11.5-6 Relationship btw countries at different levels of development and Globalisation Flashcards
World Bank
an international organisation that lends money to developing economies for projects that will promote development
Prebisch-Singer hypothesis
a theory that suggests that the terms of trade tend to move against developing economies so that developing economies have to export more to gain a given quantity of imports
Foreign aid
assistance given to developing economies on favourable terms
Dependence
a situation where the economic development of a developing economy is hindered by its relationships with developed economies
International monetary fund (IMF)
an international organisation that promotes free trade and helps countries in balance of payments difficulties
Virtuous cycle
the links between, for example, an increase in investment, increase in productivity, increase in income and increase in saving
Foreign direct investment (FDI)
the setting up of production units or the purchase of existing production units in other countries
Multinational corporations (MNCs)
firms that operate in different countries
Globalisation
the process by which countries become more integrated in terms of product, commodity, information and capital
Free Trade Area (FTA)
trade agreement when member countries don’t have trade barriers, but each member have different trade policies with non-member countries
Customs Union
trade agreement when member countries don’t have trade barriers and same tariff with non-member countries
Monetary Union
common external tariffs, regulatory approximation, and harmonization of macroeconomic policy is taken to its full conclusion through the construction of an overarching governance framework that imposes a common economic policy system on all member countries
trade creation
more international trade with removal of trade barriers
trade diversion
international trade is diverted from the more efficient producer to the less efficient producer due to formation of trade blocs
