FDI & Export Glossary Flashcards
Offer guidance, mentorship & capital to develop start-ups with the intention of helping them grow in national and global markets
Accelerator (business)
The process of entering into an existing treaty that has already been signed and enacted by other parties. Has the same legal binding effect of ratification.
Accession (treaty)
A tax levied in proportion to the value of a taxed item. For example, local property taxes are generally ad valorem taxes. Many export duties are also ad valorem taxes. More generally rates according to value rather than weight or number of units.
Ad valorem
A loan secured by turning over shipment documents of title to the creditor; an alternative to acceptance financing.
Advance against documents
Activities that create a more favorable business and operating environment for foreign businesses; range from providing post-establishment facilitation services to developmental support for new foreign investors.
Aftercare
An investor who provide equity investment to start-up businesses
Angel investor
The increase in the value of an asset
Appreciation
The Association of Southeast Asian Nations is a political and economic organization of ten countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar & Vietnam
ASEAN
Bank that fosters economic growth and cooperation and accelerates economic development in the region of Asia and the Far East
Asian Development Bank (ADB)
Business property acquired at a measurable cost, the use of which is related to the business operations.
Asset
Occurs when a foreign firm seeks local companies to supply parts
Backward vertical transfer
A quantifiable measure of economic competitiveness and quality of life collected on a regular basis. Used to measure a region’s economic status and progress against comparable regions.
Benchmark
Between 2 Countries
Bilateral
Also called a foreign buyers check. Negotiable form of payment from the seller/exporter to the buyer/importer.
Bill of Exchange
A document issued by a carrier that details a merchandise shipment and assigns title of the merchandise to some party.
Bill of Lading (BoL)
A site operated as part of a foreign parent corporation’s operations, rather than a separate entity
Branch
Used to determine the concerns, plans, and community relations of businesses.
Business Retention & Expansion Surveys
Ranking from the Economist Intelligence Unit, designed to replicate the main criteria major corporations use in deciding where to invest.
Business environment ranking
The aggregate of local government, labor and business attitudes toward business.
Business Climate
Entity that nurtures and supports young companies until they are viable, providing them with affordable space, technical and management support, equity and long-term debt financing and employment.
Business Incubator (or Incubator)
Traditional approach to economic development, in which companies are enticed to relocate or set up a new branch operation in a place.
Business recruitment and attraction (‘smokestack chasing’)
Systematic effort to keep local companies operating at their present locations. Includes assisting companies to cope with changing economic conditions.
Business retention & expansion (BR&E)
The act of developing an organization’s ability to effectively undertake a project. This can be accomplished with technical assistance, networking, conferences and workshops.
Capacity Building
Property, both financial and physical, from which income is derived, and which can be used to produce additional wealth
Capital
The total funding of an organization, consisting of debt, stock and retained earnings, used to finance operations and meet debt obligations.
Capitalization
A finance instrument protecting an exporter against loss or damage to property incurred in shipping
Cargo insurance
A customs document that permits duty-free and tax-free temporary trade in goods including commercial samples, professional equipment, and goods for presentation at trade fairs. The best-known is the ATA carnet
Carnet
Currency instruments and highly liquid short-term investments, such as money market funds and Treasury bills.
Cash (finance)
A financial statement that shows all cash receipts and disbursements of an entity for a specified period of time.
Cash Flow
The originating and administrating body for SBA 504 loans. The program provides long-term, fixed rate financing to small businesses to acquire real estate, machinery and equipment for the expansion of business or modernization of facilities.
Certified Development Company (CDC)
AKA Agglomerations. Regional groupings of related firms; often identified as prime targets for marketing and development efforts
Clusters
Assets that a borrower pledges to secure a debt against default.
Collateral
A raw material, usually further refined and manufactured (i.e. rubber, copper, eggs, silk)
Commodity
A) A 501(c)(3) organization that can obtain federal and private support. Some perform only economic development services, but most work only on housing issues.
B) Bank sponsored way to invest in local businesses or real estate investment projects. They can purchase, construct or rehab property.
Community Development Corporation (CDC) or Bank CDC
The set of institutions and policies that determine the productivity of a place.
