Exam 3 Study Guide

Front 1

Mercantilism (Colonial Version)

Back 1

an economic system from the 16th – 18th centuries in which states pursued wealth by promoting exports and limiting imports, creating a zero sum struggle for material advantage.

Front 2

Hegemonic Stability Theory

Back 2

realist theory that a hegemonic power ns necessary to support a highly integrated world economy

Front 3

Elements of British Hegemony

Back 3

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Front 4

Gold Standard

Back 4

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Front 5

Pax Americana

Back 5

American hegemony after WWII first within the West and then after the Cold War throughout the world

Front 6

General Agreement on Tariffs and Trade (GATT)

Back 6

the Bretton Woods economic institution that supervised multilateral trade negotiations to reduce trade barriers in manufactured goods

Front 7

IMF and World Bank

Back 7

World Bank: the Bretton Woods institution that provides long-term financing for infrastructure development and basic human needs such as health and education

Front 8

Principles of (Economic) Liberalism

Back 8

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Front 9

“Invisible Hand” (Adam Smith)

Back 9

economic concept that, if each nation or individual acts in its own best economic interests, the common good will be served

Front 10

Comparative Advantage

Back 10

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 these goods internationally

Front 11

Terms of Trade

Back 11

relative price of imports and exports

Front 12

Protectionism/Managed Trade

Back 12

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Front 13

Absolute v. Relative Gains

Back 13

Absolute (non-zero sum): the increase each side gains over what it had before.

Relative (zero-sum): the increase one side gains over another.

Front 14

Gross Domestic Product

Back 14

the quantification of a country’s production of goods and services at home

Front 15

Gross National Product

Back 15

same as GDP, but including product of all national citizens and companies, regardless of where production occurs (and subtracting foreign production in the country)

Front 16

Per capita GDP

Back 16

Overall GDP divided by the population

Front 17

Opportunity Cost

Back 17

the costs associated with using the same resources to produce one product compared to another

Front 18

Inflation

Back 18

a sustained rise in the general price level over time

Front 19

Deflation

Back 19

a sustained fall in the general price level over time

Front 20

Balance of Payments (Definition and Components)

Back 20

a country’s current and capital account balances plus reserves and statistical errors

Front 21

Exchange rate Changes & Effects on Trade

Back 21

price of a currency valued in another currency. This alters goods going across borders.

Front 22

Foreign Direct Investment (FDI)

Back 22

capital flows involving the acquisition or construction of manufacturing plants and other facilities to a foreign country.

Front 23

Money Supply

Back 23

is the total amount of monetary assets available in an economy at a specific time

Front 24

Portfolio Investment

Back 24

transfers of money to buy stocks, bonds, and so on

Front 25

Troubled Asset Relief Program (TARP)

Back 25

program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008. It was a component of the government's measures in 2008 to address the subprime mortgage crisis

Front 26

Sources of Globalization (Five Trends)

Back 26

1) Internationalization of Economic Activity;
2) Global Liberalization;
3) Technological Changes;
4) Improvements in Transportation;
5) Globalized Production Structures

Front 27

Fannie Mae and Freddie Mac

Back 27

placing into conservatorship of government-sponsored enterprises Fannie Mae and Freddie Mac by the U.S. Treasury in September 2008. It was one of the financial events among many in the ongoing subprime mortgage crisis

Front 28

‘Quantitative Easing’

Back 28

fed buying up bonds to put back into the economy; modern day ‘printing money’; Concerns: inflation; financial problems like 2008

Front 29

Import-Substitution Policies

Back 29

policies developed in Latin America that substitute domestic industries for imports

Front 30

Economic Autarky

Back 30

a closed domestic economic system based on protectionism and state-owned industries

Front 31

Asian Tiger Economics

Back 31

Asian countries that followed an export-led development strategy

Front 32

Capital Flight

Back 32

moving money out of the local currency and country because of inflation and economic or political instability

Front 33

Stagflation

Back 33

slow growth accompanied by high inflation

Front 34

East Asian Miracle

Back 34

a period of unprecedented economic growth and development in East Asia between 1965 and 2005

Front 35

Real Economy

Back 35

the trade and investment markets involving production activities

Front 36

Biodiversity

Back 36

the multiple species of plant and animal life found in nature

Front 37

Greenhouse Gases

Back 37

emissions from fossil fuels and other sources that can cause climate change

Front 38

Pollution Rights

Back 38

credits that a country accumulates when it does not exceed its pollution cap and then trades with another country that exceeds its pollution cap

Front 39

Civil Society

Back 39

the nongovernmental sector

Front 40

Totalitarian Government

Back 40

governments that try to control all or most of civil society

Front 41

Authoritarian Government

Back 41

states that typically restrict civil rights in key sectors of society such as political parties and the media but allow some independent activities in commerce and other areas

