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80 Cards in this Set

  • Front
  • Back

Comparative advantage

The ability of a country or firm to produce a particular good or service more efficiently than other goods or services such that its resources are most efficiently employed in this activity. The comparison is to the efficiency of other economic activities the actor might undertake, not to the efficiency of other countries or firms.

Absolute advantage

The ability of a country or firm to produce more of a particular good or service than other countries or firms using the same amount of effort and resources.

Heckscher-Ohlin trade theory

The theory that a country will export goods that make intensive use of the factors of production in which it is well endowed. Thus, a labor-rich country will export goods that make intensive use of labor.

Protectionism

The imposition of barriers to restrict imports.

Trade barriers

Government limitations on the international exchange of goods, Examples include tariffs, quantitative restrictions (quotas), import licenses, requirements that government only buy domestically produced goods, and health and safety standards that discriminate against foreign trade.

Tariff

A tax imposed on imports; this raises the domestic price of the imported good and may be applied for the purpose of protecting domestic producers from foreign competition.

Quantitative restrictions (quota)

Limit placed on the amount of a particular good that is allowed to be imported.

Nontariff barriers to trade

Obstacles to imports other than tariffs (tax trades). Examples include restrictions on the number of products that can be imported (quantitative restrictions, or quotas); regulations that favor domestic over imported products; and other measures that discriminate against foreign goods or services.

Stolper-Samuelson theorem

The theorem that protection benefits the scarce factor of production. This view flows from the Heckscher-Ohlin approach: if a country imports goods that make intensive use of its scarce factor, then limiting imports will help that factor. So in a labor-scarce country, labor benefits from protection and loses from trade liberalization.

Ricardo-Viner (specific-factors) model

A model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself. This differentiates it from the Heckscher-Ohlin approach, from which the nature of the factor -labor, land, capital- is the principle consideration.

Reciprocity

In international trade relations, a mutual agreement to lower tariffs and other barriers to trade. Reciprocity involves an implicit or explicit arrangement for one government to exchange trade-policy concessions with another.

Most-Favored Nation (MFN) status

A status established by most modern trade agreements guaranteeing that the signatories will extend to each other any favorable trading terms offered in agreements with third parties.

World Trade Organization (WTO)

An institution created in 1995 to succeed the GATT and to govern international trade relations. The WTO encourages and polices the multilateral reduction of barriers to trade, and it overseas the resolution of trade disputes.

General Agreement on Tariffs and Trade (GATT)

An international institution created in 1947 in which member countries committed to reduce barriers to trade and provide similar trading conditions to all other members. In 1995, the GATT was replaced by the WTO.

Regional Trade Agreements (RTAs)

Agreements among three or more countries in a region to reduce barriers to trade among themselves.

Portfolio Investment

Investment in a foreign country via the purchase of stocks (equities), bonds, or other financial instruments. Portfolio investors do not exercise managerial control of the foreign operation.

Sovereign lending

Loans from private financial institutions in one country to sovereign governments in other countries.

Foreign direct investment (FDI)

Investment in a foreign country via the acquisition of a local facility or the establishment of a new facility, Direct investors maintain managerial control of the foreign operation.

World Bank

An important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects.

Recession

A sharp slowdown in the rate of economic growth and economic activity.

Depression

A severe downturn in the business cycle, typically associated with a major decline in economic activity, production and investment; A severe contraction of credit; and sustained high unemployment.

Default

to fail to make payments on a debt

Austerity

The application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting rages.

Bank for International Settlements

One of the oldest international financial organizations, created in 1930, its members include the world's principal central banks, and under its auspices they attempt to cooperate in the financial realm.

International Monetary Fund (IMF)

A major international economic institution that was established in 1944 to manage international monetary relations and that has gradually reoriented itself to focus on the international financial system, especially debt and currency crises.

Multinational corporation (MNC)

An enterprise that operates in a number of countries, with production of services facilities outside its country or origin.

Bilateral Investment Treaty

An agreement between two countries about the conditions for private investment across borders. Most of these treaties include provisions to protect an investment from government discrimination or expropriation without compensation, as well as establishing mechanisms to resolve disputes.

Exchange rate

The price at which one currency is exchanged for another

Appreciate

In terms of a currency, to increase in value in terms of other currencies.

Depreciate

In terms of currency, to decrease in value in terms of other currencies.

Devalue

To reduce the value of one currency in terms of other currencies.

Monetary Policy

An important tool of national governments to influence broad macroeconomic conditions such as unemployment, inflation, and economic growth. Typically, governments alter their monetary policies by changing national interest rates or exchange rates.

Central Bank

The institution that regulates monetary conditions in an economy, typically by affecting interest rates and the quality of money in circulation.

Fixed exchange rate

An exchange rate policy under which a government commits itself to keep its currency at or around a specific value in terms of another currency or commodity, such as gold.

Gold Standard

The monetary system that prevailed between 1870-1914, in which countries tied their currencies to gold as a legally fixed price.

floating exchange rate

an exchange rate policy under which a government permits its currency to be traded on the open market without direct government control or intervention.

Bretton Woods monetary system

The monetary order negotiated among world war 2 allies in 1944, which lasted until the 1970s and which was based on a U.S. dollar tied to gold. Other currencies were fixed to the dollar but were permitted to adjust their exchange rates.

Adjustable Peg

A monetary system of fixed but adjustable rates. Governments are expected to keep their currencies fixed for extensive periods but are permitted to adjust the exchange rate from time to time as economic conditions change.

International Monetary Regime

A formal or informal arrangement among governments to govern relations among their currencies; the agreement is shared by most countries in the world economy.

Less developed countries (LDCs)

countries as a relatively low level of economic development.

