When were talking about trade, you’ll probably hear the words “investments”, “portfolios”, “capital”, “debit and credit”, and BOP (thats balance of payments). These words to global trade advisors and financial aficionados are like second nature, but to those just breaking into the world of International Business, they can be daunting words. Let’s use an example that will give you a visual picture of just how everything comes together to understand how countries measure international business activity, balance payments, and look at exchange rates and altered trade prices.
By Professor Michael Czinkota & Josephine Tolosa
In light of Greece’s international indebtedness, there are numerous debates over the Grexit which refers to the exit of Greece from the Euro currency bloc.
If Greece leaves the currency bloc this will undermine the economic stability of the euro currency. Before the euro, the need to exchange foreign currencies within the region meant costs, risks, and a lack of transparency in transactions. The single currency brought new strengths and opportunities arising from the integration and scale of the euro-area economy, and made the single market more efficient. The common currency has reduced interest rates and kept inflation low. A single currency made doing business in the euro area easier for outsiders as well by facilitating international trade and investment and making traveling within the region much easier. The size and strength of the euro area also protects it more from external economic shocks such as unexpected changes in oil prices or turbulence in currency markets. Therefore it makes sense to prevent a Grexit and work out any disagreements between the euro members and Greece. In spite of sharing an orthodox religion, Greece should not be foisted into a Russian sphere of interest. The United States should be of help in the process. It’s a no to the Grexit.
Do you agree or not?
Tell me your thoughts in the comments section. The one with the most convincing argument will receive a soft copy of select articles from my book As I was Thinking.
Prof. Czinkota and Prof. Skuba discuss the remarkable 20% drop of the Euro in recent months and what this means for the future of the currency in this episode of Thoughts on International Business, Marketing and Strategy.
Thanks for watching and look for more episodes soon.