Competitiveness
Buying agents that represent foreign firms
Confirming house
A required document in some countries, describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. Certified by the consular official of the foreign country, it is used by the country’s customs officials to verify the value, quantity, and nature of the shipment.
Consular invoice
A legally independent company with shareholders
Corporation
The chance that the return on an investment will be less than expected or that the borrower will not meet the terms of the loan or investment and that secondary repayment resources such as collateral will be insufficient to cover the losses.
Credit Risk.
The total amount invested in a country.
Cumulative Foreign Direct Investment (aka FDI Stock)
A market for trading currencies.
Currency Exchange (aka Foreign Exchange)
The national agency responsible for controlling the passage of goods in and out of the country, and for collecting tariffs.
Customs
The profession which clears good through customs.
Customs broker
An agreement b/w sovereign states to allow free trade b/w them and administer a common tariff on imports.
Customs union
Failure to pay a financial obligation.
Default
A decrease in value through age, wear or deterioration. It is important for tax assessments. The rate determines tax due on the value of an asset.
Depreciation
Property that is a creative invention, such as design, for which the inventor has the rights and can apply for copyrights, patents and trademarks.
Intellectual Property (aka Design)
A relative designation for nations with more developed economies and infrastructure.
Developed Country
A relative designation for nations with less developed economies and infrastructure.
Developing Country
A form of advertising in which a message is sent to pre-selected targets.
Direct Mail
The provision of own funds by a lender to a borrower without going through another organization, typically used in terms of governments, foundations and non-profits.
Direct Financing
The opposite of FDI. For example, the closing of a foreign owned plant or the purchasing of a foreign asset by a domestic firm.
Divestment
Document given from the domestic carrier to the port of embarkation upon moving exports to the shipping line; transfers accountability.
Dock Receipt
A business practice wherein a company exports a product and sells it for less than the price it charges in tis own market
Dumping (pricing)
Evaluation of an entity’s financial statements or portfolio of loans to determine its credit worthiness and other risk factors.
Due Diligence.
An import duty on products.
Tariff (aka Duty (trade))
Prepared by the World Bank, ranks how costly and complex it is for businesses to navigate a country’s regulatory environment.
Ease of Doing Business Index
A part of the Commerce Department created by the Public Works and Economic Act of 1965. The main goals are to alleviate unemployment and diversity the economy as well as assist urban areas with planning and emergency public works programs.
Economic Development Administration (EDA)
Prepared by the Heritage Foundation and the Wall Street Journal, measures 10 indicators of economic liberty.
Economic Freedom Index
A trade bloc consisting of a common market, a customs union and a monetary union. Allows for free trade of goods, common external trade policies and a common currency.
Economic and monetary union
Coordination of trade policies b/w states.
Economic integration
The combination of a customs union with the common market policies
Economic union (politics)
The phenomenon of production where the average cost of production declines as more of the product is produced.
Economies of Scale
Fast growing markets that do not yet meet the standard of a developed market.
Emerging Market
A rule for any mode of transport; the seller fulfills obligations by means of making goods available to buyer at a location designated by the seller.
ExWorks
Policy used to regulate exported materials either to address domestic scarcity or to limit the supply of another nation.
Export Control
Any number of documents necessary to conduct export trade
Export documentation
A government authorization to export certain goods to certain places. May or may not be necessary depending on the goods and the country.
Export license
A comprehensive inventory of a shipment, listing the goods, the type of package and their weight.
Export Packing List
A written plan similar to a business plan, that discusses the resources needed and strategies that will be employed for each element of the process of exporting
Export Plan (or International Business Plan)
The taking of foreign property by a government without adequate compensation. A distinct risk for both exporters and foreign direct investors.
Expropriation (trade)
Parties contribute assets toward a legal entity, either by forming a new entity or investing more equity in an existing one. The business entity could take the form of a partnership, corporation or LLC.
Equity joint venture
The political and economic union of 28 European member states.
European Union
A transaction where an insuring bank purchases accounts receivable from an exporter.
Factoring
The US Agency tasked with consumer protection and the prevention of anticompetitive business practices.
Federal Trade Commission (FTC)
When a company invests enough, through the purchasing of stocks or bonds, that it owns a controlling stake in the foreign enterprise.
