#5 Political Economy of Trade Flashcards
Purchase, sale, or exchange of goods and services across national borders
International Trade
Mexico is dealing with its dependency on the US and the best way for Mexico to make US still be dependent on them is to boost competitiveness and name itself a top choice among emerging markets, since China is rising their labor
Trade Dependency
Trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports
Mercantilism
Ability of a nation to produce a good more efficiently that any other nation
Absolute Advantage
Inability of a nation to produce a good more efficiently than other nations but an ability to produce that good more efficiently than it does any other good
Comparative Advantage
Trade theory stating that countries produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply
Factor Proportions theory
Conditions that results when the value of a nation’s exports is greater than the value of its imports
Trade surplus
Conditions that results when the value of a country’s imports is greater than the value of its exports
Trade deficit
Trade theory stating that
- there are gains to be made from specialization and increasing economies of scale
- the companies first to market can create barriers to entry
- government may play a role in assisting its home companies
New Trade Theory
Theory stating that a company will begin by exporting its product and later undertake foreign direct investment as the product moves though its life cycle
International Product Life Cycle
The apparent paradox between predictions of the theory and actual trade flows is called…
Leontief Paradox
Trade theory stating that a nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade
National Competitive Advantage Theory
