INTL 3200 Final Ryan Powers

Comparative Advantage

The ability of a country or firm to produce a particular good or service more efficiently than other goods or services (lower opportunity cost), such that its resources are most efficiently employed in this activity

Absolute Advantage

The ability of a country or firm to produce more of a particular good or service than other countries or firms using the same amount of effort and resources

Neo-mercantilism

A contemporary version of mercantilism that encourages exports, discourages imports, and controls capital movement to increase a nation's currency reserves

Heckscher-Ohlin Trade Theory

The theory that a country will export goods that make intensive use of the factors of production in which it is well endowed (e.g., a labor-rich country will export labor-intensive goods)

Protectionism

The imposition of barriers to restrict imports, commonly used to shield domestic industries from foreign competition

Trade Barriers

Any government limitation on the international exchange of goods, such as tariffs, quotas, or regulations

Tariff

A tax imposed on imports; this raises the domestic price of the imported good and may be used to protect domestic producers from foreign competition.

Quantitative Restriction/Quota

A limit placed on the amount of a particular good that is allowed to be imported.

Nontariff Barriers to Trade

Obstacles to imports other than tariffs, including quotas, health and safety regulations, and even government subsidies for domestic industries

Stolper-Samuelson

The theorem that protection benefits the scarce factor of production (e.g., capital in a labor-rich country) and harms the abundant factor (e.g., labor in a labor-rich country).

Ricardo-Viner

A model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself (e.g., capital and labor in the steel industry lobby together)

Reciprocity

a mutual agreement to lower tariffs and other barriers to trade

Most-Favored Nation (MFN) Status

A status established by most modern trade agreements guaranteeing that the signatories will extend to each other any favorable trading terms offered in agreements with third parties.

World Trade Organization (WTO)

An institution created in 1995 to succeed the GATT and to govern international trade relations (more strict and formal, has guidelines to handle disputes)

General Agreement on Tariffs and Trade (GATT)

An international institution created in 1947 in which member countries committed to reduce barriers to trade and to provide similar trading conditions to all other members

Regional Trade Agreements

Agreements among three or more countries in a region to reduce barriers to trade among themselves (e.g., the EU or USMCA)

Portfolio Investment

Investment in a foreign country via the purchase of stocks, bonds, or other financial instruments, which does not involve managerial control of the foreign operation

Sovereign Lending

Loans from private financial institutions in one country to sovereign governments in other countries

Foreign Direct Investment (FDI)

Investment in a foreign country via the acquisition of a local facility or the establishment of a new facility, maintaining direct managerial control

Multinational Corporation (MNC)

An enterprise that operates in a number of countries, with production or service facilities outside its country of origin

Global Supply Chains

A network of firms and facilities that produce and distribute a product, often spanning multiple countries

Default

To fail to make payments on a debt

Depression

A severe downturn in the business cycle, associated with a major decline in economic activity and very high unemployment.

Recession

sharp slowdown in the rate of economic growth and economic activity

Austerity

The application of policies to reduce consumption, typically by cutting government spending and raising taxes

Bilateral Investment Treaty

An agreement between two countries about the conditions for private investment across borders.

World Bank

An important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects

International Monetary Fund (IMF)

A major international economic institution that was established in 1944 to manage international monetary relations and that now focuses on the international financial system

Exchange Rate

The price at which one national currency is exchanged for another.

Appreciate

In terms of a currency, to increase in value in terms of other currencies

Depreciate

In terms of a currency, to decrease in value in terms of other currencies

Devalue

To reduce the value of one currency in terms of other currencies.

Monetary Policy

An important tool of national governments to influence broad macroeconomic conditions such as unemployment, inflation, and economic growth, typically through the supply of money and interest rates

Central Bank

institution that regulates monetary conditions in an economy, including interest rates and the quantity of money in circulation

Fixed Exchange Rate

An exchange rate policy under which a government commits itself to keep its currency at a specific value in terms of another currency or a commodity, such as gold

Floating Exchange Rate

An exchange rate policy under which a government permits its currency to be traded on the open market without direct government control or intervention

Adjustable Peg

A monetary system of fixed but adjustable rates, where governments are expected to keep their currencies fixed for extended periods but are permitted to adjust them if economic conditions change

Gold Standard

The monetary system that prevailed between about 1870 and 1914, in which countries tied their currencies to gold at a legally fixed price

Bretton Woods System

The monetary order negotiated among the World War II allies in 1944, which was based on a U.S. dollar tied to gold

Less Developed Countries (LDCs)

Countries at a relatively low level of economic development

Infrastructure

Basic physical and organizational structures and facilities (e.g., buildings, roads, power supplies) needed for the operation of a society or enterprise

Primary Products

Raw materials and agricultural products, typically unprocessed or only slightly processed

Oligopoly

A market or industry that is dominated by a few firms

Terms of Trade

The relationship between a country's export prices and its import prices

Import-Substituting Industrialization (ISI)

A set of policies, pursued by most developing countries from the 1930s through the 1980s, to reduce imports and encourage domestic manufacturing

Export-Oriented Industrialization (EOI)

A set of policies, originally pursued in the late 1960s by several East Asian countries, to spur manufacturing for export, often through subsidies and incentives for export-friendly industries

Group of 77

A coalition of developing nations in the UN, formed in 1964 with 77 members, that seeks to promote its members' collective economic interests

Commodity Cartels

Associations of producers of commodities (raw materials and agricultural products) that restrict world supply and thereby cause the price of the goods to rise (e.g., OPEC)

Global Climate Change

Human-induced change in the environment, especially from the emissions of greenhouse gases, leading to higher temperatures around the globe

United Nations Framework Convention on Climate Change (UNFCCC)

An international environmental treaty adopted in 1992 to provide a framework for intergovernmental efforts to address climate change

Paris Agreement

An agreement negotiated under the UNFCCC in 2015, aimed at keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels

Tragedy of the Commons

A problem that occurs when a resource is open to all, without limit, and no one has an incentive to conserve it, causing the resource to be overexploited and degraded.

Public Goods

Products that are nonexcludable and nonrival in consumption, such as clean air

Common-Pool Resources

Goods that are available to everyone, such as open ocean fisheries; it is difficult to exclude anyone from using the common pool, but one user's consumption reduces the amount available for others.

Nonexcludable Goods

Goods that, if provided to one person, others cannot be excluded from consuming as well

Nonrival Goods

Goods for which consumption by one person does not diminish the quantity available for others

Kyoto Protocol

An amendment to the UNFCCC, adopted in 1997 and entered into force in 2005, that established specific targets for reducing emissions of carbon and five other greenhouse gases

Vienna Convention for the Protection of the Ozone Layer

A framework convention adopted in 1985 to regulate activities, especially emissions of CFCs, that damage the ozone layer

Montreal Protocol

An international treaty, signed in 1987, that is designed to protect the ozone layer by phasing out the production of a number of CFCs and other chemical compounds

Cap-and-Trade System

A system that sets limits on emissions, which are then lowered over time to reduce pollutants

Nationally Determined Contribution

The commitment each party to the Paris Agreement makes as to how they will contribute to reducing emissions and adapting to climate change