Foreign Direct Investment (FDI)
Prepared by A.T. Kearney, a proprietary index based on the weighted results of an investor survey.
FDI Confidence Index
When local suppliers intentionally and explicitly learn business processes from the foreign supplier in order to better supply goods and services.
Forward vertical transfer
The total amount of foreign capital invested into a country at a given time.
FDI stock.
Measures the change in total investment over a given unit of time (usually a year); calculated by subtracting total divestment from total new investment within a given timeframe.
FDI Flow
A specialized economic zone where customs duties are only collected when the goods are moved to the final consumer.
Foreign Trade Zone (or Free Trade Zone) (FTZ)
A transaction where a forfeiter purchases receivables from an exporter.
Forfeiting
An agreement to reduce trade barriers b/w 2 nations.
Free Trade Agreement
A region with a Free Trade Agreement
Free Trade Area (FTA)
A firm that consolidates cargo but that does not own any vessels and thus does not itself ship cargo. Issues bills of lading.
Freight Forwarder
The multilateral agreement on trade that was replaced by the World Trade Organization in 1995.
General Agreement on Tariffs and Trade (GATT)
Computer programs that integrate social, economic and demographic information and mapping; used for market studies, transportation analyses, crime studies and housing impact analyses.
Geographic Information Systems (GIS)
Compiled by the Economic Intelligence Unit; ranks cities across the world based on the quality of living conditions.
Global Livability Report
Prepared by the World Economic Forum, ranks countries based on indicators grouped under 3 principal categories an 12 sub-categories
Global Competitiveness Index
The recessionary economic period of 2008-09, characterized by layoffs, low inflation, a housing price bubble, and a major reduction in stock prices and international investment.
Great Recession.
New construction projects undertaken by foreign companies. Particularly prevalent in the manufacturing sector, as foreign manufacturers often must build new facilities according to their site and production process needs.
Greenfield
Often thought of as the size of the economy, the monetary value of all goods and services produced within a country, often measured on a yearly basis.
Gross Domestic Product (GDP)
An international standard of names to classify codes. International trade statistics are frequently presented according to HS classifications.
Harmonized Commodity Description and Coding System (Harmonized System)
When local competitors observe a foreign corporation and are able to imitate its technology.
Horizontal Spillover
The sum total of all the perceptions others have about a community or entity
Image (marketing)
Benefits offered to firms as part of an industrial attraction strategy. They include tax abatements and credits, low interest loans, infrastructure improvements, job training and land grants.
Incentives
Model that states that rather than attuning our educational system to the desire of students, the US should consider changing to a system that trains students for the jobs that industries need most urgently.
Industry Sector Model
An increase in the price level, or general prices in an area.
Inflation
Lending facilities that target the public sector, financed through a combination of bond issues, government funds, and external donor support. They mobilize domestic funds and create an attractive vehicle for donor funding.
Infrastructure Bank
Creating new idea, devices or processes.
Innovation
The inability to pay ones’ debts when they come due.
Insolvency
Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit.
Insurance Certificate
Internationally accepted trading terms; create a common set of rules and define transaction costs and responsibilities b/w buyer and seller.
International Commercial Terms (INCOterms)
JVs where at least one of the partners is a foreign company. Often evolve from non-equity licensing or distribution relationships.
International Joint Venture
Specifications for products, services and systems, put together collaboratively by various international organizations to ensure quality, safety and efficiency; vital in facilitating international trade.
International Standards Organization (ISO)
Or strategic alliance, is the temporary joining together or 2 or more partner companies to share resources. Formed for a specific purpose; once this objective has been achieved, the entity is usually dissolved.
Joint Venture (JV)
When a trade mission is poorly executed, does not generate FDI leads and is perceived simply as a luxurious and expensive foreign trip that benefits only the participants.
Junket
A versatile document usually issued by a commercial bank verifying that the client has credit for a specified amount, against which drafts can be drawn.
Letter of Credit (L/C)
1) The relation of debt to equity; the use of borrowed funds by an entity.
2) The use of incentives to induce private sector lenders, individuals or businesses to invest capital in a designated area, project or business.
