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Trade

The exchange of goods and services between countries.

Tariffs

Taxes imposed on imported goods to make them more expensive and protect domestic industries.

Quotas

Restrictions on the quantity of a good that can be imported into a country.

Subsidies

Financial support provided by the government to domestic firms to lower production costs and increase competitiveness.

Economies of scale

Reductions in average production costs as a firm increases its scale of production.

Fixed costs

Costs of production that do not change with the level of output in the short run.

Dumping

When a country exports goods at an artificially low price, often below their normal value or cost of production.

Intellectual property

Creations of the mind, such as inventions and designs, that are legally protected.

Patents

Legal rights giving inventors exclusive control over their inventions for a limited period.

Reverse engineering

Examining a product to understand how it works and potentially reproduce its design.

Balance of payments

A record of all economic transactions between a country's residents and the rest of the world over a period of time.

Trade deficit

When the value of a country's imports exceeds the value of its exports.

Tax base

The total income, assets or economic activity that can be taxed by the government.

Industrial base

The manufacturing industries and productive capacity within an economy.

Misallocation of resources

When resources are not distributed efficiently, resulting in reduced economic welfare.

Trade war

A situation in which countries retaliate against each other by imposing trade barriers, such as tariffs and quotas.

Downstream industry

An industry that uses the output of another industry as an input to produce further goods or services.

Unilateral preferential scheme (WTO)

An arrangement in which developed countries grant developing countries preferential access to their markets through reduced or zero tariffs without requiring equal concessions.

Bilateral trade agreement

A trade agreement between two countries to reduce trade barriers and increase trade.

Multilateral trade agreement

A trade agreement involving three or more countries to establish common rules and reduce trade barriers.

Trading bloc

A group of countries that agree to reduce or eliminate trade barriers between themselves.

Free trade area

A trading bloc in which members remove trade barriers between themselves but maintain independent trade policies towards non-members.

Embargo

A government-imposed ban on trade with a particular country or on specific goods.

Customs union

A trading bloc that removes trade barriers between members and establishes a common external trade policy towards non-members.

Globalisation

The increasing integration and interdependence of economies through international trade, investment, technology and movement of people.

Floating exchange rate

An exchange rate determined by the supply and demand for a currency in the foreign exchange market.

Foreign direct investment (FDI)

Investment by a foreign individual or company in productive assets or businesses in another country, usually involving significant control.

Portfolio investment

Investment in foreign financial assets, such as shares and bonds, without gaining control over the business.

Appreciation

An increase in the value of a currency relative to other currencies.

Depreciation

A decrease in the value of a currency relative to other currencies.

Fixed exchange rate system

An exchange rate system in which the government or central bank maintains the currency's value at a fixed level against another currency or a basket of currencies.

Revaluation

An official increase in the value of a currency under a fixed exchange rate system.

Devaluation

An official decrease in the value of a currency under a fixed exchange rate system.

Remittance

Money sent by individuals working abroad to people in their home country.

Speculation (global economics)

Buying or selling currencies or financial assets in anticipation of future price changes to make a profit.

Balance of trade

The difference between the monetary value of a country's exports and imports of goods.

Cost-push inflation

Inflation caused by an increase in the costs of production, leading firms to raise prices.

Demand-pull inflation

Inflation caused by an increase in aggregate demand that exceeds the economy's productive capacity.

Current account

A section of the balance of payments recording trade in goods and services, primary income and secondary income.

Pegged exchange rate

An exchange rate in which a currency's value is fixed or linked to another currency or basket of currencies.

Managed float exchange system

An exchange rate system in which the currency mainly fluctuates according to supply and demand, but the central bank occasionally intervenes.

Credits

Transactions that bring money into a country, such as exports and income received from abroad.

Debits

Transactions that involve money leaving a country, such as imports and income paid abroad.

Capital account surplus

When capital account credits exceed capital account debits, resulting in a net inflow recorded in the capital account.

Financial account surplus

When financial account credits exceed financial account debits, resulting in a net inflow of investment into a country.

Current transfers

One-way transfers of money or goods between countries where nothing is received in return, such as foreign aid and remittances.

Capital transfers

One-way transfers of wealth or assets between countries, such as debt forgiveness or grants for purchasing capital goods.