The ability of one country to produce a product at a lower cost than another country.
Financial markets in which money in various forms is bought and sold, including banks, securities markets, public and private debt refinancing, and so forth.
An organization of buyers and sellers, capable of manipulating price and/or supply.
A form of regional economic integration among member countries that disallows internal trade barriers, provides for common external trade barriers, and permits free factor mobility.
The theory that stresses relative advantage, rather than absolute advantage, as the true basis for trade. Comparative advantage is gained when countries focus on exporting the goods they can produce at the lowest relative cost.
The theory of international competitiveness that stresses the production of high value, high profit goods using skilled labor, agglomeration economies, and constructive state policy.
A group of countries that enters into an agreement to reduce or eliminate trade barriers among themselves in order to promote trade with one another.
A form of regional economic integration having all the features of a common market as well as a common central bank, unified monetary and tax systems, and a common foreign economic policy
19th Century economist-Assumes Labor theory of value (the value of goods reflect the amount of socially necessary labor time that goes into production, ignores demand) (Comparative advantage)
The value of one currency in terms of another.
Export restraint agreement
A nontariff barrier whereby governments coerce other governments to accept voluntary trade export restraint agreements.
Payments made by governments that lower the final cost of goods and services to importers.
Foreign direct investment
Investing in companies in a foreign country, with the purpose of managerial and production control.
Free trade area
A form of regional economic integration in which member countries agree to eliminate trade barriers among themselves but continue to pursue their independent trade policies with respect to nonmember countries.
General agreement on tariffs and trade
An international agency, headquartered in Geneva, Switzerland, supportive of efforts to reduce barriers to international trade; replaced by the World Trade Organization in 1995.
A young industry that, it is argued, requires tariff protection until it matures to the point where it is efficient enough to compete successfully with imports.
Intellectual property rights
Establishing and policing patent, copyright, and trademark rights on an international basis.
International currency markets
The internationalization of currency, banking, and capital markets.
International monetary fund
An international financial agency that attempts to promote international monetary cooperation, facilitate international trade, make loans to help countries adjust to temporary international payment problems, and lessen the severity of international payments disequilibrium, often by imposing Structural Adjustment Policies.
Trade among subsidiaries of the same corporation, typically using shadow pricing rather than market prices.
Restrictions other than tariffs that limit entry into an industry by competitive firms or countries, including quotas and a variety of legal limitations such as licensing requirements.
North American free trade agreement
The North American free trade agreement signed by Mexico, Canada, and the United States that began in 1994 and gradually removed all tariffs and nontariff barriers among them.
Organization of the Petroleum Exporting Countries
The international cartel of oil producing countries.
An effort to protect domestic producers by means of controls such as tariffs and quotas on imports.
A restriction on imports imposed by one country against another as a form of protectionism; the most common form of nontariff barrier.
Regional economic integration
The international grouping of sovereign nations to form a single economic region.
A schedule of duties placed on products. A tariff may be levied on an ad valorum basis (i.e., as a percentage of value) or on a specific basis (i.e., as an amount per unit). Tariffs are used to serve many functions-to make imports expensive relative to domestic substitutes; to retaliate against restrictive trade policies of other countries; to protect infant industries; and to protect strategic industries, such as agriculture, in times of war.
Tax haven country
A typically small nation, often an island, that gives extraordinary tax breaks to lure foreign capital and corporations.
Terms of trade
The relative prices of exports to imports for a country.
The excess of a country's imports over exports for any specific year.
Companies that operate factories or service centers in countries other than the country of origin; also known as mulinational corporations.
The argument that an artificial division of labor has made earning a good income from free trade difficult for most less developed countries.
A group of international financial agencies that includes the International Bank for Reconstruction and Development, the International Finance Corporation, and the International Development Association.
World Trade Organization
The world trade union that came into existence following the Uruguay Round of the GATT Treaty. The WTO enforces trade rules and assesses penalties against violators.
The currency used in most, but not all, member countries of the European Union.
Theory of Competitive Advantage: Social creation of innovation in knowledge based economy, productivity growth is key to success, National development strategies should emphasize move to high wage industries, with high multiplier effects.