final Flashcards
the theory that a country will export goods that make intensive use of the factors of production in which it is well endowed. For example, a labor-rich country will export goods that make intensive use of labor.
Heckscher-Ohlin trade theory
the imposition of barriers to restrict imports
Protectionism
Government limitations on the international exchange of goods. Examples include tariffs, quantitative restrictions (quotas), import licenses, requirements that governments buy only domestically produced goods, and health and safety standards that discriminate against foreign goods.
Trade Barriers
the theorem that trade protection benefits the scarce factor of production. This view flows from the Heckscher-Ohlin trade theory: if a country imports goods that make intensive use of its scarce factor, then limiting imports will help that factor. So in a labor-scarce country, labor benefits from protection and loses from trade liberalization.
Stolper-Samuelson Theorem
The ability of a country or firm to produce a particular good or service more efficiently than it can produce other goods or services, such that its resources are more efficiently employed in this activity. The comparison is to the efficiency of other economic activities that the actor might undertake given all the products it can produce - not to the efficiency of other countries or firms.
Comparative Advantage
The ability of a country or firm to produce more of a particular good or service than other countries or firms can produce with the same amount of effort and resources
Absolute Advantage
a belief that national economic policy should encourage exports and discourage imports and that the country should aim to run a trade surplus. So-called in relationship to the classical mercantilism of the colonial powers, which aimed at running trade surpluses with their colonies
Neo-mercantilism
a tax imposed on imports. They raise the domestic price of imported goods and may be applied for the purpose of protecting domestic producers from foreign competition.
Tariff
a limit placed on the amount of a particular good that is allowed to be imported and sold domestically
Quantitative restrictions (quotas)
obstacles to imports other than tariffs (Trade Taxes). Examples include restrictions on the number of products that can be imported (quantitative restrictions or quotas); regulations that favor domestic over imported products; and other measures that discriminate against foreign goods or services. “Buy American” laws that govern what state and local governments can buy, for example, are an implicit - but nontariff
Nontariff Barriers to Trade
a model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself. This differentiates it from the Heckscher-Ohlin theory, in which the nature of the factor - labor, land, capital, is the principal consideration.
Ricardo-Viner (specific factors) model
In international trade relations, a mutual agreement to lower tariffs and other barriers to trade. Reciprocity involves an implicit or explicit arrangement for one government to exchange trade-policy concessions with another.
Reciprocity
a status established by most modern trade agreements that the signatories will extend to each other any favorable trading terms offered in agreements with third parties
Most-favored Nations (MFN) Status
an institution created in 1955 to succeed the GATT and to govern international trade relations. It encourages and policies the multilateral reduction of barriers to trade, and it oversees the resolution of trade disputes.
World Trade Organization (WTO)
An international institution created in 1947 in which the member countries committed to reducing barriers to trade and providing similar trading conditions to all other members. In 1955, it was replaced by the WTO.
General Agreement on Tariffs and Trade (GATT)
agreements among three or more countries in a region to reduce barriers to trade among themselves
Regional Trade Agreements (RTAs)
investment in a foreign country via the purchase of stocks (equities), bonds, or other financial instruments. Investors do not exercise managerial control of the foreign operation
Portfolio Investment
loans from private financial institutions in one country to sovereign governments of another country
Sovereign Lending
investment in a foreign country via the acquisition of a local facility or the establishment of a new facility. Direct investors maintain managerial control of the foreign operation
Foreign Direct Investment (FDI)
an important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects
World Bank
a sharp slowdown in the rate of economic growth and economic activity
Recession
a severe downturn in the business cycle, typically associated with major declines in economic activity, production, and investment; a severe contraction of credit; and sustained high unemployment
Depression
to fail to make payments on a debt
Default
the application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting wages
Austerity
one of the oldest international financial organizations, created in 1930. Its members include the world’s principal central banks, and under its auspices, they attempt to cooperate in the financial realm
Bank for International Settlement
a major international economic institution established in 1944 to manage international monetary relations. It has gradually reoriented itself to focus on the international financial system, especially debt and currency crises
International Monetary Fund (IMF)
an enterprise that operates in a number of countries, with production or service facilities outside its country of origin
Multination Corporation (MNC)
a network of customers and suppliers involved in the production and distribution of a product. Parts of it may be inside a multinational corporation; parts may also involve links between corporations
Global Supply chains
an agreement between two countries about the coordination of private investment across borders. Most of these treaties include provisions to protect an investment from government discrimination or expropriation without compensation as well as mechanisms to resolve disputes
Bilateral Investment Treaty
the price at which one currency is exchanged for another
Exchange rate
in terms of a currency, to increase in value relative to other currencies
Appreciate
in terms of a currency, to decrease in value relative to other currencies
Depreciate
to reduce the value of one currency relative to other currencies
Devalue
an important tool of national governments to influence broad macroeconomic conditions such as unemployment, inflation, and economic growth. Typically, governments alter their policies by changing national interest rates or exchange rates.