Infrastructure

Basic structures necessary for social activity, such as transportation and telecommunications networks, and power and water supply.

Primary Products

Raw materials and agricultural products typically unprocessed or only slightly processed. The primary sectors are distinguished from secondary sectors (industry) and tertiary sectors (services)

Oligopoly

A situation in which a market or industry is dominated by a few firms.

Terms of Trade

The relationship between a country's export prices and its import prices.

Import-Substituting Industrialization (ISI)

A set of policies, pursed by most developing countries from the 1930s through the 1980s, to reduce imports and encourage domestic manufacturing, often through trade barriers, subsidies to manufacturing, and state ownership of basic industries.

Export-Oriented Industrialization (EOI)

A set of policies, originally pursued in the late 1960s by several East Asian countries, to spur manufacturing for export, often through subsidies and incentives for export production.

Washington Consensus

An array of policy recommendations generally advocated by developed country economists and policy makers starting in the late 1980s, including trade liberalization, privatization, openness to foreign investment, and restrictive monetary and fiscal policies.

Group of 77

A coalition of developing countries in the UN, formed in 1964 with 77 members; it has grown to over 130 members but maintains the original name.

Commodity Cartels

Associations of products of commodities (raw materials and agricultural products) that restrict world supply and thereby cause the price of the goods to rise.

International Law

A body of rules that binds states and other agents in world politics and its considered to have the status of law.

Customary International Law

International law that usually develops slowly, over time, as states recognize practices as appropriate and correct.

Obligation

The degree to which states are legally bound by an international rule. High-obligation rules must be performed in good faith and, if breached, require reparations to the injured party.

Precision

The degree to which international legal obligations are fully specified. More precise rules narrow the scope for reasonable interpretation.

delegation

The degree to which third parties, such as courts, arbitrators, or mediators, are given authority to interpret, and apply international legal rules, to resolve disputes over the rules, or to make additional rules

Norms

standard of behavior for actors with a given identity; norms define what actions are "right" or appropriate under particular circumstances.

Transnational advocacy network (TAN)

A set of individuals and nongovernmental organizations acting in pursuit of a normative objective

Norms life cycle

A three-stage model of how norms diffuse within a population and achieve a "taken for granted" status

Boomerang model

a process through which NGO's in one state are able to activate transnational linkages to bring pressure from other states on their own governments

Human Rights

The rights possessed by all individuals by virtue of being human, regardless of their status as citizens of particular states or members of a group of organization.

Universal Declaration of Human Rights (UDHR)

Adopted by the UN general assembly in 1948, this declaration defines a "common standard of achievement for all peoples" and forms the foundation of modern human rights law.

International Covenant on Civil and Political Rights (ICCPR)

The agreement completed in 1966 and in force from 1976 that details the basic civil and political rights of individuals and nations.

International Covenant on Economic, Social, and Cultural Rights (ICESCR)

The agreement completed in 1966 and in force from 1976 that specifies the basic economic, social, and cultural rights of individuals and nations.

International Bill of Rights

Refers collectively to the UDHR, the ICCPR, and the ICESCR. Together, these three agreements form the core of the international human rights regime.

nonderogable rights

Right that cannot be suspended for any reason, including at time of public emergency

Prisoners of conscience (POCs)

A label coined and used by the human rights organization amnesty International to refer to individuals imprisoned solely because of the peaceful expression of their beliefs

Individual petition

A right that permits individuals to petition appropriate international legal bodies directly if they believe a state has violated their rights

International Criminal Court (ICC)

A court of last resort for human rights cases that possesses jurisdiction only if the accused is a national of a state party, the crime took place on the territory of a state, or the UN security Council has referred the case to the prosecutor

Externalities

Costs or benefits for stakehoolders other than the actor undertaking an action. When an externaility exists, the decision maker does not bear all the costs or reap all the gains from his or her action

nonexcludable

Characteristic of a public good: if the good is available to one actor to consume, then other actors cannot be prevented from consuming it as well

Chlorofluorocarbons (CFCs)

Chemical compounds used in aerosols, insulating materials, refrigerators and air-conditioner coolants, and other products. CFCs are widely banned today due to their damaging effect on the ozone layer

Ozone layer

part of the lower stratosphere, approximately 6 to 30 miles above the earth, with relatively high concentrations of ozone, which blocks out harmful UV radiation.

Global climate change

Human-induced change in the environment, especially from the emissions of greenhouse gases, leading to higher temperatures around the globe.

Nonrival in consumption

Characteristic of a public good: one actor's consumption of the good does not diminish the quantity available for others to consume as well

Kyoto Protocol

An amendment to the UN Framework Convention on Climate Change, adopted in 1997 and entered into force in 2005, that establishes specific targets for reducing emissions of carbon and five other greenhouse gases

Cap-and-trade

A cap-and-trade system sets limits on emissions, which are then lowered over time to reduce pollutants released into the atmosphere. Firms can sell "credits" when they emit less than their allocation or must buy from others when they emit more than their allocation.

Common-pool-resources

Goods that are available to everyone, such as open ocean fisheries; it is difficult to exclude anyone from using the common pool, but one user's consumption reduces the amount available for others.

Overexploitation

Consumption of a good at a rate that is collectively undesirable, even if it is efficient from the view of any single actor.

Vienna Convention

A framework convention adopted in 1985 to regulate activities, especially emissions of CFCs, that damage the ozone layer

Montreal Protocol

An international treaty, signed in 1989, that is designed to protect the ozone layer by phasing out the production of a number of CFCs and other chemical compounds

Framework Convention on Climate Change (FCCC)

An international agreement enacted in 1992, and entered into force in 1994, that provided an overall framework for intergovernmental efforts on climate change.