Page 70 - Encyclopedia of Business and Finance

eobf_B 7/5/06 2:55 PM Page 47

B

BAIT AND SWITCH On a broader level, the world’s endowment of natu-
ral resources is both uneven and capricious. For example,
SEE Ethics in Marketing; Ethics in Law for Business; Gov-
Canada, with its huge forests, is a major producer of lum-
ernment Role in Business
ber and paper products; the Middle East has rich oil
reserves; and the coastal regions of the world are leaders in
the fishing industry. Ironically, however, each of these
nations (or regions) may lack resources (or goods) that are
BALANCE OF TRADE
abundant elsewhere.
Even though the United States is well endowed with both
Without international trade, each country would
human and natural resources, as well as the ways and
have to be totally self-sufficient. Each would have to make
means to use them in the production and distribution of do only with what it could produce on its own. This
goods and services, it cannot provide its people with all would be the same as an individual being totally self-
that they want or need. For this reason, the United States sufficient, providing all goods and services, such as cloth-
engages in international trade, which is the exchange of ing and food, that would fulfill all wants and needs. Inter-
goods and services with other nations. Without interna- national trade allows each nation to specialize in the
tional trade, goods would either cost more, not be avail- production of those goods it can produce most efficiently.
able, or, if available, be of unreliable supply. Specialization, in turn, allows total production to be

Four largest U.S. trading partners: 2004
(Merchandise exports and imports, in millions)
Percent of
Rank Country Exports Imports Trade Balance Total Trade
1 Canada 190 256 -66 19.5%
2 Mexico 111 156 -45 11.6%
3 China 35 197 -162 10.1%
4 Japan 54 130 -76 8%
Note: Trade Balance = Exports – Imports
SOURCE: U.S. Bureau of the Census, Foreign Trade Division, 2004.

Table 1

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