Monetary Policy
the institution that regulates monetary conditions in a country’s economy, typically by raising or lowering interest rates and the quantity of money in circulation.
Central Bank
an exchange-rate policy under which a government commits itself to keeping its currency at or around a specific value relative to another currency or a commodity, such as gold.
Fixed exchange rate
the monetary system that prevailed between about 1870 and 1914, in which countries tied their currencies to gold at a legally fixed price
Gold Standard
an exchange-rate policy under which a government permits its currency to be traded on the open market without direct government control or intervention
Floating Exchange Rate
the monetary order negotiated among the WWII allies in 1944, which lasted until the 1970s and was based on a U.S. dollar tied to gold. Other currencies were fixed to the dollar but were permitted to adjust the exchange rates.
Bretton Woods Monetary System
a monetary system of fixed but adjustable rates. Governments are expected to keep their currencies fixed for extended periods but are permitted to adjust the exchange rate from time to time as economic conditions change
Adjustable Peg
a formal or informal arrangement shared by most countries in the world economy to govern relations among their currencies.
International Monetary Regime
countries at a relatively low level of economic development
Less Developed Countries (LDCs)
basic structures necessary for social activity, such as transportation and telecommunication
Infastructure
raw materials and agricultural products, typically unprocessed or only slightly processed. The primary sectors are distinguished from the secondary sectors (industry) and tertiary sectors (services)
Primary Products
a situation in which a few firms dominate a market or industry.
Oligopoly
the relationship between a country’s export and import prices
Terms of Trade
a set of policies, pursued by most developing countries from the 1930s through the 1980s, to reduce imports and encourage domestic manufacturing, often through trade barriers, subsidies to manufacturing, and state ownership of basic industries
Import-substituting industrialization (ISI)
a set of policies, originally pursued in the mid-1960s by several East Asian countries, to spur manufacturing for export, often through subsidies and incentives for export production
Export-oriented industrialization (EOI)
a coalition of developing countries in the UN, formed in 1964 with 77 members, that seeks changes to the economic order to favor the developing world. It has grown to over 130 members but retains the same name.
Group of 77
associations of producers of commodities (raw materials and agricultural products) that restrict the world supply of their products and thereby cause the price of their goods to rise
Commodity cartels
a body of rules that bounds states and other agents in world politics and is considered to have the status of law
International Law
a body of rules that seeks to limit the effects of armed conflict, protect noncombatants, and restrict means and methods of warfare for humanitarian reasons
International Humanitarian Law (Laws of War)
international law that usually develops slowly, over time, as states come to recognize practices as appropriate and correct
Customary International Law
the degree to which states are legally bound by an international rule. High-obligation rules must be performed in good faith and, if breached, require reparations to the injured party
Obligation
the degree to which international legal obligations are fully specified. More precise rules narrow the scope for reasonable interpretation.
