International Business

Chapter 6: Economic and Geographic Influences

Chapter Summaries

• The most common types of economic systems are market economies, command economies, and mixed economies.
• The degree of development of the natural, human, and capital resources of a country determine its ability to trade.
• Four stages that define the level of economic development are underdeveloped, developing, industrialized, and post-industrial. Countries in the latter two stages of economic development are capable of doing the most international trading.
• An absolute advantage for a country means that it produces a good or service more efficiently than any other country in the world. A comparative advantage for a country means that it specializes in producing goods and services that it can create more efficiently.
• Four basic geographic features are topography, deserts and rain forests, bodies of water, and climates. Success in international business involves taking advantage of positive geographic features, such as having a trade center near a body of water and a flat plain.
• Geography affects trade through location, time zones, and proximity. Close trading partners often are physically close together on a world map.