Term
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Definition
| The increasing integration of economies around the world, particularly through trade and financial flows, but also through the movement of ideas and people, facilitated by the revolution in telecommunications and transportation. |
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Term
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Definition
| The economic relationships among nations. |
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Term
| Anti-globalization movement |
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Definition
| The loose organization that blames globalization for many human and environmental problems throughout the world and for sacrificing human and environmental well-being to the corporate profits of multinationals. |
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Term
| International Trade Theory |
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Definition
| Analyzes the basis and the gains from trade. |
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Term
| International Trade Policy |
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Definition
| Examines the reasons for and effects of trade restrictions. |
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Term
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Definition
| A summary statement of all the international transactions of the residents of a nation with the rest of the world during a particular period of time, usually a year. |
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Term
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Definition
| The framework for the exchange of one national currency for another. |
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Term
| Adjustment in the balance of payments |
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Definition
| The operation and effects of the mechanism for correcting balance-of-payments disequilibria. |
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Term
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Definition
| The study of the individual units, such as a particular nation and the relative price of a commodity. |
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Term
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Definition
| The study of the whole or the aggregate, such as the total receipts and payments of a nation and the general price index. |
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Term
| Open-economy macroeconomics or international finance |
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Definition
| The study of foreign exchange markets, the balance of payments, and adjustment to balance-of-payments disequilibria. |
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Term
| WTO (World Trade Organization) |
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Definition
| The international organization that regulates international trade in goods and services. |
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Term
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Definition
| The bank that provides loans to developing countries for developing programs and poverty reduction. |
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Term
| IMF (International Monetary Fund) |
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Definition
| The organization that oversees that rules in international finance are allowed. |
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Term
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Definition
| The international organization to facilitate cooperation in international law, security, economic development, social progress, and human rights. |
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Term
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Definition
| The forces that give rise to trade between two nations. This was absolute advantage according to Adam Smith and comparative advantage according to David Ricardo. |
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Term
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Definition
| The increase in consumption in each nation resulting from specialization in production and trading. |
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Term
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Definition
| The commodities exported and imported by each nation. |
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Term
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Definition
| The body of writings prevailing during the 17th and 18th centuries that postulated that the way for a nation to become richer was to restrict imports and stimulate exports. Thus, one nation could gain only at the expense of other nations. |
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Term
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Definition
| The greater efficiency that one nation may have over another in the production of a commodity. This was the basis for Adam Smith. |
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Term
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Definition
| The policy of minimum government interference in or regulation of economic activity, advocated by Adam Smith and other classical economists. |
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Term
| Law of comparative advantage |
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Definition
| It postulates that a nation should specialize in and export the commodity in which its absolute disadvantage is smaller (this is the commodity of its comparative advantage), and should import the other commodity. |
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Term
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Definition
| The theory that the cost or price of a commodity is determined by or can be inferred exclusively from its labor content. |
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Term
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Definition
| The theory that the cost of a commodity is the amount of a second commodity that much be given up to release just enough resources to produce one more unit of the first commodity. |
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Term
| Production Possibility Frontier |
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Definition
| A curve showing the various alternative combinations of two commodities that a nation can produce by fully utilizing all of its resources with the best technology available to it. |
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Term
| Constant opportunity costs |
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Definition
| The constant amount of a commodity that must be given up to produce each additional unit of another commodity. |
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Term
| Relative commodity prices |
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Definition
| The price of one commodity divided by the price of another commodity. This equals the opportunity cost of the first commodity and is given by the absolute slope of the production possibility frontier. |
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Term
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Definition
| The utilization of all of a nation's resources in the production of only one commodity with trade. This usually occurs under constant costs. |
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Term
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Definition
| The situation where trade takes place at the pretrade relative commodity prices in the large nation so that the small nation receives all of the benefits from trade. |
