International Trade Flashcards

Flashcards covering key vocabulary and concepts from the International Trade lecture.

Factors of Production

Land, labor, and capital are the different endowments that influence a country's trade capabilities.

Adam Smith

Specialization in economic activities leads to increased wealth in societies.

Absolute Advantage

The ability of a country to produce more of a good or service than another country using the same amount of resources.

Comparative Advantage

The ability of a country to produce a good or service at a lower opportunity cost than another country.

Free Trade

Absence of barriers like tariffs and quotas that restrict international trade.

Tariff

A tax imposed on imported goods, typically paid by the importer.

Quota

A quantitative restriction that limits the amount of a foreign good that can be sold domestically.

Non-tariff barriers

Barriers to trade that include quotas, requirements that governments purchase from national producers, technical barriers to trade and sanitary and phytosanitary regulations.

Heckscher-Ohlin (HO) Trade Theory

Countries export goods that make intensive use of their well-endowed factors of production.

Stolper-Samuelson

Protectionism benefits the scarce factor of production, increasing its price.

Ricardo-Viner (Specific Factors)

Factors of production are tied to their industry; actors (industrial sectors) care about profits within industries.

Intra-firm Trade

Trade that takes place within companies, such as foreign subsidiaries and supply chains.

Intra-industry Trade

Trade of similar products between advanced industrial countries, often driven by brand name and consumer preferences.

Protectionism

Government policies that restrict free trade to protect domestic industries.

Deadweight Loss

Efficiency losses to the economy as a whole caused by trade barriers.