Leverage
Granting the right to use certain intellectual property for commercial purposes; permits manufacturing or producing products or components for sale in agreed upon territories and explicated time periods. Typically includes payment to licensor for these purposes.
Licensing (intellectual property)
When a shareholder’s liability (i.e. in the case of a lawsuit or bankruptcy) is held to the amount of their investment.
Limited Liability
Combined features of a corporation and partnerships. They are generally not recommended as an effective investment vehicle for foreign investors, for tax and liability reasons.
Limited Liability Corporation (LLC)
The ability to convert assets to cash quickly without loss of market value. It also refers to the ability of an entity to meet its current obligations.
Liquidity
A promise by a 3rd party to cover a loan in case of default.
Loan Guarantee
Flow management from the point of origin to the point of consumption.
Logistics
A consumer movement to purchase American-made goods.
Made in America
The set of existing and prospective users of a product or service.
Market
A distinct or definable subset of a market, also target market.
Market Segment
The process of analyzing, planning, and executing and controlling messages and programs designed to influence the level, timing, and character of demand in selected target markets for the purpose of achieving an organization’s objectives.
Marketing
The amount of time before an investment or debt comes due
Maturity
Survey used by human resources professionals and location consultants to determine adequate compensation.
Mercer Quality of Living Survey
Tangible products that are the traditional objects of trade, such as commodities and manufacturers. Often contrasted with Service.
Merchandise (trade)
Changes in company ownership. In the context of inward flow of FDI, it means that facilities or assets shift from domestic ownership to foreign ownership.
Mergers and Acquisitions (M&A)
A business that is “smaller than small”. Operated by a person on a full or part-time basis, usually out of a home. Examples include carpenters, day-care providers, crafts persons and caterers.
Microenterprise
Skills needed for jobs that require more education than a HS degree but less than a 4-yr college degree. Vacancies are found in fields such as computer technology, nursing, high-skill manufacturing and others.
Middle skills gap
When a cultures actions and goals are approached sequentially. These cultures tend to have a linear view of time. Americans, Germans, and Britons generally prefer this style.
Monochronic work style
In international trade, it’s a country whose firms receive the lowest tariff and tax rates.
Most-Favored Nation (MFN)
Between 3 or more countries.
Multilateral
The amount by which total assets (typically measured by their fair market value) exceed total liabilities.
Net Worth
The revenue foregone by choosing one use of money and resources over another. (For instance, investing in the stock market vs. earning interest in a bank account)
Opportunity Cost
An agreement that permits the purchase or sale of something within a specified period of time according to specified terms.
Option
International forum for developing global understanding and seeking solutions for common economic development issues.
Organization for Economic Cooperation and Development (OECD)
Hiring or contracting an outside firm to perform a process or operation.
Outsourcing
A federal agency that provides assistance to US companies that assists American companies investing in other countries.
Overseas Private Investment Corporation (OPIC)
Tax pass-throughs, meaning that the company itself pays no tax. Instead, partners pay tax on the disbursements.
Partnerships
The exclusive right of the patent owner to use a certain technology
Patent
Cultures that pursue multiple actions in tandem and may bargain on several items at once or revisit discussions about items that had already been agreed upon. Asians, Arabs, some Southern Europeans and most Latin Americans prefer this style.
Polychronic work style
Common form of foreign investment where businesses purchase stocks or bonds of businesses in other countries.
Portfolio Foreign Investment
A trade bloc which gives preferential treatment to participating countries
Preferential Trade Agreement (PTA)
The act of furthering the growth and development of an organization by generating exposure to a target market.
Promotion
The term for a business climate that is unwelcoming to foreign investors. Typically it occurs in 2 ways: protecting the inbound flows of foreign investment or restricting the conditions of outbound investment.
Protectionism
A restriction on the number of goods able to be exported in a period.
Quota
Work to introduce and improve products and services
Research and Development (R&D)
A movement to restore manufacturing jobs to the US
Reshoring
Net income divided by dollars invested.
Return on Investment (ROI)
A pool of funds that are lent out, whereby the loan repayments and income are recycled or plowed back into the pool which increases funds available for lending.
Revolving Loan Fund
The degree of uncertainty that an investment will be lost.
