Chapter Ten Vocab, Set One

Front 1

Real economy

Back 1

the trade and investment markets involving production activities

Hint 1

"Meat and potatoes of world economy" - when they function well, the world economy flourishes

Front 2

Financial economy

Back 2

portfolio, financial, and currency transactions involving money exchanges

Hint 2

provides savings and liquidity for future investment and trade

Front 3

Geoeconomics

Back 3

the regional or global struggle for relative power and geopolitics through economic competition

Hint 3

Realists - another arena for struggle of relative power to take place
Liberals - an opportunity for common or non-zero sum gains for the development of global institutions
Identity - reflection of competing ideas... such as capitalism versus socialism
Critical theory - outgrowth of a neo-Marxist historical dialectic that generates imperialism

Front 4

factories

Back 4

institutions that integrate specialized exchanges vertically

Front 5

markets

Back 5

repetitive interrelationships that integrate specialized exchanges horizontally

Front 6

comparative advantage

Back 6

a relationship in which two countries can produce more goods from the same resources if they specialize in the goods they produce most efficiently at home and trade those goods internationally

Front 7

absolute advantage

Back 7

being able to produce most or all products more efficiently than another country can

Front 8

national security export controls

Back 8

limitations on the trade of military and dual-use (having both commercial and military applications) products and technology

Hint 8

hard part is finding where to draw the line... almost anything can fit under these categories. US worries about dependence on foreign oil, etc. and has created the Strategic Petroleum Reserve to minimize the national security risks of trade dependence.

Front 9

infant industries

Back 9

developing industries that require protection to get started

Front 10

import substitution policies

Back 10

policies developed in Latin America that substitute domestic industries for imports

Front 11

inter-industry trade

Back 11

trade of products between different industries such as agricultural products for manufactured goods... complementary products were exchanged from different industries and often from countries at different stages of development

Hint 11

Random fact: as late as the 1950's, 2/3rds of global trade took place between advanced and developing nations

Front 12

intra-industry trade

Back 12

trade of products within the same industry such as automobiles or computer chips... trade (usually between advanced countries) of competitive products.

Hint 12

Random fact: by 1990, 3/4ths of all trade was among advanced nations

Front 13

economies of scale

Back 13

the larger the amount of a good that is produced, the lower the cost of production

Front 14

competitive advantage

Back 14

a trade advantage created by government intervention to exploit monopoly rents in strategic industries

Hint 14

calls for governments to protect and subsidize key industries and technologies, whereas comparative advantage calls for governments to lower protection and subsidies for trade

Front 15

patient capital

Back 15

money invested by the government or government-directed banks over the long term to develop dominant industries for the future

Front 16

Social categories in international affairs

Back 16

poor - periphery; middle-income - semi-periphery; rich - core

Front 17

Gary Burtless

Back 17

Writer of Globaphobia... an assessment of international trade that prefers designing a "fair trade" policy for the world economy

Hint 17

goal is balanced global and national rules

Front 18

Central organization in various types of societies

Back 18

communism - based on direct political control and government plans
bureaucracies - multiyear production and consumption quotas and dictate direct exchanges of resources and final products
capitalist - organized based on opportunity costs and market prices

Front 19

David Ricardo

Back 19

(1817) demonstrated Smith's principle of specialization for international trade. Concentrated on Portugal and England and considered their talents in producing cloth and wine. Portugal superior at both... so they have an absolute advantage over England with these products.

Front 20

strategic trade

Back 20

starts from the premise that in markets for some products the economies of scale are so large that only one firm or country can make a profit in that market in world markets... if another enters, profits drop below cost and neither firm can gain. can lead to monopoly rents and other abuses of that monopoly's power.

Hint 20

realists - favor it because it views markets as zero-sum
identity - see it suggesting how different economic cultures distort and limit comparative advantage
liberals - might emphasize that strategic trade theory itself has limitations and is difficult to implement (although perhaps theoretically valid)

Front 21

MITI

Back 21

Japan's Ministry of International Trade and Industry (now the METI - Ministry of Economics, Trade, and Industry)

Hint 21

made many economic decisions in Japan that proved to be wrong