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Term
| Increasing opportunity costs |
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Definition
| The increasing amounts of one commodity that a nation must give up to release just enough resources to produce each additional unit of another commodity. The is reflected in a production frontier that is concave from the origin. |
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Term
| Marginal Rate of Transformation (MRT) |
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Definition
| The amount of one commodity that a nation must give up to produce each additional unity of another commodity. This is another name for the opportunity cost of a commodity and is given by the slope of the production frontier at the point of production. |
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Term
| Community indifference curve |
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Definition
| The curve that shows the various combinations of two commodities yielding equal satisfaction to the community or nation. Community indifference curves are negatively sloped, convex from the origin, and should not cross. |
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Term
| Marginal Rate of Substitution (MRS) |
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Definition
| The amount of one commodity that nation could give up in exchange for one extra unit of a second commodity and still remain on the same indifference curve. It is given by the slope of the community indifference curve at the point of consumption and declines as the nation consumes more of the second commodity. |
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Term
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Definition
| The absence of trade, or isolation. |
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Term
| Equilibrium-relative commodity price in isolation |
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Definition
| The relative commodity price at which a nation is maximizing its welfare in isolation. It is given by the slope of the common tangent too the nation's production frontier and indifference curve at the autarky point of production and consumption. |
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Term
| Equilibrium-relative commodity price with trade |
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Definition
| The common relative commodity price in two nations at which trade is balanced. |
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Term
| Incomplete specialization |
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Definition
| The continued production of both commodities in both nations with increasing costs, even in a small nation with trade. |
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Term
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Definition
| The ratio of the index price of a nation's export to its import commodities. |
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Term
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Definition
| A curve that shows how much of its import commodity a nation demands to be willing to supply various amounts of its export commodity, or willingness of the nation to import and export at various relative commodity prices. |
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Term
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Definition
| Another name for the offer curve. |
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Term
| Heckscher-Olin Theory (H-O) theory |
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Definition
The theory that postulates that
1) a nation exports commodities intensive in its relatively abundant and cheap factor
2) international trade brings about equalization in returns to homogeneous factors across countries. |
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Term
| Heckscher-Olin Theorem (H-O) Theorem |
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Definition
| The part of the H-O theory that postulated that a nation will export the commodity intensive in its relatively abundant and cheap factor and import the commodity intensive in its relatively scarce and expensive factor. |
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Term
| Factor-price equalization (H-O) theorem |
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Definition
| The part of the H-O theory that predicts, under highly restrictive assumptions, that international trade will bring about equalization in relative and absolute returns to homogeneous factors across nations. |
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Term
| Stolper-Samuelson theorem |
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Definition
| It postulated that free international trade reduces the real income of the nation's relatively scarce factor and increases the real income of the nation's relatively abundant factor. |
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Term
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Definition
| The model to analyze the effect of a change in commodity price on returns of factors in a nation when at least one factor is not mobile between industries. |
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Term
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Definition
| The empirical finding that U.S. import substitutes were more K intensive that U.S. exports. This is contrary to the H-O trade model which predicts that, as the most K-abundant nation, the U.S. should import L-intensive products and export K-intensive products. |
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Term
| Increasing returns to scale |
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Definition
| The production situation where output grows proportionately more than the increase in inputs or factors of production. For example,doubling all inputs more than doubles output. |
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Term
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Definition
| A firm's purchase of parts and components abroad, rather than itself producing them at home in order to keep costs down in a global world economy. |
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Term
| International economies of scale |
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Definition
| The increased productivity resulting from the firm's integration of its entire system of manufacturing operations around the world. |
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Term
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Definition
| The somewhat different products (such as automobiles,cigarettes, and soaps) produced by different manufacturers in the same industry of general product group. |
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Term
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Definition
| International trade in the differentiated products of the same industry or broad product group. |
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Term
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Definition
| The hypothesis that a portion of international trade is based on the introduction of new products or processes. |
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Term
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Definition
| The hypothesis, advanced by Vernon, that new products introduced by industrial nations and produced with skilled labor eventually become standardized and can be produced in other nations with less skilled labor. |
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Term
