, firewood, or livestock.
PARTIES
In the bartering transaction will need to spend time
agreeing on the terms of the deal.
PRIMARY DIFFERENCES
Is that goods or services are exchanged immediately,
and the exchange is reciprocal, meaning it’s a negotiated or
fair trade, with each party getting the thing they want or
need in an even amount to what they are offering in exchange.
USES OF BARTERING
Bartering is generally conducted directly between
two parties. However, it may be done multilaterally through
a trade exchange.
Developed countries generally don’t engage in
barters unless they’re done in conjunction with the
standard monetary system of the country, and even then, it
is only used in rare instances.
In times of monetary crisis or collapse, a barter
system is often established to continue the trading of goods
and services and to keep a country functioning. This may
occur if physical money is simply not available, or if a
country sees hyperinflation or a deflationary spiral.
ADVANTAGES OF BARTERING
• It is very simple.
• It does not involve money.
• Allows individuals to get they need with what
they already own
• Mutually beneficial arrangement that doesn’t
involve the exchange of cash or another
monetary medium such as a credit card.
DISADVANTAGES OF BARTERING
• There is no standard measure of value.
• It is difficult to find people who need what the
other people have.
• It is time consuming.
• It is inefficient.
• Guarantee fair exchange.
NOMADIC LIFE
Moving from place to place with no intention of
setting in the new location. This means there is no permanent
home for nomads.
2nd SEMESTER REVIEWER
After years of nomadic life, people started settling
down in areas, where they began growing plants and raising
farms and animals.
CULTIVATION AND FARMING FLOURISHED
People then had enough time to spend on other work,
like pottery, carpentry, weaving and the like, they started
trading surplus goods and the system if trade flourished.
Bartering can be traced back to 6000 BC. The Barter
system was introduced by the tribes of Mesopotamia. Then
adopted by Phoenicians who bartered their goods to people
in other cities located across the oceans. An improved system
of bartering was developed in Babylonia.
People used to exchange their goods for weapons,
tea, spices and food items even Human skull were used for
barter.
SALT was so valuable at that time that the salary
of Roman soldiers was paid in salt.
HISTORY OF PHILIPPINE CURRENCY
BARTER was the means of trade long before the
Spaniards came to the Philippines.
Trade among the early Filipinos and with traders
from the neighboring countries like China, Java, Borneo and
Thailand
INCONVENIENCE OF BARTER SYSTEM
Led to the adoption of a specific medium of
exchange. The cowries, glossy, often colorful patterned
shells.
 BARTER RINGS. Made in gold were the first local
of coinage called Piloncitos.
Philippine Republic of 1898 under General Emilio
Aguinaldo issued its own coins and paper currency backed
by the country’s natural resources.
Malolos arsenal, two types of two-centavo copper
coins were struck. One-peso and five-peso revolutionary notes
printed as Republika Filipina Papel Moneda de Un Peso
and Cinco pesos were freely circulated.
The coming of the Americans in 1898, modern
banking and currency and credit systems were instituted
making the Philippines on of the most prosperous countries
in East Asia.
AMERICAN INSTITUTE
A monetary system for the Philippines based on
gold (Gold Standard) and pegged the Philippine peso to the
American dollar at the ratio f 2:1, two pesos = one US dollar.
GOLD STANDARD
Is a monetary system where a country’s currency
or paper money has a value directly linked to gold,
countries agreed to convert paper money into a fixed amount
of gold per unit of currency.
Years later, a new set of coins and notes were issued
carrying the logo of the new Bangko Sentral ng Pilipinas.
21ST CENTURY
 BA CORE 6 | INT’L TRADE & AGREEMENT
2nd SEMESTER REVIEWER
MOBILE PAYMENT

Are money rendered for a product or service

through a portable electronic device, such as a cellphone or
tablet device. It can be used to send money to friends or family
members.

NEAR FIELD COMMUNICATION

Payment in technology that allow two devices, your

phone and a payment terminal to process contactless
payments using close-proximity radio frequency
identification.

MAGNETIC SECURE TRANSMISSION

When a phone emits a magnetic signal imitating the

magnetic strip on the payer’s credit card, which the card
terminal picks up and processes as if a physical card was
swiped through the machine.

MST is secure as it uses a secure tokenization

system.

MOBILE OR DIGITAL WALLET

Stores payment information on a mobile device

usually in an app that utilize different technologies in the
payment process.

QUICK RESPONSE (QR)

Codes are the trademark of a type of matrix barcode

readable by smartphones. This is more secure because your
phone, that you card details are securely connected to,
confirms you are the owner of the card.

4 IMPORTANT ADVANTAGES OF QR
1. It stores a large volume of data.
2. It can be scanned from a screen, not just paper.
3. It can be read even if part of the code is
damaged.
4. It is safer because information can be encrypted.
AUTO PAY

It is done when payments to credit cards or other

bills, like for water, electricity, or whether bills need to be
paid, are scheduled to be automatically paid on a certain date
from funds of the payee with a certain bank, just like a debit
card.

PAYMENT LINKS

It is mostly commonly referring to a link sent in an

email, text message or over social media to process a
transaction for a specified merchant etc.