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Economies of scale
More is cheaper
Trade protection/protectionism
Using trade barriers like tariffs and quotas to protect domestic businesses
Tariff
Tax on imports
Quota
Limit on amount of a good imported
Export subsidy
Government funding that makes exports cheaper
Infant industry
New industry that needs trade protection to survive
National security
Ensuring a country has the resources to prevent and defend against attacks
Dumping
Subsidizing exports to undercut competition
Economically least developed countries (ELCD)
Poorest countries, HDI below .55
Diversification
Having a variety of industries
Preferential trade agreement
Increasing trade between countries by limiting tariffs
Bilateral
Between two countries
Multilateral
Between many countries
World Trade Organization
Promotes trade by keeping tariffs low between 166 countries
Free trade area/agreement
Eliminates tariffs between members (US MCA, EU)
Customs union
Common external trade policy
All members agree to trade agreements with other countries
Common market
Workers are free to cross the border
Sovereignty
A country’s control over its economy
Monetary union
Countries with same currencies
Foreign exchange
Other countries currencies
Floating exchange rate rates
Value of currency changes with global demand
Appreciation/depreciation
Rise/fall of currency value
Foreign direct investment (FDI)
Starting and running a business overseas
Portfolio investment
Buying stocks and bonds
Remittance
Sending money to other people and other countries
Speculation
Buying currency, or any assets, with the expectation that it will rise in the future
Fixed exchange rate
Using heavy Central Bank intervention to keep a currency at the same price
Overvalued/undervalued currency
When a currency has not adjusted to its equilibrium level
Balance of payments
Money flows in and out of the country
Current account
Trade in goods and services, remittances, and transfers
Capital account
Non-produced assets
Land, natural resources
Financial account
FDI, And other investments - Change in foreign reserves
Foreign reserves/reserve asset
Foreign currency is held in a bank
Sustainable development
Improvement in equality of life with an eye on the future
Human development index
Composite index, including income, life expectancy, mean and expected years of schooling
Gender inequality index
Measures women’s healthcare, labor, force, participation, and empowerment
Inequality adjusted HDI
HDI with inequality included
Poverty trap/poverty cycle
Poverty is a self reinforcing problem and needs intervention to fix it
Primary sector production
Farming, mining
Capital flight
Investment stop flowing to a country, investors leave
Corruption
Government officials serving own interests
Trade Liberalization
Moving towards free trade, no tariffs
Import substitution
Protectionist policy to spur industrialization in a country
Official development assistance
For an aid from government
Non-governmental organizations
Not for profit agencies, such as doctors without borders, Red Cross
International monetary fund
Development Institute that provides money to financially struggling countries
World bank
Provides money to countries for development project
Micro finance
Small loans to help entrepreneurs/farmers who otherwise don’t qualify