Midterm 1 Deck Flashcards
International trade
the movement of goods and services across borders
migration
the movement of people across borders - the majority of international trade occurs into developing countries as a result of immigration restrictions into wealthier countries
foreign direct investment
FDI, majority occurs between industrial countries, occurs when a firm in one country owns in part or in whole a company or property in another country.
export
product sold from one country to another
import
product bought by one country from another
trade balance
the difference between its total value of exports and its total value of imports (usually including both goods and services)
trade surplus
Countries that export more than they import China
trade deficit
Countries that import more than they export US
bilateral trade balance
the difference of exports and imports between two countries
value-added
iPod Example The difference between the value of the iPod when it leaves China and the cost of parts and materials purchased in China and imported from other countries.
offshoring
goods shifted back and forth between countries during manufacturing, a new feature of international trade
import tariffs
taxes are international trade
GDP
The value of all final goods produced in a year
trade barriers
Refers to all factors that influence the amount of goods and services shipped across international borders.
import quotas
a limitation on the quantity of an import good allowed into a country (France imposed they in response to the The Smoot-Hawley Tariff Act)
horizontal FDI
The flows between industrial countries
vertical FDI
When a firm from an industrial country owns a plant in a developing country - law wages tend to be the principle reason that firms shift their production
US Imports/Exports: 1925 to 2009
US Imports and Exports have shifted from Industrial materials and foods to consumer goods and capital goods
Where is the largest amount of trade in the world?
Within Europe because import tariffs are low
What tendencies do countries with the highest ratios of trade to GDP (total trade/GDP *100) share?
They tend to be small in economic size
Degree of Openness
(exp+imp)/GDP x 100
a large % = big proportion of GDP comes from trade, they are very open
a small % = small proportion of GDP comes from trade, they are less open (US and Japan relatively closed economies)
The Smoot-Hawley Tariff Act
raised tariffs to as high as 60% on many categories of imports with the intention of protecting farmers and other industries … backfired, causing other countries to retaliate by applying high tariffs of their own (in Canada)
technology
Difference in each country’s ability to manufacture products
resources
Labor, capital, and land found in each country
proximity.
How close countries are to each other. The closer countries are, the lower the costs of transporting goods.
RIcardian Model
Focuses on technology differences between country as an explanation for trade, and how this technology affects wages. Free trade increases relative prices in the export sector, and decreases relative prices in the import sector.
trade pattern
The products a country imports and exports.
free-trade area
When neighboring countries take advantage of their proximity by creating a free-trade area - where the countries have no restrictions to trade between them.
