Week 3 - International Trade

These flashcards cover major concepts and terms related to international trade and economic theories discussed in the lecture.

Mercantilism

An economic theory that states a nation’s strength comes from having lots of gold and silver, advocating for more exports and fewer imports.

Export

To sell goods abroad.

Import

To buy goods from abroad.

Corn Laws

Tariffs on imported grain introduced in Britain after 1815 to protect English farmers, leading to food price increases.

Absolute Advantage

A situation where one country can produce more of a good or service with the same resources than another country.

Comparative Advantage

A country should specialize in producing goods it can produce most efficiently, even if it can produce everything better than another country.

Factor Proportions Theory

Explains why countries export and import specific types of goods based on their resources.

New Trade Theory

Argues that not all gains from trade are equal and that first-mover advantages can dominate trade.

Global South

Refers to poorer, less-developed regions of the world, often former colonies.

Neocolonialism

The practice of keeping poorer nations dependent on developed countries without formal colonial governance.

Offshoring

The relocation of a business process to another country to reduce costs, often synonymous with moving jobs overseas.

Industrial Policy

Government measures aimed at promoting specific sectors of the economy.

CHIPS and Science Act

A legislative measure to support U.S. semiconductor production and reduce dependence on foreign sources.

Emergent Industries

New, fast-growing sectors of the economy that are prioritized for growth and development.

Trade Protectionism

Economic policy of restraining trade between nations through tariffs and other regulations.

Problems with Mercantilism

• Assumed trade was zero-sum

• Led to wars, inefficiency, and colonial exploitation

European Powers

Britain, France, Spain, Portugal, Dutch

Monopoly 

A market structure characterized by a single seller, controlling the entire supply of a good or service, and restricting competition.

Triangle of Trade

• Europe to Africa: sent manufactured goods

  • Examples: guns, rum, textiles

• Africa to Americas: sent enslaved people

• Americas to Europe: sent raw goods

  • Examples: sugar, tobacco, cotton

Mercantilist colonial system

An economic policy that aims to increase a nation's wealth by government regulation of all economic activity, often through colonial expansion and monopolistic practices.

Navigation Acts

A series of laws passed by the British Parliament that regulated colonial trade and enabled England to collect taxes from the colonies, restricting colonial trade to English ships.

Rise of Free Trade

Adam Smith advocated for minimal government intervention in the economy, promoting competition and free markets.

Sweatshops

Factories where workers, often in poor conditions, are paid very low wages; frequently associated with the garment industry.

The Garment Worker Statue

• A statue of a man sewing

• Where: Manhattan’s 7th Avenue in NYC, in the Garment District.

Krugman 

"Not t-shirts but America should focus on industries of the future, not the past"

• Let the market decide what gets made in the U.S.

• Some limited government intervention is helpful

Bipartisan

Members of both political parties (democrats and Republicans) supported the law

Democrats (liberal/ progressive party)

Political party advocating social equality and environmental issues, often supporting government intervention.

Republicans (Conservative party)

Political party advocating free markets, individual liberties, and limited government intervention.