PSCI 3100 CH 9 Vocab
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20 terms
Terms | Definitions |
|---|---|
 comparative advantage | The ability of a country to make and export a good relatively more efficiently than other countries; the basis for the liberal economic principle that countries benefit from free trade among nations |
| derivatives | Financial instruments often derived from an asset (mortgages, loans, foreign exchange, interest rates) which parties agree to exchange over time; way of buying and selling risk in international financial markets |
| direct foreign investment | Investing in another state, usually by multinational corporations, by establishing a manufacturing facility or developing an extractive industry |
| General Agreement on Tariffs and Trade (GATT) | Founded by treaty in 1947 as the Bretton Woods institution responsible for negotiating a liberal international trade regime that included the principles of nondiscrimination in trade and most-favored-nation status; re-formed as the World Trade Organization in 1995 |
| Group of 7 | Group of the traditional economic powers (U.S., Great Britain, France, Japan, Germany, Italy, Canada) who meet annually to address economic problems; when Russia joins, the G-8 discussions turn to political issues |
| hegemonic stability theorists | Those who support the theory that a dominant state is needed to support an integrated world economy; the hegemon is willing to bear the costs of maintaining the system |
| International Monetary Fund (IMF) | The Bretton Woods institution originally charged with helping states deal with temporary balance-of-payments problems; now plays a broader role in assisting debtor developing states by offering loans to those who institute specific policies, or structural adjustment programs |
| mercantilism | Economic theory that international commerce should increase a state's wealth, especially gold; state power is inhanced by a favorable balance of trade |
| moral hazard | Problem when states or individuals are not made to pay the consequences of reckless behavior; they have little incentive to change that behavior |
| most-favored-nation (MFN) principle | Principle in international trade agreements when states promise to give another state the same treatment in trade as the first state gives to its most-favored trading partner |
| offshore financial centers | States or jurisdictions with few regulations on banking and financial transactions, often with low taxation; used by individuals and international banks to transfer funds |
| portfolio investment | Private investment in another state by purchasing stocks on bonds, without taking direct control of the investments |
| radicalism | A social theory, formulated by Karl Marx and modified by other theorists, that posits that class conflict between owners and workers will cause the eventual demise of capitalism; offers a critique of capitalism |
| sovereign wealth funds | State-controlled investment companies that manage large foreign exchange reserves; located in China or in petroleum-exporting countries (Norway, the Gulf states, Saudi Arabia) |
| statism | Modern version of mercantilism; use of state power to achieve economic and social goals |
| structural adjustment programs | IMF policies and recommendations aimed to guide states out of balance-of-payment difficulties and economic crises |
| sustainable development | An approach to economic development that tries to reconcile current economic growth and environmental protection with the needs of future generations |
| Washington Consensus | The liberal belief that only through specific liberal economic policies, especially privatization, can development result |
| World Bank | A global lending agency focused on financing projects in developing countries; formally known as the International Bank for Reconstruction and Development, established as one of the key Bretton Woods institutions to deal with reconstruction and development after World War II |
| World Trade Organization (WTO) | Intergovernmental organization designed to support the principles of liberal free trade; includes enforcement measures and dispute settlement mechanisms; established in 1995 to replace the General Agreement on Tariffs and Trade |
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