Csv Import Test

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Appreciation/Depreciation

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when a currency's purchasing power is raised relative to another currency; significant because it increased import competition; this is when a country's currency's purchasing power is lowered relative to another currency; significant because it raises export competitiveness; country use exchange rate policy to improve dom econ cond. Conflict btw INTL COOP ND AUTO
helps to determines trade policy and which domestic interests are happy [ EXPORTERS ] and which are not [ BUYERS COS PURCHASE PWR DROP ]

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Backward and Forward Linkages

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Backward linkages can be defined as "the growth of an industry leads to the growth of the industries that supply inputs to it"; Forward linkages exist when the growth of an industry leads to the growth of other industries that uses its output as input; significant because it shows the development and potential growth brought about by FDI

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Brain Drain

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When human capital resources are trained in a country and then leave for another. Example of an Indian immigrant coming to the U.S. to study medicine and then they leave for India. Significant because it represents a loss of both human capital, and resources as technology and education is transferred to another nation and lost in the host country.

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Bretton Woods Conference

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gathering in 1944 of 730 delegates of the 44 Allied nations in Bretton Woods, New Hampshire; intended to regulate the international monetary and financial order after conclusion of WWII; instituted the IMF and the GATT and put Bretton Woods system in place (see other definition;

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Bretton Woods System

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Signed in 1944 at Bretton Woods, after WW2 to create an international monetary system that established the IMF and the World Bank; ended in 1971 by Nixon. It was based upon the dollar being pegged to gold, $35 to 1 ounce of gold, fixed exchange rates and temporary financing facilities. Significant because it helped to facilitate an environment of stability, establishing a lender of last resort, and creating short term lending in support of fixed exchange rates; increased embedded liberalism.

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Capital Controls

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imposed tax on all capital moving across a country's borders; significant because higher capital controls deter capital inflows AND LIMIT OUTFLOWS SO AS TO PREVENT BANKING CRISES

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Collective Action Problem

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Situation in which all parties benefit but there is an associated cost to the action. Cost is disproportionately borne by the party that undertakes the action, but benefit shared by all. In international political economy, it has been used to understand interest-group formation, and in particular, why consumer interests are underrepresented in trade policy.

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Commodity-backed Currency

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currency that's value is based on the fact that it can be readily converted to a commodity such as gold or silver; significant because GS FOUNDAN 4 the international economy under Great Britain's hegemony in the 19th Century

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Comparative Advantage

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economic law that says that countries can mutually benefit from trade as long as their relative productivities are different; even if a country is best at all things they will specialize in what they are best at and the other country will specialize in what it is best and then engage in trade; this is significant for this class because it helps shape international trade and makes it more difficult for countries to renege on trade agreements

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Competitive Devaluation

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When a country tries to devalue its currency to increase its international competitiveness; significant because this often encourages other countries to do the same, leading to a temporary increase in the competitiveness of its exports; but also a chain of devaluations amongst countries.

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Currency Union

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When a country has no independent monetary policy and shares currency with one or more states. Examples include the European Union and the CFP franc. Significant because it was one of the two paths taken after the collapse of the Bretton Woods system, creating COOP between nations 4 MUTUAL BENEFIT BUT ALSO a lack of independent monetary policy.

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Embedded Liberalism

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idea that countries remain open as much as domestic political constraints allow; significant because it reflects the democratic constraints of the 20th Century

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Expropriation

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policies intended to divert investment returns from MNC to host country; ranges from unfavorable regulation to nationalization; significant because it is a reason that MNC's hesitate to engage in FDI in certain countries; can also cause conflict between MNC and host country and in turn conflict between host country and home country (Guatemala 1940's-1950's)

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Fiat Currency

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a currency that is backed only by a government's commitment to honor its value; credibility of the government's commitment is key; significant because this can cause people/investors not to trust a country's currency or exchange rate;

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Firm-specific Capital

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intellectual property developed by firms; capital, such as the "ford" logo that is useful and specific to only one firm; it can shape and inspire renegotiations of production/pricing agreements between firms that produce these things and those that purchase them; FDI keeps control of Firms' specific assets within the firm;

