T4.1.1 - 4.1.5: International Economics P1 Flashcards
What is Containerisation?
A system of freight transport for use in sea shipping that has reduced the transport costs of shipping many thousands of different goods across the globe.
What is a Closed economy?
An economy operating without imports and exports, i.e. closed to global trade.
What is Deglobalisation?
The process of diminishing interdependence and integration between economies around the globe.
What is Foreign direct investment (FDI)?
FDI is the acquisition of a controlling interest in productive operations abroad by businesses resident in the home economy. May involve the creation of new productive capacity such as a new factory or building of infrastructure.
What is Globalisation?
The deepening of relationships between countries of the world reflected in an increasing level of cross-border trade and investment and migration.
What is Mercantilism?
The notion that the wealth of a nation was based on how much it could export in excess of its imports, and thereby accumulate precious metals.
What are Multinational companies (MNCs)?
A MNC has facilities and other assets in at least one country other than its home country.
What is an Open economy?
An economy with low tariff and non-tariff barriers which is deeply integrated into the regional and global economy.
What are Transnational companies (TNCs)?
TNCs base their manufacturing, assembly, research and retail operations in a number of countries.
What is Absolute advantage?
Occurs when a country can produce a product using fewer resources than another nation.
What is Comparative advantage?
Refers to the relative advantage that one country or producer has over another.
What are Dynamic gains from trade?
Dynamic gains from trade make a domestic economy more productive.
What is Fairtrade?
Trade between companies in developed countries and producers in developing countries in which fair prices are paid to the producers.
What is Free trade?
When trade in goods and services between nations is allowed to occur without any form of import restriction.
What are Relative export prices?
A country’s export prices relative to those of a competing economy.
What is Specialisation?
When individuals, regions or countries concentrate on making one product to create a surplus to trade.
What is Trade creation?
Occurs when a country enters a free trade area/agreement or becomes involved in a customs union in which there is free trade between members but also a common external tariff.
What is Trade diversion?
A feature of a country deciding to join a customs union, switching from a lower-cost foreign source/supplier outside of a customs union towards a higher-cost supplier located inside the customs union.
What is a Bilateral trade agreement?
An agreement to lower import tariffs and other trade barriers between two countries.
What is Competitiveness?
External competitiveness is the sustained ability to sell goods and services profitably at competitive prices in a foreign country.
What is an Exchange rate?
The external value of a currency.
What is Intra-regional trade?
The exchange of virtually identical products between countries within the same region.
What is a Trading bloc?
A group of countries co-operating to liberalize trade between each other.
What is the Prebisch-Singer Hypothesis?
An observation that states that the terms of trade between primary goods and manufactured products deteriorate over time.
What are Terms of Trade?
The real value of countries exports in terms of their imports.
What are Anti-dumping tariffs?
Import tariffs allowed under World Trade Organisation rules when cases of dumping have been established.
What is ASEAN?
Association of Southeast Asian Nations - a regional trade bloc.
What is a Common External Tariff (CET)?
An import tariff applied equally by each country participating in a customs union.
What is a Common market?
A single market providing for participating countries free trade in goods and services and free movement of labour and capital.
What is a Customs union?
A group of countries that abolish tariffs and quotas between member nations to encourage free movement of goods and services.
What is the European Free Trade Agreement (EFTA)?
European Free Trade Association consists of Norway, Iceland, Switzerland and Liechtenstein.
European Union eurozone
As of January 2017, there are twenty-eight member nations of the EU –
collectively known as EU28. The UK voted to leave the EU in June 2016.
Eurozone
The consists of those member states of the EU that use the Euro as their currency.
Free trade area (FTA)
A free trade area (FTA) is one where there are no tariffs or taxes or quotas
on goods and/or services from one country entering another.
Monetary union
An intergovernmental agreement that involves two or more states sharing
the same currency.
NAFTA
North American Free Trade Agreement - a free trade area agreement
signed by the US, Canada and Mexico. This has now been replaced by the
USMCA agreement.
Non-tariff barrier
Trade barriers such as import quotas, embargoes and export subsidies.
Pacific alliance
Trade agreement between Chile, Colombia, Mexico and Peru.
Regional trade agreement
An agreement to lower import tariffs and other trade barriers between
countries in a certain region.
SAFTA
South Asian Free Trade Area comprising Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Schengen area
26 country passport-free area inside Europe.
Single market
A single market represents a deeper form of economic integration than a customs union. It involves the free movement of goods and services,capital and labour.
Trade liberalisation
Reductions in import tariffs and non-tariff barriers to enhance trade
between one or more countries.
Trading bloc
A group of countries co-operating to liberalize trade between each other.
Transition economies
Former countries of the Eastern Bloc that have been engaged in a transition from being largely command economies to market systems with a
greater role for private enterprise and resource allocation via the price mechanism.
World trade organisation
The WTO polices free trade agreements and decides on trade disputes between countries. It arranges trade negotiations to liberalize trade for member countries by mutually agreed reductions in tariffs & quotas and opening domestic markets up to foreign competition.
