The introductory chapters in THE SUBJECT were designed to familiarize the reader with the field of international business and its main actors. As THE FIELD AND THE FRAMEWORK demonstrated, the field of international business is very diverse, involving people and corporations that exchange goods and services across national boundaries and invest the profits of their efforts either by buying government and corporate stocks and bonds, real estate, and other types of property or by setting up new factories and offices. Although the main participants in these activities are individual citizens of a given country, a great deal of international business is conducted through interactions between large private or semiprivate corporations and agencies of the governments of the countries involved. In international business nomenclature the corporation is known as a multinational corporation or an MNC, and the government agency represents the nation-state or the state. Thus the subject of inquiry in this book is the MNC-nation-state interaction system.
The three chapters that constitute THE THEORETICAL BASE: THE FUNDAMENTALS, are designed to acquaint the reader with the fundamentals. Every human endeavor involves the application of basic knowledge. The construction of a large highway or a port, for example, is an expression of basic principles of physics; the civil engineer who supervises such a project must have learned the fundamentals of physics to be able to calculate the distances, curvatures, inclines and declines, and so forth. The science that serves as the basis for the international business discipline is economics—the study of scarce resources that have alternative uses. In its pure scientific mode, economics deals with a basic question at the center of international business: Why and how do people and their organizations make decisions to buy, sell, and invest in wealth-creating facilities?
The three chapters that follow aim at providing a brief exposure to the fundamentals of international economics. INTERNATIONAL ECONOMICS, provides an overview of the workings of an open economy. The chapter focuses on the theoretical aspects of international economics rather than on the policy aspects. INTERNATIONAL TRADE, details the major characteristics of an exchange economy. INTERNATIONAL FINANCE, is designed to familiarize the reader with the fundamentals of this complex subject. Few people can claim to fully understand the workings of international financial markets and their main players. Ironically, the miracle of the electronic revolution, the computer, which has helped most other human endeavors considerably, has made the acquisition, sale, exchange, and transfer of money almost unfathomably complex. Thus the aim of the chapter is to provide a basic exposure to the primary concepts and techniques which are the tools of the trade.
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