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Trade and Economic
Trade and economic Problem G8
| Term | Definition |
|---|---|
| World Trade Organization (WTO) | put into place in 1995, acts as a mediator between two nations in economic disputes. Is focused on general trade policy and tariff reduction |
| most favored nation | getting the lowest tariff rate from the government of the country you are exporting to |
| import quota | a direct quantitative restriction on the amount of a commodity allowed to be imported |
| crony capitalism | tight connection between government and business |
| import / export bank | sets up the trade restrictions and distributes trade licenses. |
| competitive auction | highest bidder pays the government for the license. Roughly equivalent to tariff revenues |
| political favoritism | no competition, the government chooses who gets the quota license based off of any number of things |
| rent seeking | trying to manipulate the government to give you the license |
| marginal revenue | the addition or change in revenue from selling one additional unit |
| marginal cost | the addition or change in cost from producing one additional unit |
| voluntary export restraint | when the importing country causes another nation to reduce its exports of a commodity voluntarily under the threat of higher all around trade restrictions. |
| export duty | effects are symmetrical to a tariff and illegal in the US Constitution |
| export subsidy | direct payments to the granting of a tax relief and subsidized loans to the nations exporters or potential exporters giving low interest loans to foreign buyers to stimulate the nations exports |
| countervailing duty | tariff imposed by an importing country which is intended to increase price of the good to a legally defined fair level. Often used in export subsidy sases. (basically undoes an export subsidy) |
| dumping | the export of a commodity at below cost or at a lower price than sold domestically |
| predatory dumping | temporary dumping to attract consumers and drive the other producers out of business so the firm can increase prices to a monopoly level |
| persistent dumping | continuous tendency to maximize total profits for a domestic monopoly by selling at a lower price globally and a higher price domestically |
| specialized factor pattern | the more a factor is specialized into the production of exports the more the producer gains from trade |
| Stolper-Samuelson Theorem | moving from no trade to free trade unambiguously raises the returns to the factor used intensively |
| immiserising growth | producing more goods for export can make a nation worse off |
| Rybczyński Theorem | in a two good world with consistent prices the growth of one factor of production actually cuts the output of one good. |
| dutch disease | 1977 they put their focus on natural gas so much so that their manufacturing sector hurt more than the natural gas gains. An example of immiserising growth |
| trade creation | some domestic production in a member of a customs union is replaced by a lower cost import from another member of the union. This increases welfare |
| trade diversion | lower cost imports from outside the union are replaced by higher cost imports from another union member. This reduces welfare. |
| embargo | complete prohibition of trade with another country |
| public choice | analyzes what public servants do and explains the legislation they make. |
| two important factors of public choice | redistribution of income and the size of the interest group matters. |
| free rider | when the benefits of a group effort fall on everyone in a large group regardless of how much they spend as individuals |
| economic union | Free trade among members, common external tariffs, free factor movement, and harmonization of economic policy. |
| General Agreements of Tariffs and Trade (GATT) | precursor to the WTO, nations would get together to discuss tariffs |
| double entry bookkeeping | the accounting procedure where each international transaction is entered twice once as credit and once as debit |
| capital inflow | increase in foreign assets within the nation and/or reduction of the nation's assets abroad |
| debit transactions | payment to foreigners (I am buying - an import) |
| credit transactions | receiving a receipt of payment from foreigners (I am selling- an export) |
| balance of payments | summary statement of all international transactions of the residents of a nation with the rest of the world during a particular period of time |
| Non Tariff Trade Barrier (NTB) | import quota, export subsidy, countervailing duty. Any means by which the government affects imports and exports through policies |
| common market | free trade among members, common external tariffs, and free factor movement among members |
| customs union | there is free trade as well as common external tariffs among members |
| balance on merchandise trade | merchandise exports - merchandise imports. focuses on a trade balance between nations. Part of the broader current account. |
| current account | all sales and purchases of currently produced goods and services and unilateral transfers. A link between the nations international transactions and its national income |
| capital account | change in foreign assets abroad and foreign assets domestically. Other than official reserves |
| direct investment | real investments in factories, capital goods, land, and inventories where capital and management are involved and the investor retains control over the use of invested capital |
| statistical discrepancy | estimated numbers in the entry made in the BoP to make total credits equal total debits. |
| international investment position | the total amount and the distribution of a nations assets abroad and foreign assets in the nation at year end; also called the balance of international indebtedness. It compliments the BoP. |
Created by:
rudolph.beukes
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