ECON1001 Topic 9 – International Trade Vocabulary

Key vocabulary terms and theoretical concepts regarding global markets, comparative advantage, and international trade restrictions from the ECON1001 lecture notes.

Imports

The goods and services that we buy from people in other countries.

Exports

The goods and services we sell to people in other countries.

National comparative advantage

The ability of a nation to perform an activity or produce a good or service at a lower opportunity cost than any other nation.

Tariff

A tax on a good that is imposed by the importing country when an imported good crosses its international boundary, such as India's $100\text{ percent}$ tax on wine from the United States.

Import quota

A restriction that limits the maximum quantity of a good that may be imported in a given period, used by the United States for products like sugar, bananas, beef, textiles, and paper.

Export subsidy

A payment made by the government to a domestic producer of an exported good, which brings gains to domestic producers but results in domestic overproduction.

China's $2020$ Export Rank

The world's top exporter in $2020$, accounting for $13\text{ percent}$ of the world's total (up from $12\text{ percent}$ in $2019$) and totaling $US\text{\textdollar} 2,323\text{ billion}$.

Basis for comparative advantage

Differing opportunity costs between countries.

Other Import Barriers

Thousands of detailed health, safety, and other regulations that restrict international trade.

Infant industry argument

One of the seven arguments for restricting trade which claims that protection helps a young domestic industry grow.

Dumping

A practice that trade restrictions aim to counteract as part of the case against free trade to protect domestic industries.

Offshore outsourcing

The process of sending local jobs abroad, which protectionists argue should be reduced to protect domestic employment.

Domestic Consumers

The millions of individuals who gain from free trade due to low-cost imports, though the benefit per individual is small.

Import-competing producers (Lobbying)

A group of a few thousand producers who lose from free trade and have a strong incentive to incur the expense of lobbying for tariffs.

Free trade price effects

International trade results in a lower price for an imported good and a higher price for an exported good.