| Transport or logistic costs |
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Definition
| Freight charges, warehousing costs, costs of loading and unloading, insurance premiums, and interest charges while goods are still in transit. |
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Term
| Nontraded goods and services |
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Definition
| Those goods and services that are not traded internationally because the cost of transporting them exceeds the international price difference. |
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Term
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Definition
| The level of pollution accepted in various countries. |
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Term
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Definition
| The form of market organization where there are many firms selling a differentiated product and entry into or exit from the industry is relatively easy. |
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Term
| Trade or commercial policies |
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Definition
| The regulations governing a nation's commerce or international trade. |
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Term
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Definition
| A tax or duty on imports. |
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Term
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Definition
| A tax or duty on exports. |
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Term
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Definition
| A tariff expressed as a fixed percentage of a value of a traded commodity. |
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Term
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Definition
| A tariff expressed as a fixed SUM per unit of a traded commodity. |
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Term
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Definition
| A combination of an ad valorem and a specific tariff. |
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Term
| Consumption effect of a tariff |
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Definition
| The reduction in domestic consumption of a commodity resulting from the increase in its price due to a tariff. |
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Term
| Production effect of a tariff |
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Definition
| The increase in domestic production of a commodity resulting from the increase in its price due to a tariff. |
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Term
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Definition
| The reduction in the volume of trade in the commodity resulting from a tariff. |
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Term
| Revenue effect of a tariff |
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Definition
| The revenue collected by the government from the tariff. |
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Term
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Definition
| The difference between what consumers are willing to pay for a specific amount of a commodity and what they actually pay for it. |
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Term
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Definition
| A payment that need not be made in the long run in order to induce producers to supply a specific amount of a commodity or factor services. |
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Term
Protection Cost
Deadweight Loss of a Tariff |
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Definition
| The real losses in a nation's welfare because of inefficiencies in production and distortions in consumption resulting from a tariff. |
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Term
| Terms of trade effect of a tariff |
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Definition
| The reduction in the price of the import commodity that results when a large nation imposes an import tariff. |
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Term
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Definition
| The rate of tariff that maximizes the benefit resulting from improvement in the nation's terms of trade against the negative effect resulting from reduction in the volume of trade. |
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Term
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Definition
| A tariff sufficiently high to stop all international trade so that the nation returns to autarky. |
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Term
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Definition
| A tariff (such as an ad valorem) calculated on the price of a final commodity. |
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Term
| Rate of effective production |
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Definition
| The tariff calculated on the domestic value added in the production of a commodity. |
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Term
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Definition
| A direct quantitative restriction on trade. |
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Term
| Nontariff trade barriers (NTBs) |
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Definition
| Trade restrictions other than tariffs, such a voluntary export restraints; technical, administrative, and other regulations; as well as those arising from international cartels, dumping and export subsidies. |
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Term
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Definition
| New forms of nontariff trade barriers. |
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Term
| Voluntary export restraints (VERs) |
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Definition
| Refer to an importing country inducing another country to "voluntarily" reduce its exports of a commodity to the importing nation under the threat of higher all-around trade restrictions. |
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Term
| Technical, administrative, and other regulations |
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Definition
| NTB such as safety, health, labeling requirements, and border taxes. |
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Term
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Definition
| An organization of supplies of a commodity located in different nations (or a group of governments) that agrees to restrict output and exports of the commodity with the aim of maximizing or increasing the total profits of the organization. An international cartel that behaves as a monopolist called a centralized cartel. |
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Term
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Definition
| The export of a commodity at below cost or at a lower price than sold domestically. |
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Term
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Definition
| The continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a lower price abroad than domestically; called international price discrimination. |
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Term
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Definition
| The temporary sale of commodity at a lower price abroad in order to drive foreign producers out of business, after which prices are raised to take advantage of the newly acquired monopoly power abroad. |
