GST 110 Ch. 6 & 7

Capitalism

a system of economic organization based on private property and free markets

Mercantilism

the economic approach that promotes the aggressive pursuit of exports and the simultaneous protection of domestic markets to acquire and expand wealth and power

Liberalism

the economic approach, commonly traced to the writings of Adam Smith, that emphasizes the role of the free market in promoting economic growth and prosperity

Comparative Advantage

the idea that countries should produce and export goods that they can produce at a lower cost than others and import items that others produce at lower cost

Hegemon

the dominant power in the global economy

Nondiscrimination

the idea that countries would extend preferential trade status to all their trade partners

Reciprocity

the idea that countries would respond to actions taken by their trade partners to reduce trade barriers with similar reductions of their own

Most-Favored Nation

a means to promote trade equality by guaranteeing that if one country is given better trade terms by another, all other partners must receive the same benefit

Dependency Theory

the view that the development of countries in the Global South is limited by the unfavorable terms utilized to integrate them into the global capitalist economy

Petrodollars

U.S. dollars earned through the sale of petroleum

Neoliberalism

the economic principles that promote free market capitalism and reflect the ideals of contemporary globalization

Conditionality

the requirements imposed on prospective borrowers by the IMF or other lending institutions that emphasize economic growth over welfare considerations

Outsourcing

the transfer of certain specific functions performed within a company to an outside provider

Offshoring

the relocation of an entire business operation to another country

Current Account

the equivalent of a country’s checkbook, reflecting the combined balances on trade in goods, services, income, and net transfers

Protectionism

government policies that restrict imports in an effort to shield local businesses from global competition

Doha Rounds

the most recent international trade negotiations conducted under the auspices of the WTO

Intellectual Property Rights

patents, copyrights, and trademarks extended to individuals and organizations to protect their ownership of products or other creative works generated through their original ideas

North American Free Trade Agreement

an arrangement designed to expand cross-border trade and investment signed by Canada, Mexico, and the United States in 1994

Portfolio Investment

the purchase of stocks, bonds, or other financial assets that does not result in direct management or control over an enterprise

Direct Investment

the acquisition of corporate assets through the purchase of property, a plant, or equipment

Transnational Corporations

companies that operate on a global scale with integrated operations across regions and countries

Washington Consensus

the set of economic policy reforms imposed by the IMF and other Washington, DC–based financial institutions on potential borrowers

Securitization

the pooling of various loans (including those with considerable risk) into securities and selling them to other institutions

Securities

bond or stock certificates

Sovereign Debt

a government’s outstanding financial liabilities and obligations

Group of Twenty

the G20 Finance Ministers and Central Bank Governors, representing leading industrial and emerging market countries