Unit 7 - 2 Flashcards
When one party desires a good/service that it doesn’t have or can’t produce and another party has the desired good/service with which it is willing to part.
Trade
A system of exchange in which no money changes hands. (Goods/services exchanged instead).
Barter
Ability to produce a good or service at a lower cost than others.
Comparative Advantage
When a country has the income, goods, or services that another country desires(and vice versa). Without it, a trade imbalance is created that is heavily weighted in one direction.
Complimentary
Laws that reduced barriers to trade.
Free Trade(Policies)
A set of reforms that reduces gov. regulations and taxation. Support for free trade was a cornerstone of this. 1980s, President Ronald Reagan and UK Prime Minister Margaret Thatcher were leading advocates for this.
Neoliberal Policies
2018→ US tariffs on Chinese goods so they would be more expensive for US consumers and consumers would buy more US made goods and China relax barriers on US imports. (China just decreased US good purchase and increased tariffs on US products).
Policies decreasing trade
Groups of countries that agree to a common set of trade rules. Most within regions.
Ex. USMCA, OPEX, Mercosur
Trading Blocs
Southern Common Market, which includes several South American countries. Trading Bloc.
Mercosur
Global organization created in 1995 to monitor the rules of international trade by providing a forum for negotiating trade deals, settling disputes between its members, supporting the needs of developing countries, and helping companies follow similar international trade polices.
2020→ 164 member countries that accounted for 98% of global trade. An additional 20 applied for membership.
World Trade Organization(WTO)
Best known IFI(International financial institutions), created in 1945 to help countries caught in need of financial aid. Recognizing how quickly a financial crisis can lead to social and political instability, the IMF promotes economic stability for countries dealing with financial struggles.
Assistance can be anything from new more manageable loans to assistance in overhauling the country’s economic system. 190 member countries and also works to promote monetary cooperation, facilitate international trade, increase employment, encourage sustainable growth, and reduce poverty.
Many projects involve multimillion/billion dollar deals to build big projects(hydroelectric dams, new transport systems). Successful = beneficial to many but risky when don’t work as planned. Can create bigger issues w/ bigger debt.
International Monetary Fund(IMF)
To reduce costs, when you contract work to noncompany employees/other companies. Why contracted company less expensive? Specializes in work and does more efficiently or less benefits/pay to workers. Often outsource manufacturing work/administrative functions like handling payroll and paying taxes.
Outsourcing
When some tertiary/quaternary sector companies move back offices to other countries. For costs, if risk is worth. Many software and manufacturing companies in US/Europe locate to India and China. High skill, low cost. Labor unions and gov officials—pressure some into reshoring because it benefits others by the Multiplier Effect.
Offshoring
Created by globalization, changed system of employment in the various economic sectors throughout the world:
-Core: design and develop products for global market. Tertiary, quaternary, and quinary sector jobs ↑
-Semi-periphery: Manufacture goods that are marketed in core. Secondary ↑ and primary ↓
-Periphery: (Bangladesh, Angola, Papua New Guinea) big primary and export to semi-periphery and core for further processing and consumption.
New International Division of Labor
Actions that creates new wealth for a region. Products normally sold beyond area of making so money outside area is used to purchase products. Outside money considered new money and makes area that produced goods wealthier and leads to additional growth(multiplier effect). Because of this, sometimes called city-forming activities.
Ex. most manufactured goods and commercial farm products.
Basic Economic Activity
New money not generated for area but allows recirculation of existing money in area. Important to give goods/services like food/clothes. Limited multiplier effect and referred to as city-servicing activities.
Ex. Grocery stores.
Non-basic Economic Activity
Businesses that operate in multiple countries. Can bring jobs and wealth so gov. competes to attract them.
Trans/multinational Corporation
Special manufacturing zones that greater than 100 countries have attracted TNC/MNCs with. Often offer foreign corporations major tax savings, inexpensive labor, fewer environmental regulations, well serviced industrial sites, and proximity to transportation networks. Often near international airports, seaports or land borders.
Tax breaks = one incentive used. Typically no tax for any imported item into it if re-exported/used for products to export. Protects existing businesses that cater to local market.
Functions: originally occupied by manufacturing factories. But some were transshipment points(transfer containers) and sites for tertiary and quaternary economic sector activity.
Export Processing Zones(EPZs)
Special manufacturing zones in China. Similar to maquiladoras and free trade zones. 1979, costal cities near major ports.
Special Economic Zone(SEZs)
Special manufacturing zones in Mexico. Similar to special economic zones and free trade zones. Second largest income source after petroleum. Surge after NAFTA 1994. Initially all in single district in North Mexico, near border to lower transport costs. Recently, lower number of them from competition. Still, 3,000 factories and 1 million workers.
Maquiladoras
Special manufacturing zones in major seaport cities. Similar to special economic zones and maquiladoras. Locations where companies store, warehouse, transfer, and process without additional tax or duties if exported. Singapore, London, Amsterdam, and Hong Kong. Larger scale: free trade regions, like the EU.
Free-trade Zones
Many wealthier core countries have this. No longer employs big number of people in factories but has people who provide services and process information.
Postindustrial Economy
Where item is moved from worker to worker who repeats same task. Henry Ford, early 20th century to advance productivity.
Grew with automation, late 20th century. But also, unemployment rose.
Assembly Line
System of mass production where low skill became standard practice.
Fordism
