Chapter 7 : Political Economy of Int'l Trade
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17 terms
Terms | Definitions |
|---|---|
 Tariffs | taxes levied on imports that effectively raise the cost of imported products relative to domestic products |
| Subsidies | government payments to domestic producers |
| Import Quotas | restrict the quantity of some goos that may be imported into a country |
| Tariff rate quotas | a hybrid of a quota and a tariff where a lower tariff is applied to imports within the quota than to those over the quota |
| Quota Rent | the extra that producers make when supply is artificially limited by an import quota |
| Voluntary Export Restraints | quotas on trade imposed by the exporting country, typically at the the request of the importing country's government |
| Local content requirements | demand that some specific fraction of a good to be produced domestically |
| Administrative Policies | bureaucratic rules designed to make it difficult for imports to enter a country |
| Antidumping Policies | punishing foreign firms that engage in dumping and protecting domestic produces from unfair foreign competition |
| Dumping | selling goods in a foreign market below their costs of productions, or selling goods in a foreign market below their fair market value |
| 2 Main Arguments for Gov't Intervention | Political Arguments Economic arguments |
| Political Arguments | concerned with protecting the interests of certain groups within a nation often at the expense of other groups |
| Economic Argument | concerned with boosting the overall wealth of a nation |
| Political Arguments Examples | Protecting jobs Protecting industries deemed important for national security Retaliation Protecting consumers from dangerous products Furthering the goals of foreign policy Protection of Environment |
| Economic Arguments Examples | Infant industry argument Strategic trade policy |
| Infant industry argument | an industry should be protected until it can develop and viable and competitive internationally |
| Strategic trade policy | first mover advantages can be important to success |
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