UNIT 3 - INTERNATIONAL TRADE POLICY

trade policy

comprises the rules and regulations gov puts into place to govern transactions across national borders

common market

a group of countries commited to the pursuit of a common external trade policy

floating exchange rate

a system under which the exchange rate for converting one currency into another is continuously adjusted depending on the laws of supply and demand

globalization of markets

moving away from an economic system in which national markets are distinct entities

infant industry argument

new industries in developing countries must be temporarily protected from international competiotion to help them reach a position wherethey can compete on world markets with the firms of developed nations

international strategy

trying to create values by transferring core competencies to foreign markets where indigenious competitors lack those competencies

local content requirement

a requirement that some specifc fraction of a good be produced domestically

VER - voluntary export restraint

a quota on trade imposed from the exporting country’s side, instead of the importer’s; usually imposed at the request of the importing country’s gov

tax haven

a country with exceptionally low, or no, income taxes

minimum efficient scale

the level of output at which most plant-level scale economies are exhausted

polycentric staffing

a staffing policy in an MNE in which hos-country nationals are recruited to manage subsidiaries in their own countries, while parent-country nationals occupy key positions at corporate headquarters

economic risk

the likelihood that events, including economic mismanagement, will cause drastic changes in a country’s business environment that adversely affect the profit and other goals of a particular business enterprise

free trade

the absence of barriers to the free flow of g&s btw countries

positive sum game

a situation in which all countries can benefit evenif some benefits more than others

price elasticity of demand

a measure of how responsive demand for a product is to changes in price

systematic risk

movement in a stock portfolio’s value attributable to macroeconomic forces affecing all firms in an economy, rather than factors specific to an individual firm

mixed economy

private sectors with private ownership and free market mechanism + public sectors with significant gov ownership and planning

balance of payment

a staistical summary of a country’s total trade, other economic transactionsa nd financial flows at a given time

= current account + capital account

current account

show trade in g&s, income and unrequited transfers (eg. foreign aid payment, workers remittances)

capital account

record currency inflows and outflows due to international dealings in financial assets, such as investments and loans

balance of trade

the balance btw exports and imports in an economy

code of conduct

a non-binding intergovernmental instrument that seeks to regulate certain types behavior of govs pr private corporations

commercial policy

cover gov acts, policies and practices which influence trade in g&s

competition policy

approaches of gov to the promotion and protection of competition, consists of competition laws and policies achieving similar aims

contigent multilateralism

mean that multilateral action should be taken whenever possible to improve market access, but sometimes preferential liberization in the form of free-trade agreement and unilateral action would be better

contigent protection

protective mechanism - are legal under the WTO agreement - may be triggerred to counter the effects of dumping, subsidies and unexpected import surges causing injury to domestic industry

internationalisation

the extension of economic activities across national borders to harness the benefits of lower costs in other economies, with countries specializing in a particualr stage of production

globalisation

the increasing integration of national economic systems through growth in international trade, investment and capital flows

protectionism

a climate of economic policy formulation which sees merit in preventing the exposure of domestic producers to te rigours of the international market

free trade

the free movement across borders of g&s, capital and people

trade liberalization

the gradual or complete removal of existing impediments to trade in g&s

trade policy

the complete framework of laws, regulations, international agreements and negotiating stances adopted by gov to achieve legally binding market access for domestic firms

bilateral trade agreement

an agreement btw 2 countries setting out the conditions under which trade btw them will be conducted

multilateral trade agreement

intergovernmental agreements aimed at expanding and liberalizing international trade under non-discriminatory, predictable and transparent conditions set out in an array of rights and obligations

multilateralism

an approach to the conduct of international trade based on corporations, equal rights and obligations, non-discrimination and the participation as equals of manycountries regardless of their size or share of international trade

competitive advantage

it state that the success of a firm or an industry is based on cost advantages in the production of a relatively standardized product or product-based advantages related to the development of differentiated products. Firms with…are often concentrated geographically, which in turn assists the development of a workforce with the relevant skills