The Evolution of Trade Flashcards
the purchase, sale or exchange of goods and service across national borders
International trade
occurs between different states, regions, or cities within a country.
domestic trade
nations should accumulate financial wealth usually in the form of gold, by encouraging exports and discouraging imports.
mercantilism
the ability of one country to produce a good or service more efficiently than other.
theory of absolute advantage
who introduces the theory of absolute advantage?
Adam Smith
the ability of one country that has an absolute advantage in the production of two or more good to produce one of them relatively more efficiently than the other.
theory of comparative advantage
who introduces the theory of comparative advantage?
David Ricardo
the loss of potential gain from other alternatives when one alternative is chosen.
opportunity cost
a theory than emphasizes productivity rather than a nation’s resources; this is in line with comparative advantage.
New trade theory
what are the benefits of the international trade?
- cheaper goods or services
- greater variety
- wider markets for the supplying country
- jobs and employment
- economic growth
economic and strategic advantage gained by being the first company to enter the industry.
first-mover advantage
are cost advantages companies gain from increasing their output.
economies of scale
a nation’s competitive industry depends on the capacity of the industry to innovate and upgrade.
national competitive advantage theory
who introduces the national competitive advantage theory?
Michael Porter
countries produce and export goods that requires sources that are abundant and import goods that require resources in short supply.
Factor proportions theory
factor proportion’s theory is also known as?
heckscher-ohlin theory
who introduces the factor proportions theory?
Eli Heckscher and Bertil Ohlin
a company will begin by exporting its product and later undertake foreign direct investment as the products moves through its life cycle.
international product life cycle theory
all government actions that seek to alter the size of merchandise and/or service flows from and to a country.
trade policy
are regulations that limit the amount or number of units of products that can be imported to a country.
import quotas
are commercial and financial penalties applied by one or more countries against a targeted self-governing state.
economic sanctions
it is the partial or complete prohibition of commerce and trade with a particular country/state or a group of countries.
trade embargo
are government policies that restrict international trade to help domestic industries.
protectionism
the removal/reduction of restrictions/barriers on the free exchange of goods between nations.
trade liberalization
is a trade policy that does not restrict imports or exports
free trade
a region in which a group of countries has signed a free trade agreement and maintain little or no barriers to trade in the form of tariffs or quotas between each other.
free trade area
a collection of independent businesses or organizations that collude in order to manipulate the price of a product or service.
cartel
