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49 Cards in this Set
- Front
- Back
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political economy
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the political, economic, and legal systems of a country
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political risk
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the governmental and societal actions and policies, originating either within or outside the host country, and negatively affecting either a select group of, or the majority of foreign business operations and investments
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expropriation
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A specific type of political risk in which a government seizes foreign assets
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local content requirement
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A requirement that some specific fraction of a good be produced domestically.
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tariff
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Taxes on imported goods and services, levied by governments to raise revenues and create barriers to trade
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quota
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The quantity of goods of a specific kind that a country permits to be imported without restriction or imposition of additional duties.
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voluntary export restraint
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One country promises another country to limit its imports; this is often done when the promising country fears increased tariffs or quotas if it does not self-regulate.
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value added tax
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A sales tax collected at each stage of production in proportion to the value added during that stage.
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index of economic freedom
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an index created by the Heritage Foundation that measures the freedom of a country's economic system. The index has 10 different components, including business freedom, trade freedom, fiscal freedom, and government size.
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privatization
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A process whereby publicly owned enterprises are sold to private investors
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deregulation
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the removal of various government controls on an economy
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export substitution vs. complement
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the concept that outward FDI can either substitute or complement exports.
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Balance of payment accounts
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summary of a country's transactions with other countries, including two main elements: the balance of payments on current account and the balance of payments on financial account
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sovereign wealth fund
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A state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments.
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Committee on Foreign Investments in the U.S. (CFIUS)
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An inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States. Representatives are from 9 different agencies including the Defense, State, and Commerce departments.
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U.S. Treasury securities
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Debt financing instruments used by the United States Federal government, which include treasury bills, treasury notes, treasury bonds, and treasury inflation protected securities (TIPS)
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international labor organization
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a specialized agency of the UN that deals with labor issues
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universal declaration of human rights
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a declaration crafted by the UN General Assembly which consists of 30 articles that cover basic, civil society, and religious, and socio-economic rights of the individual.
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GATT
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A post-World War II agreement designed to promote freer international trade among the nations of the world. The GATT was replaced by the World Trade Organization (WTO) in 1994.
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WTO
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The WTO is a multilateral organization that promotes free and fair trade among the nations of the world. It was created in 1994 by 121 nations at the Uruguay Round.
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World Bank
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An international organization created at Breton Woods in 1944 to help in the reconstruction and development of its member nations. Its goal is to improve the quality of life for people in the poorer regions of the world by promoting sustainable economic development. See also International Bank for Reconstruction and Development.
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IMF
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An international organization designed to promote global economic stability and development. It compiles statistics on cross-border transactions and publishes a monthly summary of each country’s balance of payments.
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National treatment
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A country accords no less favorable treatment to imported goods than it does to domestic goods.
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Most Favored Nation
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A status granted to one country by another; the granting country then accords the recipient's imports and exports the most favorable treatment that it accords any country.
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The General Agreement on Trade in Services (GATS)
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A treaty of the WTO that extends the multilateral trading system to service sector.
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Trade-Related Aspects of Intellectual Property Rights (TRIPS)
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A treaty of the WTO that sets down minimum standards for many forms of intellectual property (IP) regulation.
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Advalorem Tariff
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A tariff assessed as a percentage of the value of an import.
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infant industry argument
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The rationale for the “temporary protection” of a new industry or firm in order to help it become established domestically and later become competitive worldwide. These protections consist of tariff and non-tariff barriers to imports, preventing global competition from entering the market.
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European Union (EU)
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An intergovernmental organization which coordinates foreign, economic, and judicial policy among its 27 member nations.
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European Coal and Steel Community (ECSC)
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An international organization that sought to unify Western Europe and eventually lead to the creation of the European Union.
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European Monetary System
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An exchange rate system based on cooperation between European Union central banks.
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Copenhagen criteria
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The rules and regulations that all applicant countries to the European Union must meet, and to which all EU member nations must maintain.
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Spot exchange rate
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Exchange-rate today for settlement in two days.
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Forward exchange rate
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An agreement to purchase or sell a defined amount of forward currency in the future at a certain fixed rate.
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Appreciation
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An increase in a currency value relative to another currency in a floating exchange rate system.
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Depreciation
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A decrease in a currency value relative to another currency in a floating exchange rate system.
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Transaction exposure
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Changes in the value of contractual (monetary) cash flows as a result of changes in currency values.
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Economic exposure
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Change in the value of a corporation’s assets or liabilities as a result of changes in currency values.
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treaties
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agreements between countries, which may be bilateral or multilateral; also called conventions, covenants, compacts, or protocols
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extraterritorial application of laws
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a country's attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside its borders
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arbitration
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a process, agreed to by parties to a dispute in lieu of going to court, by which a neutral person or body makes a binding decision
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nonrevenue tax purposes
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purposes such as redistributing income, discouraging consumption of products such as tobacco and alcohol, and encouraging purchase of domestic rather than imported products
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foreign tax credits
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allowances by which U.S. taxpayers who reside and pay income taxes in another country can credit those taxes against U.S. income tax
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tax treaties
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treaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement; often called tax conventions
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national tax jurisdiction
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a tax system for expatriate citizens of a country whereby the country taxes them on the basis of nationality even though they live and work abroad
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territorial tax jurisdiction
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a tax system in which expatriate citizens who neither liver nor work in the country - and therefore receive non of the services for which taxes pay - are exempt from the country's taxes
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foreign corrupt practices act (FCPA)
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U.S. law against making payments to foreign government officials for special treatment
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floating exchange rate system
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An exchange rate system under which a government is not obligated to declare that its currency is convertible into a fixed amount of another currency. Rather, the exchange rates are settled by market forces
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fixed exchange rate system
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An exchange rate system in which governments stand ready to buy and sell currency at official exchange rates. Fluctuations of this currency are not possible.
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