4.1 - International Economics Flashcards
Containerisation
4.1.1 - Globalisation
A system of freight transport for use in sea shipping that has reduced the transport costs of shipping many thousands of different goods across the globe
Deglobalisation
4.1.1 - Globalisation
The process of diminishing interdependence and integration between economies acround the globe
Foreign direct investment
4.1.1 - Globalisation
FDI is the accquisition of a controlling interest in productive operations abroad by businesses resident in the home economy. May involve the creation of new productive capacity such as a new factory or building of infrastructure
Globalisation
4.1.1 - Globalisation
The deepening of relationships between countries of the world reflected in an increasing level of cross-border trade and investment and migration
Mercantilism
4.1.1 - Globalisation
The notion that the wealth of a nation was based on how much it couild export in excess of its imports, and thereby accumulate precious metals. Applied in the modern context to countries accumulating huge trade surpluses and focusing on export-let growth
Multinational companies
4.1.1 - Globalisation
A MNC has facilities and other assets in at least one country other than its home country
Open economy
4.1.1 - Globalisation
An economy with low tariff and non-tarriff barriers which is deeply integrated into the regional and global economy
Transnational companies
4.1.1 - Globalisation
TNCs base their manufacturing, assembly, research and retail operations in a number of countries
Absolute advantage
4.1.2 - Specialisation and trade
Occurs when a country can produce a product using fewer resources than another nation. If a country using the same factors of production can produde more of a product, then it has an absolute advantage
Comparative advantage
4.1.2 - Specialisation and trade
Refers to the relative advantage that one country or producer has over another. A country can benefit from specializing in and exporting the product(s) for which it has the lowest opportunity cost of supply
Dynamic gains from trade
4.1.2 - Specialisation and trade
Dynamic gains from trade make a domestic economy more productive. Examples of gains from trade liberalization that fall into this category are: Diffusion of knowledge and technology, economies of scale and increased competition and innovation
Fairtrade
4.1.2 - Specialisation and trade
Trade between companies in developed countries and producers in developing countires in which fair prices are paid to producer
Free trade
4.1.2 - Specialisation and trade
When trade in goods and services between nations is allowed to occur without any form to import restriction
Relative export prices
4.1.2 - Specialisation and trade
A country’s export prices relative to those of a competing economy
Specialisation
4.1.2 - Specialisation and trade
When individuals, regions or countries concentrate on making one product to create a surplus to trade
Trade creation
4.1.2 - Specialisation and trade
Trade creation occurs when a country enters a free trade area/agreement or becomes involved in a customs union in which there is free trade between members but also a common external tariff. Trade creation is the movement from a high cost source of output to a lower cost source of supply as a result of joining a trade agreement
Trade diversion
4.1.2 - Specialisation and trade
Trade diversion is a feature of a country deciding to join a customs union i.e. an area where there is free trade within a customs union but also a common external tariff. Trade diversion is a switch from lower-cost foreign source/supplier outside of a customs union towards a higher-cost supplier located inside the customs union
Bilateral trade agreement
4.1.3 - Pattern of trade
An agreemnt to lower import tariffs and other trade barriers between two countries - for example between South Korea and Australia
Competitiveness
4.1.3 - Pattern of trade
External competitiveness is the sustained ability to sell goods and servcices profitably at competitive prices in a foreign country. The core measure of competitiveness is a nation’s relative unit labour costs expressed in a common currency
Exchange rate
4.1.3 - Pattern of trade
The external value of currency
Intra-regional trade
4.1.3 - Pattern of trade
Intra-regional trade is the exchange of virtually identical products between countries within the same region
Trading bloc
4.1.3 - Pattern of trade
A group of countries co-operating to liberalize trade between each other
Prebisch-Singer Hypothesis
4.1.4 - Term of trade
This is an observaqtion (not a theory) that states that the terms of trade between primary goods and manufactured products deteriorate over time. The Prebisch-Singer Hypothesis (PSH) suggests that, over the long run, prices of primary goods such as coffee and cocoa decline in proportion to prices of manufactured goods such as cards and washing machines
Relative export prices
4.1.4 - Term of trade
A country’s export prices relative to those of competing economy
Terms of Trade
4.1.4 - Term of trade
The terms of trade (also known as the real exchange rate) is the real value of countries exports in terms of their imports. Thus, it is a function of the price levels in the domestic and foreign country and the nominal exchange rate
Anti-dumping tariffs
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
Anti-dumping import tariffs are allowed under World Trade Organisation rules when cases of dumping have been establised
ASEAN
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
Association of Southeast Asian Nations - a regional trade bloc
Bilateral trade agreement
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
An agreement to lower import tariffs and other trade barriers between two countries - for example between South Korea and Australia
Common External Tariff (CET)
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
A CET is an import tarrif applied equally by each country participating in a customs union, e.g. the EU might impose a common tariff on imported whisky from Japan
Common market
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
A single market providing for participating countries free trade in goods and services and free moment of labour and capital. The European Union is a single market
Customs union
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
A group of countries that abolish tariffs and quotas between member nations to encourage free movement of goods and services. Adopt a common external tariff on imports from non-member countries. The European Union is a customs union
European Free Trade Agreement (EFTA)
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
European Free Trade Association consists of Norway, Iceland, Switzerland and Leichtenstein
European Union (EU)
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
As of January 2017, there are twenty-eight member nations of the EU - collectively known as EU28. The UK voted to leave the EU in June 2016
Eurozone
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
This consists of those member states of the EU that use the Euro as their currency
Free trade area
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
A free trade area (FTA) is one where there no tariffs or taxes or quotas on goods and/or services from one country entering another
Monetary union
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
An intergovernmental agreement that involves two or more stats shareing the same currency
NAFTA
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
North American Free Trade Agreement - a free trade area agreement signed by the US, Canada and Mexico. This has now been replaced by the USMCA agreement
Non-tariff barrier
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
Trade barriers such as import quotas, embargoes and export subsidies
Pacific Alliance
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
Trade agreement between Chile, Colombia, Mexico and Peru
Regional trade agreement
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
An agreement to lower import tariffs and other trade barriers between countries in a certain region
SAFTA
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
South Asian Free Trade Area comprising Afghanistan, Bangladesh, Bhutan, India, Maldivves, Nepal, Pakistan and Sri Lanka
Schengen Area
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
26 country passport-free area inside Europe
Single market
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
A single market represents a deeper form of economic integration than a customs union. It invovles the free movement of goods and services, capital and labour
Trade liberalisation
4.1.5 - Trading blocs and the World Trade Organisation (WTO)
Reductions in import tariffs and non-tariff barriers to enhance trade between one or more countries