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Fixed Exchange Rate

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a country's exchange rate when its currency is pegged to another currency, currency union, commodity, or simple pledge; significant because it enhances policy credibility; countries must defend/maintain a fixed exchange rate; significant because it lowers the risks and costs of international trade and financial flows and enhances the credibility of monetary policy; favored by groups engaged in the international economy

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Floating Exchange Rate

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a country's exchange rate that is determined by market demand; significant because it allows flexibility for a country to respond to changing economy and alter values for purely domestic purposes; favored by those who would be helped by inflationary policies prior to elections and high levels of government borrowing

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Foreign Direct Investment

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moving production abroad , creating infrastructure, and establishing a physical presence in a foreign nation, significant because corporations often engage in this;seen as a measure of economic development it can facilitate a race to the bottom by countries looking for FDI and facilitates foreign market access when trade is not possible by bypassing trade restrictions, avoiding high transport costs, and because many services are not tradable.

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Heckshcher Olin Theorem

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Countries specialize in production of goods that make intense use of locally abundant factors of production, significant because it determines comparative advantage of a country and helps shape trade and production in a country.

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Hegemony

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the dominance and strong influence of a single country on international politics and economics; examples include 19th C Great Britain and 20th C US; significant because according to hegemonic stability theory it is necessary in order to maintain free trade or a gold standard, provide public goods, and act as a lender of last resort to countries and institutions in need

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Hold-up Problems

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a situation where two parties may be able to work most efficiently by cooperating but refrain from doing so because of concerns that they may give the other party increased bargaining power and thereby reduce their own profits; significant because this is a legit concern that shapes negotiations and interactions between firms and countries especially in terms of firm-specific capital

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Hyper Inflation

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Inflation that has risen to such a high level that it is out of control; generally when the monthly inflation rate is greater than 50 percent. Occurs when there is an increase in the supply of paper money, usually by the government to pay increasing debt; significant because it decreases the purchasing power of consumers, capital liquidity, as consumers tend to hold more wealth in the form of physical commodities, leading to more bartering than trading, and cause turmoil for lenders.

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Issue-linkages

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linking one or more issues together in order to further trade or policy agreements/negotiations; relevant because multilateral international institutions fostered this during the Bretton Woods system

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Lender of Last Resort

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An actor willing and able to provide credit to solvent but illiquid institutions in times of financial panic. This is relevant to the course because the lender of last resort is one of the public goods that Hegemonic Stability Theory (Kindleberger, Lake, Broz) expects the world's leading economic state to provide on behalf of the global economy.

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Liquid Capital

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a readily convertible asset, such as cash money as opposed to long term assets such as real estate or production factories; it can be held by individuals, companies, or governments; significant because in today's global world economy, political or economic difficulties can be exacerbated dependency on foreign liquid capital embodied by capital flight;

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Log-rolling

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the trading of favors such as support for trade protection by members of different sectors of an economy; results in protection for both (or all) industries even though each one just wanted protection for themselves and not protection for all; significant because it often bogs down legislation and trade agreements

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Marriage of Iron and Rye

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with the economic depression of world economy in 1873, German farmers and industrialists each wanted protective tariffs for their respective sectors; however, in order to guarantee that they protect themselves they allied with each other against labor which brought about both agricultural and industrial tariffs even though neither party actually wanted both and were only seeking their own protection; significant because it illustrates log-rolling which often affects and bogs down trade agreements

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Median-voter Theorem

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a politician can maximize their number of votes by committing to the policy position preferred by the median voter; significant because this shows how domestic situation can shape a country's foreign economic policy;

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Most-favored nation status

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idea that if a country grants a trade agreement to one country then they must grant that agreement/concession to all countries with MFN status; important because it facilitates openness and determines the state of global trade today;

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Multilateral Institutions

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binding international agreements that govern signatory countries' economic policies; examples include the IMF, World Bank, and WTO; significant because they facilitate openness and balance openness with domestic constraints in a modern globalized world and were big part of Bretton Woods system;