Risk
Strategically protecting against financial losses for any venture that has an uncertain outcome.
Risk Management
Markets where ownership of an investment is transferred from the one owner, usually the original, to another.
Secondary Market
A part of International Trade Administration of the US Dept. of Commerce; The Country’s investment promotion agency designed to foster FDI inflows by connecting businesses and investors from around the world with domestic economic development organizations.
SelectUSA
Intangible traded product delivered from producer to client in the form of labor or information; such as travel, consulting, or information technology work. In the context of trade, often contrasted with Merchandise.
Service
A designation of what is written on export cartons.
Shipping Mark
Founded in 1953, it’s mission is to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” Its charger also mandates that it ensure small businesses a fair proportion of gov’t contracts and sales of surplus property. Since its inception, it has delivered more than 13M loan, loan guarantees, contracts, and other forms of assistance to small businesses.
Small Business Administration (SBA)
Businesses with fewer employees than a set threshold.
Small or Medium-sized enterprise (SME)
The use of emerging media (web, mobile phone, etc.) to communicate interactively with customers.
Social Media
Development costs for various services, including architecture and engineering fees, construction interest, loan fees, insurance fees, legal and accounting fees and permit fees.
Soft Costs
An adjustment where available assets, tools and resources are marshaled to accommodate the needs of investors so that they can acclimate and succeed in an unfamiliar environment.
Soft Landing
Benefits that are unique to FDI that transfer into the community at large; often the main reason that decision makers at the national level initiate FDI-specific attraction policies and subsidies.
Spillover Effect
When national gov’ts hold majority stakes in for-profit businesses.
State-Owned Enterprise (SOE)
An extremely common way that large foreign corporations invest in foreign countries; a separate legal entity, such as a corporation or partnership that is at least 80% controlled by a foreign parent corporation or holding company. Evolve away from their parent corporations and develop their own business culture and operations.
Subsidiary
The multi-step process involved in moving a product from producer to consumer.
Supply Chain
A tool used in the economic development planning process to asses a community’s Strengths & Weaknesses (factors from within a community that can be changed), as well as the Opportunities and Threats (factors from outside the community that cannot be changed).
SWOT Analysis
Quotas that allow for a quantity of goods to be imported at a reduced tariff. Importers of goods in excess of the quota pay a higher tariff.
Tariff Rate Quota
The use of various tax relief measures, such as tax exemptions, tax credits or tax abatements, to recruit and attract businesses to a community or help local businesses expand.
Tax Incentive
Includes aid with preparing grant applications, training staff, applying for loans and marketing the product. It may also include assisting a small business to improve the design of its product or manufacturing process. It is generally aimed at providing specific services that small businesses typically cannot afford.
Technical Assistance
Includes transfer from foreign to local firms. Includes both physical technology, such as equipment, as well as intangible technology, such as production processes and innovative and effective ways of doing business.
Technology Transfer
Debt capital repayable according to a specific schedule. It includes medium and long-term loans.
Term loans.
The relative price of exports in terms of imports. It’s calculated by dividing export prices by import prices.
Terms of Trade (TOT)
An organization established to serve the needs of members of that same industry or trade.
Trade Association
Gov’t restriction on international trade.
Trade Barrier
When a country’s imports are of greater value than its exports.
Trade Deficit
A trip by gov’t agents to explore business opportunity.
Trade Mission
When a country’s exports are of greater value than its imports.
Trade Surplus
A commercial or industrial formal gathering in which sellers at pre-assigned stations present goods or services for possible sale to prospective buyers.
Trade Show
The process of evaluating a potential borrower in terms of its creditworthiness, risks involved and performance potential.
Underwriting
An intergov’t organization which promotes international cooperation.
United Nations
Investment capital subject to considerable risk, generally associated with capitalizing new or unproven businesses with the possibility of very substantial returns.
Venture Capital
When companies tacitly or explicitly learn business processes from a foreign supplier.
Vertical spillover
Current assets of an entity including cash, marketable securities, accounts receivables, inventory and prepaid expenses. Net working capital is current assets less current liabilities.
Working Captial
An international financial institution which offers loans to businesses in developing economies.
World Bank
