Global Definitions Flashcards
Balance of Payments
A record of transactions in trade, income, transfers and capital flows between one country and the rest of the world over a given period of time.
The three main components are the current account, the capital account and the financial account.
Balance of Trade
A measure of the difference between the total value of exports minus the total value of imports over a period of time.
Barter
The exchange of goods or services for other goods or services without using money.
Absolute Advantage
AA in the production of goods which it produces more efficiently than the rest of the world.
Comparative Advantage
Two countries will gain from trade if they each choose to specialise in the production of the good with the lowest opportunity cost.
Debit
When money leaves a country
Credit
Money coming into a country
Debt Relief
Where part or all of a country’s debt is cancelled and not paid back.
Debt Restructuring
Where there is an extension of payments, change in interest rate or reduction in the amount of a loan (called a ‘haircut’) to make it easier for the debtor country to manage the payments.
Dumping
Firms exporting their goods at a price below production cost. It is a type of predatory pricing behaviour.
An importer may sell or ‘dump’ goods abroad in order to gain a foothold in a new market.
ELDCs
Low-income country facing severe structural challenges to sustainable development.
Fair Trade
Trade that promotes equity in international trade by offering fair payment to producers in the developing world, as well as improving environmental and social standards.
Globalisation
The cooperation and integration of the world through multiple perspectives such as culture, technology, the cross-national movement of goods and people, and more.
Immigration
Individuals entering a country to reside on a permanent basis.
Immigration can increase the number of workers available.
Indebtness
Condition of owing money.
Infant/Sunrise Industry
Industry that has just opened up and is not yet large enough to take advantage of economies of scale.
Interdependent Countries
Countries are interdependent when they become reliant on each other.
IMF
An international organisation that aims to:
- Promote global economic growth and financial stability
- Encourage international trade
- Reduce poverty
International trade
Exchange of goods and services across international borders.
Multilateral Development Assistance
The support provided by organisations to which many countries contribute.
MNC
Companies that operate in many countries with a headquarters based in one to coordinate the global operation.
NGO’s
Non-profit, citizen-based group that functions independently of government.
Official Borrowing
Occurs when the government borrows (debit) or lends (a credit item) money from the IMF, World Bank, or the government from another country.
Outsourcing
Moving factories and production processes to foreign countries, usually to reduce costs of production.
Sustainable Development Goals (SDGs)
A set of 17 global goals, focusing on the environment, society and the economy, that aim to move the world to a more sustainable future.
Terms of Trade
Measures a country’s export prices in relation to its import prices
Theory of Comparative Advantage
States that two countries can both gain from trade if each one chooses to specialise in the production of the good it can produce with the lowest opportunity cost.
Trade Union
Formal organisations that represent the interests of workers.
They bargain with employers on behalf of workers for improved pay and working conditions.
World Bank
An international organisation focused on fighting world poverty by providing developmental assistance to poorer nations.
World Trade Organisation
A global international organisation focused on improving free trade by providing a medium for trade negotiations and acting as a moderator for trade disputes.