Front 42

Constitutional Government

Back 42

governments that reserve a large space for civil society to act independent

Front 43

Civil Rights

Back 43

rights for participants in civil society, regarded in democratic societies as existing before government and as inalienable by governments

Front 44

Reasons for European Dominance

Back 44

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Front 45

Pax Britannica

Back 45

British hegemony before WWI creating global markets

Front 46

Repeal of the Corn Laws (1846)

Back 46

trade laws designed to protect cereal producers in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports between 1815 and 1846

Front 47

Sources of British Decline

Back 47

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Front 48

Beggar--Thy--Neighbor Trade Policies

Back 48

an economic policy through which one country attempts to remedy its economic problems by means that tend to worsen the economic problems of other countries

Front 49

Bretton Woods (institutions)

Back 49

the three major post-war economic institutions created at Bretton Woods, New Hampshire, in 1944 GATT, the IMF, and the IBRD

Front 50

Bretton Woods (system)

Back 50

post-WWII economic system that fixed exchange rates and liberalized multilateral trade

Front 51

Dollar Standard

Back 51

fixed exchange rate system established by Bretton Woods, that pegged the US dollar to gold and other currencies to the dollar

Front 52

Principles of Mercantilism (Econ. Nationalism)

Back 52

Capital markets optimal, but not neutral; Focus on distribution of gains from economic activity; Purpose is to increase national power (state gets involved because the economy is so important); Economics is subordinate to politics; a tool in international political struggles; States can and should use power to manipulate markets to their advantage.

Front 53

“Creative Destruction” (Joseph Schumpeter)

Back 53

a term in economics which has since the 1950s become most readily identified with the Austrian American economist Joseph Schumpeter, who adapted it from the work of Karl Marx and popularized it as a theory of economic innovation and the business cycle

Front 54

Laissez-Faire Economics

Back 54

an economic environment in which transactions between private parties are free from government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights

Front 55

Industrial Policies

Back 55

its official strategic effort to encourage the development and growth of the manufacturing sector of the economy

Front 56

Economic Structure (as opposed to size)

Back 56

the system of producing and distributing of goods and services and allocating resources in a society. It includes the combination of the various institutions, agencies, entities (or even sectors as described by some authors) and consumers that comprise the economic structure of a given community

Front 57

Non-Tariff Barriers (NTBs)

Back 57

policy instruments other than price, such as quotas and qualitative restrictions, designed to limit or regulate imports and exports

Front 58

Productivity

Back 58

output per unit input

Front 59

Purchasing Power Parity (PPP)

Back 59

exchange rates adjusted for the greater purchasing power of local currencies in developing countries

Front 60

Business Cycle

Back 60

refers to economy-wide fluctuations in production, trade and economic activity in general over several months or years in an economy organized on free-enterprise principles

Front 61

Fixed v. Floating Exchange Rate

Back 61

Fixed: a system in which governments fix exchange rates of golf another currency, or a basket of currencies.
Floating: is a type of exchange-rate regime in which a currency's value is allowed to fluctuate according to the foreign-exchange market.

Front 62

Balance of Payments Crisis

Back 62

a country’s current and capital account balances plus reserves and statistical errors.

Front 63

Current Account Surplus/Deficit

Back 63

the net border flows or goods and services, along with government transfers and net income on capital investments.

Front 64

Fiscal and monetary Policy

Back 64

Fiscal: policies affecting a government’s budget that when it is in surplus stimulates the economy and when it is in deficit contract the economy.
Monetary: government policies that seek to control the money supply and affect the economy as a whole.

Front 65

Macroeconomic Policies

Back 65

fiscal and monetary policies that affect the domestic economy as a whole

Front 66

Subprime Mortgages

Back 66

making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks such as unemployment, divorce, medical emergencies, etc.

Front 67

Mortgage Backed Securities

Back 67

a type of asset-backed security that is secured by a mortgage, or more commonly a collection ("pool") of sometimes hundreds of mortgages. The mortgages are sold to a group of individuals (a government agency or investment bank) that "securitizes", or packages, the loans together into a security that can be sold to investors.

Front 68

Sources of Globalization

Back 68

1) Internationalization of Economic Activity; 2) Global Liberalization; 3) Technological Changes; 4) Improvements in Transportation; 5) Globalized Production Structures

Front 69

Informal Sector

Back 69

business activities that take place outside the legal system of a country because of excessive regulations

Front 70

Newly Industrialized Countries (NICs)

Back 70

another term for the Asian tigers and other countries that developed by promoting manufactured exports to advanced countries

Front 71

Rent-Seekers

Back 71

firms that lobby to limit competition, extracting monopoly rents by producing at low costs while selling at high prices

Front 72

Dependency Theory

Back 72

theory developed by Latin American economists that explains the lack of growth in terms of external or colonial exploitation and oppression

Front 73

Crony Capitalism

Back 73

noncompetitive lending and investment relationships between government financial institutions and private industry

Front 74

Voluntary export Restraints (VERs)