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Multinational Corporations

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a corporation that manages production or delivers services in more than one country; significant because MNCs engage in FDI and are looked to for economic development reasons, can cause a race to the bottom, and their presence or lack thereof can shape a countries' domestic policies and international agreements

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Mundell-Fleming Dilemma/The Unholy Trinity

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idea that countries can sustain only two of the tree international policy instruments: fixed exchange rates, independent monetary policy, and capital mobility; selection between these further illustrates tradeoff between stability and flexibility; significant because when countries attempt to have all three one will break and a financial crisis often ensues

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Object gap VS IDEA GAP

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A nation that lacks physical objects like factories and roads suffers from an object gap. A nation that lacks the knowledge used to create value in a modern economy suffers from an idea gap; significant because this can be addressed by FDI; also significant because this can determine what a country's comparative advantage is

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Off-shoring

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moving production abroad to be done by a separate company; different from FDI; can present a problem because of "sweatshop" conditions and exploitation of labor repression.

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Public Good

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non-rivalrous and non-excludable goods; significant because the impetus is on the hegemon to provide them; public goods vary in how excludable and how rivalrous they are; arise out of pure self-interest; private goods bundled w/ public good and cannot be separated

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Push and Pull Incentives

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Push incentives are reasons to leave the home country, which include poor economic conditions, and political unrest or revolution, Pull incentives are reasons to relocate to another country due to higher expected income, lower transport costs, and information from migrant networks or chain migration. Significant because owners of factors that are complementary to migrant labor benefit, such as a factory owner, or a tailor, and owners of factors that substitute migrant labor lose, i.e. unskilled labor . Tax payers also fear for an increased tax burden due to consumption of social insurance.

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Race to the Bottom

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countries look to get rid of labor and environmental regulations in order to attract FDI or aid in hopes of spurring economic development; countries also providing subsidies to MNCs while neglecting conditions of labor; significant because this can be a negative spillover effect of FDI

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Reciprocal Trade Agreements Act

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US legislation under which it repealed several of its isolationist trade policies in 1934; kept US competitive in international trade during the Great Depression; gave president power to reduce trade rates by as much as 50% in reciprocally beneficial tariff reductions; relevant because resulting it resulted in the creation of Most-favored Nation clauses and freer trade internationally

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Remittances

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When immigrants send their wages back to their home country. Includes ideas as well, which lead to development in their home country. Remittances are significant due to a trend that when a home country is in turmoil those in a host country elsewhere will increase their remittances, a loss of capital and a form of capital mobility.

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Repeal of the Corn Laws

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Great Britain unitarily repealed import tariffs which protected grain prices in the UK despite opposition from domestic agricultural interests; marked a significant step towards free trade; relevant because of Great Britain's hegemonic position in the 19th century and demonstrates the necessity of a hegemonic leader as theorized by the Hegemonic Stability Theory;

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Seignorage

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The profit made by a government from the printing of money, literally the face value of the money minus the cost of physically making it. In international exchange, if one country's money is BOUGHT by another, the first country derives seigniorage benefits. SINCE US IS HEGEMON ND US $ IN HIGH DEMAND 4 COMMERCE, US BENEFITS

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Spillover Effects

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externalities (that are unintended) of economic activity that can be both positive and negative; significant because FDI creates spillovers such as backward and forward linkages, labor repression, race to the bottom, environmental hazards, etc.

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Stolper - Samuelson Theorem

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says that free trade raises the income of those who own the locally abundant factor and reduces the income of those who own the locally scarce factor; significant because it agrees with law of comparative advantage and can also help determine trends such as migration and political positions of owners of these factors

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Tariff

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a tax levied on imports or exports; usually associated with protectionism; means of governmental control over trade between nations to support its domestic interests; significant because it represents a barrier to free trade that was lowered by RTAA

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Transaction Costs

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a cost incurred in making an economic exchange; these could be prohibitive in international trade; relevant because they were significantly lowered in the Bretton Woods system with the creation of multilateral international institutions

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VERTICAL ND HORIZONTAL FDI

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HORIZONTAL occurs when
a corporation creates multiple production facilities, each of which produces
the same good or goods, IN DIFF COUNTRIES. Firms integrate horizontally to MAINTAIN the full value of theIR intangible assets.