Precision
the degree to which third parties, such as courts, arbitrators, or mediators, are given authority to implement, interpret, and apply international legal rules; to resolve disputes over the rules; and to make additional rules
Delegation
standards of behavior for actors with a given identity; define what actions are “right” or appropriate under particular circumstances
Norms
govern the behavior of actors in their interactions with other actors
Regulative norms
define who is a legitimate or appropriate actor under what circumstances
Constitutive norms
norms that describe rules for the group’s operation; guide operations and decision making
Procedural Norms
individuals or groups that seek to advance principled standards of behavior for states and other actors
Norms Entrepreneurs
a set of individuals and nongovernmental organizations acting in pursuit of a normative objective
Transnational Advocacy Network (TAN)
A three-stage model of how norms diffuse within a population and achieve a taken-for-granted status
Norms Life Cycle
an expression of legitimate rulemaking by nonstate actors in international affairs, including the establishment of norms governing the behavior of private global actors such as multinational corporations and international NGOs
Private Authority
a process through which NGOs in one state are able to activate transnational linkages to bring pressure from other states on their own governments
Boomerang Model
the rights possessed by all individuals by virtue of being human, regardless of their status as citizens of particular states or members of a group or organization
Human Rights
a declaration; adopted by the UN General Assembly in 1948, that is defined as a “common standard of achievement for all peoples” and forms the foundation of modern human rights law
Universal Declaration of Human Rights (UDHR)
The agreement, completed in 1966 and in force from 1976, that details the basic civil and political rights of individuals and nations. The ICCPR and ICESCR together are known as the “twin covenants”
International Covenant on Civil and Political Rights (ICCPR)
The agreement completed in 1966 and in 1976, that specifies the basic economic, social, and cultural rights of individuals and nations. The ICCPR and ICESCR together are known as the “twin covenants”
International Covenant on Economic, Social, and Cultural Rights (ICESCR)
the UDHR, ICCPR, and ICESCR collectively. Together, these three agreements form the core of the international human rights regime
International Bill of Rights
rights that cannot be suspended for any reason, including in cases of social or public emergency
Nonderogable Rights
individuals imprisoned solely for the peaceful expression of their beliefs. The term was coined by the human rights organization Amnesty International.
Prisoners of Conscience
a right that permits individuals to petition appropriate international legal bodies directly if they believe a state has violated their rights
Individual Petition
a court of last resort for human rights cases that possesses jurisdiction only if the accused is a national of a state party, the crime took place on the territory of a state party, or the UN Security Council has referred the case to the prosecutor.
International Criminal Court (ICC)
human-induced change in the environment, especially from the emissions of greenhouse gases, leading to higher temperatures around the globe.
Global Climate Change
an international agreement enacted in 1992, and entered into force in 1994, that provides an overall framework for intergovernmental efforts on climate change
United Nations Framework Convention on Climate Change (UNFCCC)
an agreement negotiated under the UNFCCC in 2015, signed by 195 countries, and entered into force in 2016. It was the first agreement to require commitments to control greenhouse gas emissions from all signatories.
Paris Agreement
a problem that occurs when a resource is open to all, without limit. No one has an incentive to conserve, because others would use the resource in the meantime, so the resource suffers degradation.
Tragedy of the Commons
Products that are nonexcludable and nonrival in consumption, such as national defense or clean air or water.
Public Goods
Goods that are available to everyone but such that one user’s consumption of the good reduces the amount available for others.
Common-pool resources
Goods that, if available to be consumed by one actor, cannot be prevented from being consumed by other actors as well.
Nonexcludable goods
Goods for which consumption by one actor does not diminish the quantity available for others
Nonrival goods
An amendment to the UN Framework Convention on Climate Change, adopted in 1997 and entered into force in 2005, that established specific targets for reducing the emission of carbon and five other greenhouse gases through 2020
Kyoto Protocol
a framework convention adopted in 1985 to regulate activities, especially emissions of CFCs, that damage the ozone layer
Vienna Convention for the Protection of the Ozone Layer
an international treaty, signed in 1989, that is designed to protect the ozone layer by phasing out the production of a number of CFCs and other chemical compounds
Montreal Protocol
Sets an overall limit on emissions, which is then lowered over time to reduce pollutants released into the atmosphere. Firms can sell “credits” when they emit less than their allocation or must buy from others when they emit more than their allocation
Cap-and-trade System
The commitment each party to the Paris Agreement makes as to how it will contribute to reducing the threat of global warming
Nationally determined contribution (NDC)
Costs or benefits resulting from an actor’s decision that affect stakeholders other than that actor. When it exists, the decision maker does not bear all the costs or reap all the gains from the action.
Externalities
non-binding norms of state behavior; Voluntarily adopted guidelines for behavior derived from emerging norms and standards in international codes, declarations, and conventions.
Soft law
Law that is enforceable and so establishes legally binding obligations
Hard law
A situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk
Moral Hazard
