Complete each sentence with a word.

■ comparative ■ exploit ■ incentive ■ quota ■ restrict ■ specialises ■ stimulate ■ tariffs

1 All countries try to......................the natural resources that they have.

2......................are a kind of tax that the government puts on imported goods.

3 Low interest rates can help to......................the economy and make it grow.

4 A rise in salary is an......................to make people work harder.

5 The UK economy......................in services such as banking and insurance.

6 Governments sometimes need to......................the flow of imports and exports.

7 The opposite of absolute is.......................

8 They have a......................which must be fulfilled if they want to keep the contract.

2. Now read the text again and decide whether these statements are true or false. If the statement is false, correct it in the space provided.

1 Imports can be good for an economy.      

2 A country’s natural resources can give it an absolute advantage over other countries.

3 A country with an absolute advantage will always have a comparative advantage, too.

4 A small economy can have a comparative advantage over a larger economy.

5 Specialising in one area of trade will give a country a comparative advantage.

6 Tariffs and quotas are used in order to increase imports into the economy.

3 You’re going to listen to four people talking about trade restrictions. Match the speakers with the reasons for restricting trade.There is one extra reason that the speakers do not mention.

SPEAKER 1......................

SPEAKER2......................

SPEAKER 3......................

SPEAKER 4......................

A to stop imports of dangerous goods

B to protect local jobs

C to punish other countries who use restrictions

D to stop the local market being flooded with cheap imports

E to let new local industries grow

4 Discuss the following with your partner.

Do you remember these ideas from earlier units? Tell your partner what you know about these things:

-> opportunity cost

-> economic welfare

-> the benefits of an open economy

5 Discuss this question with your partner.

-» Why do you think governments sometimes use tariffs and quotas to restrict free trade with other countries?

 

Text 2. INTERNATIONAL BUSINESS

 

The international corporation or global company has its origin. Usually it is the outgrowth of the great trading companies of the 17^th and 18^th centuries. In 1811 a New York statute said corporations could be created by the filing of documents. After that it became a matter of bureaucratic operations to become a corporation. By 1850 it was a very common thing in the United States and was under general statute in European countries as well. Since that time the corporate movement began.As the jet plane, satellite communications and computers began, it became possible for a company to control business in all the world.

The growth of international corporates operations is faster than the economic growth of the industrialized nations. There are some projects which predict that within a generation almost a half of the free words production will be internationalized.

This trend for internationalism presupposes some benefits such as new jobs, higher living standards and the closing of the gaps between people – economic, educational and technological. At the same time serious questions can be asked. Is it the most efficient way to use world researches? Can the international corporation be the best force for a better world? Is it politically stronger than government? Can it take care of the self interest and competitiveness on behalf of the greatest good? And in what way can the global company work toward easing the worlds crises – monetary, political, energy and food?

Exercises

1. Answer the questions.

1. What is the origin of the multinational company?

2. When did the corporate movement begin?

3. Why did it become possible for a company to control enterprises on the other side of the globe?

4. How quickly is internationalism growing?

5. What can internationalism bring?

6. What problems can arise with internationalism?

7. What are your own answers and explanations to this problems?

 

2. Choose the necessary word and put it in the sentence.

1. All countries must prepare for possible energy... in the future and save fuel.

2. If you want to form a corporation today you must fulfil... operations.

3. When one deals with the currency of another country, it is necessary to know the current... exchange rate.

4.... is one factor to influence the growth of international business.

5. Some analysts state that roost of the free worlds production will be... internationalized within a generation.

6. In 1985 the... said that cooperatives could be created.

7. International corporation is very often an... of old trading companies.

 

A internationalized

B statute

C bureaucratic

D14 monetary

E crisis

F satellite communication

G outgrowth

Dialogue

Nick and Ann are having lunch. Nick is an executive in the international computer company.

Nick          Do you like the idea of taking a month’s trip to fcurope and the Far East?

Ann What? You are kidding.

Nick No. First of all I must say that it’s a business trip. The company wants me to visit some of our operations. I should have meetings about the new computer I am developing. They think if we

combine expertise we’ll advance more quickly.

Ann Oh, Nick. It’s great. Where are we going to?

Nick To nine countries. We have nine development laboratories. In fact, only now I realize how largethe company is, a real global company.

Ann But the company started here in America.          

Nick Yes. In this sense, we’re American. Each company has to be incorporated somewhere, here or in Japan or Canada or India. But our corporation is a real multinational one.

Ann What does it mean then?

Nick Well, we are in 126 countries and we have there 125000 employees. We do our business in 28 languages and more than 32 currencies. Our plants are situated in 13 countries and we have eight

development labs.

Ann Now I sec. You are multinational. But such industries as shipbuilding, aircraft, automobiles can’t survive without selling abroad.

Nick Right. By the way, do you know that for the last seven years more than half of the corporation’s net income has come from overseas business. We are the part of the world community.

Ann It’s exciting, isn’t it?

Nick Yes, now we really can feel that nations are tied to each other through business operations. This internationalism is our hope for a better world.

Ann Well it’s time to pack.

Nick Later.

Ann Nick, can you explain me why do you sell a computer to a company in Canada when the company has a plant in Canada?

Nick Well, Ann. For example, it’s not unusual for a automobile company from Britain to manufacture automobiles in France for sale in Britain with Canadian-made engine, Swiss transmission and

German axles. It’s international business.

Ann But it is so complicated to sell the goods to a foreign company with different currencies and all that.

Nick I can tell you how we do.

Ann It’s very interesting.

Nick     When we deliver the machine to the shipping

company, we receive a bill of lading. It’s a receipt from the shipping company and it’s also the foreign company’s claim to the computer when it gets to England.

Ann   And what’s then?

Nick    When we write draft or check which direct the

British company to pay a sum in British pounds to a third parly in, let’s say, 90 days. We call it a “bill of exchange”, which includes the rate of exchange at the time and, in addition, the interest. It must be paid in the W day extension of credit.

Ann          That is hard time getting the money, isn’t it?

Nick     No. We take tin draft, the bill of lading and other necessary papers a to our New York bank. The draft is sold at discount, it means without interest change, for the face value and get dollars. That’s the way.

Ann      Well, but you get your money from the bank. How does the British company pay? Who do they pay?

Nick         It’s quite simple, New York bank sends the

documents and the draft to its branch in London or to a British bank. The transaction is finished usually by accepting British pounds into a checking account in a London bank.

Ann          It seems rather complicating.

Nick     It only seems so. The US supplied a computer,

exported the merchandise and got back a checking account deposit in a London bank, importing claim on British goods and services.

Ann          Could you have dollars instead?

Nick     Sure, but in this case we would have reduced the

existing British claim on American goods and services.

Ann          So what?

Nick        If some nations pile up continuing capital surpluses

and other continuing deficits the problem can arise in international economics.

 

Ann      I see that I must study the subject thoroughly before

we can continue.

Nick         Yes, may be.

 

Exercises

1. Use the structure of (he model 10 respond the following sentences.

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