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Term
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Definition
| The occasional sales of a commodity at a lower price abroad than domestically in order to sell an unforeseen and temporary surplus of the commodity abroad without having to reduce domestic prices. |
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Term
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Definition
| The granting of tax relief and subsidized loans to potential exporters, and low interest loans to foreign buyers of the nation's exports. |
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Term
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Definition
| A US government agency that extends subsidized loans to foreigners to finance US exports. |
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Term
| Foreign sales corporations |
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Definition
| The overseas subsidiaries set up by the US corporations to take advantage of partial exemption from US tax laws. |
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Term
| Countervailing Duties (CVDs) |
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Definition
| Tariffs imposed on imports to offset subsidies by foreign governments. |
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Term
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Definition
| The tariff rate that would make the price of imports equal to domestic prices so as to allow domestic producers to meet foreign competition. |
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Term
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Definition
| The argument that temporary trade protection is needed to set up an industry and to protect it during its infancy against competition from more established and efficient foreign firms. |
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Term
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Definition
| Refers to a firm producing in its own plants abroad some of the parts and components that it uses in its products. |
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Term
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Definition
| The argument that an activist trade policy in oligopolistic markets subject to extensive external economies can improve a nation's welfare. |
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Term
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Definition
| An Activist policy by the government to stimulate the development and growth of some usually high-tech, industry in an industrial nation. |
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Term
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Definition
| Raised average import duties in the US to that all-time high of .59 percent in 1932. |
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Term
| Trade Agreements Act of 1934 |
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Definition
| Authorized the President to negotiate with other nations mutual tariff reductions of up to 50 percent under the most-favored-nation principle. |
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Term
| Most-favored-nation principle |
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Definition
| The extension to all trade partners of any reciprocal tariff reduction negotiated by the US with any other nation. |
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Term
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Definition
| Trade between any two nations. |
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Term
| General Agreements on Tariffs and Trade (GATT) |
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Definition
| An international organization devoted to the promotion of freer trade through multilateral trade negotiations. |
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Term
| Multilateral trade negotiations |
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Definition
| Trade negotiations among many nations. |
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Term
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Definition
| A protectionist device that prevented the president from negotiating any tariff reduction that would cause serious damage to a domestic industry. |
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Term
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Definition
| A protectionist device that allowed any industry that claimed injury from imports to petition the ITC which could then recommend to the president to revoke any negotiated tariff reduction. |
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Term
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Definition
| A protectionist device that prevented any tariff reduction (even if already negotiated) that would hurt industries important for national defense. |
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Term
| Trade Expansion Act of 1962 |
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Definition
| Granted the President authority to negotiate across-the-board tariff reductions of up to 50 percent of their 1962 level and replaced the no-injury principle with adjustment assistance. |
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Term
| Trade Adjustment Assistance |
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Definition
| The provision of the Trade Expansion Act of 1962 which provides assistance to displaced workers and firms injured by trade liberalization. |
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Term
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Definition
| Granted the President authority to negotiate tariff reductions of up to 60 percent of their post-Kennedy Round level and to negotiate reductions in NTB. |
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Term
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Definition
| The multilateral trade negotiations were completed in 1979 (under authority of the 1974 Trade Reform Act) in which agreement was reached to cut AVG tariff rates by 30 percent and to adopt a uniform international code of conduct for applying NTBs. |
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Term
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Definition
| The multilateral trade negotiations from 1986- end of 1993 aimed at reversing the trend of rising NTB. It replaced the GATT with the WTO, brought services and agriculture into the WTO, and improved the disputed settlement mechanism. |
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Term
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Definition
| The organization set up at the Uruguay Round to replace the General Agreements on tariffs and Trades (GATT) secretariat with authority over trade in industrial goods, agricultural commodities, and services, and with greater authority to settle trade disputes. |
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Term
| Trade promotion authority or "fast track" |
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Definition
| Legislation granting to the Pres. of the US the right to negotiate global trade agreements with other nations that allowed no amendments, but only an up-or-down vote by Congress to ratify or reject the agreement. |
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Term
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Definition
| The multilateral trade negotiations launched in November 2001 in Doha (Qatar) with the aim of providing greater trade access by developing countries in developed countries' markets, but which failed in July 2008 |
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