Unit 14 - The International Economy: Globalisation And International Trade Flashcards
Globalisation
The process of increasing economic integration of the world’s economies
World trade organisation
An international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers to trade. As such, it has become closely associated with globalisation
Multinational corporations
Enterprises operating in several countries but with their headquarters in one country
Less developed countries
Countries considered behind in terms of their economy, human capital, infrastructure and industrial base
More developed counties
Countries with a high degree of economic development, high average income per head, high standards of living, usually with service industries dominating manufacturing, and investment having taken on place over many years in human capital and infrastructure
European Union
An economic and partially political union established in 1993 after the ratification of the Maastricht treaty by members of the European community and since expanded to include numerous central and Eastern European nations
Absolute advantage
A country has a absolute advantage if it can produce more of a good than other countries from the same amount of resources
Comparative advantage
This is measured in terms of opportunity cost. The country with the least opportunity cost when producing a good possesses a comparative advantage that is in that good
Quotas
Physical limits on the quantities of imported goods allowed into a country
Tariffs (import duties)
Taxes imposed on imports from other countries entering a country
Export subsidies
Money given to domestic firms by the government to encourage firms to sell their products abroad and to help make their goods cheaper in export markets
Free trade area
In a free trade area, member countries abolish tariffs on mutual trade, but each partner determines its own tariffs on trade with non member countries
Customs unions
Trading blocs in which member countries enjoy internal free trade in goods and possibly services, with all the member countries protected by a common external tariff barrier
Eurozone (euro area)
The name used for the group of EU countries that have replaced their national currencies with the euro. Before 2019, 19 of the then 28 EU countries were in the eurozone, through this may change in future years
Balance of payments
A record of all the currency flows into and out of a country in a particular time period
Current accounts
Measures all the currency flows into and out of a country in a particular time period in payment for exports and imports of goods and services l, together with primary and secondary income flows (previously known as income flows and transfers)
Financial account
The part of the balance of payments which records capital flows into and out of the economy
Balance of primary income
Inward primary income flows comprising both inward income flowing into the economy in the current year generated by uk owned capital assets located overseas, and outward primary income flows comprising income flowing out of the economy in the current year generated by overseas owned capital assets located in the uk
Balance of secondary income
Current transfers, e.g. gifts of money, international aid and transfers between the uk and the eu flowing into or out of the uk economy in a particular year
Current account deficit
Currency outflows in the current account exceed the currency inflows
Current account surplus
Currency inflow in the current account exceed the currency outflow
Balance of trade in goods
The part of the current account measuring payments for exports and imports of goods. The difference between the total value of exports and the total value of imports is sometimes called the ‘balance of visible trade’
Balance of trade in services
Part of the current account, the difference between the payments for the exports of services and the payments for the imports of services
Foreign direct investment
Investment in capital assets, e.g. manufacturing and service industry capacity, in a foreign country by a business with headquarters in another country. Very often the overseas company establishes subsidiary companies int eh countries in which it is investing
