20 terms

CH. 3 Mercantilism

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Mercantilism
17th century ideology that made accumulation of natl treasure the main goal of govt officials and society. Today, it is an economic philosophy and practice of govt regulation of a nations economy in ways that increase state power and security. Policies of import restrictions and export promotion (to accumulate wealth at expense of other countries) follow from this goal.
Classical mercantilism
Historically, state policies that focused on intentionally gaining natl wealth and power at the expense of other states. These measures include export subsidies, import barriers, and other efforts to generate trade surpluses and protect domestic producers
Realism
A theory of state behavior that focuses on the acquisition of power to enhance state security. The natl interest is a determinant of state behavior. In the view of realists, states, like individuals, tend to act in their own self-interest.
Neomercantilism
A version of mercantilism that evolved in the post WWII period. Rather than focusing on surplus producing trade policies, neomercantilism today includes a wide variety of protectionist trade, finance, and development policies to generate wealth and enhance natl security
Industrial policy
Economic policies designed to guide or direct business investment and development. Such policies often include support for businesses and trade protection.
Security dilemma
According to realists, a situation wherein one state's effort to protect itself or enhance its defensive capabilities is viewed ad threatening by another state
Zero-sum
An activity whereby gains by one party create equal losses for others. The concept plays a major role in the realist-mercantilist perspective.
Comparative advantage
According to David Ricardo, the theory holds that nations should produce and export those goods they can produce at a lower cost than other nations and import those items that other nations can produce at a lower cost. Often cited as the foundation of free trade policy
Economic nationalism
Variation of mercantilist ideas. Economic nationalism holds that states have to intervene in the market for the sake of their wealth and power. Alexander Hamilton and Friedrich List are 2 famous supporters
Infant industries
New industries in any nation that are at a disadvantage relative to older, more efficient, foreign industries. Most mercantilists and even some economic liberals suggest that protective measures are justifies until the newer industries have time to compete fairly with more mature industries.
OPEC
Organization of Petroleum Exporting Countries...An organization of nations formed in 1960 to advance the interests of Third World oil exporters. In 1973 OPEC embargoed oil exports to the US and Netherlands, setting off a flurry of price hikes and notice of OPEC's new found political-economic power as a cartel.
Interdependence
Usually thought of as interconnectedness between nations and other actors through trade, aid, finance, and investment. Interdependence forces states to cooperate more often but engenders vulnerability and sensitivity to actions of other states
Nontariff barriers (NTBs)
Ways of limiting imports, including govt health and safety standards, domestic content legislation, licensing requirements, and labeling requirements. Such measures make it difficult for imported goods to be marked or significantly raise the price of imported goods.
Import quotas
Limits on the quantity of an item that can be imported into a nation. By limiting the quantity of imports, the quota tends to drive up the price of a good while at the same time restricting competition.
Malevolent mercantilist
A country that uses intentionally harmful policies that aim to defeat an enemy or potential enemy. Associated w/ Germany and Japan before WWII
Bening mercantilist
A defensive strategy that seeks to protect the domestic economy against damaging intl political and economic forces. What one nation intends as benign can be interpreted by another as malevolent (hostile)
Developmental state
An interventionist govt whose bureaucracy uses financial, fiscal, and investment policies to foster rapid industrialization. It guides private sector investments, supports industries most likely to promote natl development and encourages exports by private companies. The term is usually used to describe 4 post WWII Asian states: Japan, S Korea, Taiwan, Singapore
State capitalism
An economic system with an important role for public enterprises that are managed independently with a focus on long term profitability and innovation. Such a system typically has state owned companies hat make large investments in sectors such as energy, infrastructure, automobile manufacturing, technologically sophisticated industries. China, Russia, Turkey, Brazil
Structural adjustment policies (SAPs)
Economic policies that seek to reduce state power and introduce free market reforms in less developed countries so as to establish a foundation for economic growth. The IMF often makes the adoption of SAPs a condition for financial assistance
Strategic resources
Resources such as oil and rubber whose supply and demand have important consequences fir the natl security of a nation. Most nations fear becoming overly dependent on others for the resources they lack