Vecka 2 sammanfattningar del 3 Flashcards
What are the particular issues characteristic of developing countries?
- promoting industrialization
- coping with the uneven development of the domestic economy.
What are Two usual justifications for the infant industry argument?
- the existence of imperfect capital markets
- the problem of appropriability of knowledge generated by pioneering firms.
Why does Many economists now harshly criticize the results of import substitution?
They are arguing that it fostered high-cost, inefficient production.
What is the Brander-Spencer analysis?
It suggests that strategic intervention can enable nations to capture excess returns. These arguments are theoretically persuasive; however, many economists worry that they are too subtle and require too much information to be useful in practice.
Describe a new movement opposed to globalization?
The central concern of this movement is with the low wages paid to export workers. The response of most economists is that developing-country workers may earn low wages by Western standards, but that trade allows them to earn more than they otherwise would.
What does The environmental Kuznets curve say?
That economic growth initially tends to increase environmental damage as a country grows richer but that beyond a certain point, growth is actually good for the environment.
What is a growing environmental concern from globalization?
That it may allow highly polluting industries to move to pollution havens, where regulation is looser. There is little evidence that this is a major factor in actual location decisions, at least so far. But that may change if serious climate-change policies are implemented.
What is An exchange rate?
The price of one country’s currency in terms of another country’s currency.
Why do we care about Exchange rates?
It plays a role in spending decisions because they enable us to translate different countries’ prices into comparable terms.
What is a depreciation of a country’s currency against foreign currencies?
A rise in the home currency prices of foreign currencies, makes its exports cheaper and its imports more expensive.
What is An appreciation of its currency?
A fall in the home currency prices of foreign currencies, makes its exports more expensive and its imports cheaper.
Where are Exchange rates determined?
In the foreign exchange market.
What are The major participants in the foreign exchange market?
- commercial banks,
- international corporations,
- nonbank financial institutions,
- national central banks.
How come that Commercial banks play a pivotal role in the market?
Because they facilitate the exchange of interest-bearing bank deposits, which make up the bulk of foreign exchange trading. Even though foreign exchange trading takes place in many financial centers around the world, modern communication technology links those centers together into a single market that is open 24 hours a day.
What is an important category of foreign exchange trading?
forward trading, in which parties agree to exchange currencies on some future date at a prenegotiated exchange rate.