VERTICAL: a single
firm controls the different stages of the
production process, rather than relying
on the market to acquire inputs and sell
outputs. Difficulties inherent in
long-term contracting create incentives
for vertical integration.

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CAPITAL ACCOUNT

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That part of a country's balance of payments that records movements of capital into and out of a country.

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CB INDEP

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The central bank's freedom from political pressure. INDEP CENTRAL BANKS BETTER ABLE TO DELIVER LOW INFLATN TH R CENTRAL BANKS CTRL BY GOVT

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Currency peg

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A policy that binds the value of a nation's currency to another unit of exchange, either the currency of another country (often the dollar) or gold. Currency pegs are often used by countries to STABILIZE VALUE OF THEIR $

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EXPORT PROCESS ZONES

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INDUST ESTATES WHERE GOVT PROV LAND, UTILITIES, TRANSPORT INFRAS, BUILD ETC TO INVESTING FIRMS AT SUBSID RATES. EST BY DVLP COUNT TO ATTRACT FDI BY MNC

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DISPUTE SETTLE MECH

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QUASI-JUDICIAL COURT TO RESOLVE TRADE DISPUTES BTW WTO MEMBER GOVT. SIG IS ROLE OF MULTILAT INST IN FOSTER INTL COOP BY LEGALIZE INTL RELAT

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FACTOR PRICE EQUALIZATION

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IN OPEN ECON, INTL TRADE WILL CAUSE PRICE OF FACTORS OF PROD TO EQUALIZE. E PRICE OF EACH COUNT SCARCE FACTOR WILL FALL WHILE E PRICE OF EACH COUNT ABUNDANT FACTOR WILL RISE. EVENTUAL PRICE OF LABOR/CAPITAL IS SAME IN TRADING COUNT

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FACTOR PRICES

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Market prices for labor, land and capital, respectively. This dictates the flow of factors. For example, workers migrate toward higher wages, farmers buy land if rent is low and investors always look for high interest rates to maximize returns.

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Factors of Production

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the inputs that are used in the production of goods or services in the attempt to make an economic profit. The factors of production include land, labor, capital and entrepreneurship.

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GATT/WTO

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GATT - AN INTL AGREE CONCLUDE IN 47 MADE RULES REG NAT TRADE POL. GATT CONT TO PROV CORE RULES REG NAT TRADE POL.
an international organization based in Geneva that MONITORS and enforces global trade rules

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IMF

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An international organization established in 1945 that aims to promote international trade and monetary cooperation and the stabilization of exchange rates. AND RESOLVE DEBT CRISES IN DVLP CRISES

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OBSOLESCING BARGAIN

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A TYPE of interaction between a multinational enterprise and a host country government, which initially reach a bargain that favors the MNE but where, over time as the MNE's fixed assets in the country increase, the bargaining power shifts to the government.

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Regional trade agreements

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TRADE AGREE WHERE TARIFFS DISCRIM BTW MEMBERS ND NON MEMBERS. Stepping Stones or Stumbling Blocks to a multilateral agreement.

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Ricardo-Viner [SECTORAL] Model

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A PLTL MODEL THAT ARG E TRADE POL IS CH BY COMP BTW IMPORT COMPET ND EXPORT ORIENTED INDUST, INDUST THAT RELY ON SCARCE FACTOR HARMED BY TRADE ND SO LOBBY 4 PROT. INDUST THAT RELY ON ABUNDANT FACTOR BENEFIT FR TRADE ND LOBBY 4 TRADE LIBERAL. SHOWS WINNERS ND LOSERS OF DIFF TRADE POL

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TRADE DIVERSION

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the shifting of trade away from the low-cost producer towards a higher-cost producer as a result of a reduction in trade barriers with the country of the higher-cost producer