Back 74

agreements in which exporting countries “voluntarily” (actually under pressure) agreed to limit exports of specific products

Front 75

Washington Consensus

Back 75

the policy movement in the 1990s advocating market-oriented ideas for developing nations

Front 76

Global Warming

Back 76

the heating up of the Earth’s atmosphere due to greenhouse gases

Front 77

Kyoto Protocol

Back 77

an agreement reached in 1997 that set deadlines of 2008-2012 for industrial countries to cut their greenhouse gas emissions

Front 78

Youth Bulge

Back 78

the demographic pattern in which a substantial percentage of the population in a given country is young, typically below the age of fifteen

Front 79

Universal Declaration on Human Rights

Back 79

a UN declaration approved in 1948 prescribing the obligations of states to individuals rather than individuals to states

Front 80

Human Rights

Back 80

the most basic protections against human physical abuse and suffering

Front 81

Democratic Peace

Back 81

the theory that democratic nations for the most part do not go to war with one another, making the spread of democracy desirable

Front 82

Versailles Treaty

Back 82

one of the peace treaties at the end of World War I. It ended the state of war between Germany and the Allied Powers

Front 83

League of Nations

Back 83

universal institution founded after the Paris Peace Conference in 1919 which embodied the collective security approach to the management of military power

Front 84

Self-Determination

Back 84

the right of autonomy of nations to decide their own domestic identities

Front 85

Containment

Back 85

the policy of the United States during the Cold War that checked aggressive Soviet actions by military alliances

Front 86

Cuban Missile Crisis

Back 86

missiles aimed at US in Cuba that could hit quickly. Nuclear weapons in our ‘backyard’; Dilemma: what will Russia do after US makes a move? US decided to force a naval quarantine to prevent movement of Soviet equipment but missiles active. War avoided through communication between Russia/US. Russia agrees to remove missiles to avoid US invasion of Cuba. In turn, US removed nuclear missiles from Turkey.

Front 87

Mikhail Gorbachev

Back 87

Soviet leader. His goal was to reform communism

Front 88

‘End of History’

Back 88

Fukuyama: doesn’t mean the end of conflicts. Conflicts just narrow; Alternatives to Western liberalism

Front 89

Schlieffen Plan

Back 89

Germany’s mobilization plan that called for an attack on France first, by way of Belgium, followed by an attack on Russia

Front 90

Munich Conference

Back 90

settlement permitting Nazi Germany's annexation of portions of Czechoslovakia along the country's borders mainly inhabited by German speakers; Hitler gets Sudetenland

Front 91

Marshall Plan

Back 91

American initiative to aid Europe, in which the United States gave economic support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism

Front 92

Bipolarity

Back 92

two world powers at the same time. In the case of the Cold War: USA and USSR.

Front 93

Gulf of Tonkin Resolution

Back 93

a joint resolution that the United States Congress passed on August 7, 1964, in response to the Gulf of Tonkin Incident

Front 94

Clash of Civilizations

Back 94

Huntington: conflicts will occur on the “fault lines of civilizations”; civilization identities not the same (Muslim [Religion]; Western [democracy, capitalism])

Front 95

Purposes of Theorey

Back 95

- Need to simplify to understatd
- Generalizations and uniformity

Front 96

State, Nation, and Nation-State

Back 96

State: a political actor with 4 traits:
1) territory
2) population
3) government
4) sovereignty

Nation: a group of people who feel a comon bond because of a shared history, language, culture, religion, ethnicity or race, etc.

Nation-State: idea that geographic area of state and nation should correspond

Front 97

Sovereignity

Back 97

an attribute of states such that they are not subordinate to a higher power either inside or outside their borders and agree not to intervene in the domestic jurisdiction of other states

Front 98

Collective Security

Back 98

a principle that a group of states will agree in advnce jointly to punish states that breach international peace

Front 99

Balance of Power

Back 99

the process by which states counterbalance to ensure that no single state dominates the system; an outcome that establishes a rough equilibrium among states

Front 100

Empirical v. Normative Theory

Back 100

Emperical: if norms change you will get change in behavior of states

Front 101

Anarchy

Back 101

the decentralized distribution of power in the international system; no leader or center to monopolize power

Front 102

Power (Hard & Soft; Relational & Situational)

Back 102

Hard Power - population, military, economy, resources, geography, etc.
Soft Power - based on values, reputation, credibility, trustworthiness, etc.

Relational Power - power in comparison to someone else.
Situational Power - use of power in different situations.

Front 103

Peace of Westphalia (1648)

Back 103

established the ideas of sovergnity in Eurpe

Front 104

Security Delimna

Back 104

the situation that states face when they arm to defend themselves and in the process threaten other states
Defensive and Offensive realism

Front 105

Two Level Game

Back 105

On the Domestic Level
Trying to please interests of both SOCIETY and GOVERNMENT

Front 106

Hegemony

Back 106

a situation in which one country is more powerful than all other countries