Comparative advantage
The ability of a country or firm to produce a particular good or service more efficiently that it can produce other goods or services, such that its resources are most efficiently employed in this activity. The comparison is to the efficiency of other economic activities that the actor might undertake given all the products it can produce- not to the efficiency of other countries or firms.
Aboslute advantage
The ability of a country or firm to produce more of a particular good or service than other countries or firms can produce with the same amount of effort and resources.
Neo-mercantilism
A belief that national economic policy should encourage exports and discourage imports, and that the country should aim to run a trade surplus. So called in relationship to the classical mercantilism of the colonial powers, which aimed at running trade surpluses with their colonies.
Heckscher-Ohlin Trade theory
the theory that a country will export goods that make good use of factors of production which they have a lot of. import scarce items, export abundant items.
Protectionism
Imposition of barriers to restrict imports
Trade Barriers
Government limitations on the international exchange of goods
Tariff
A tax imposed on imports. Tariffs raise the domestic price of the imported good and may be applied for the purpose of protecting domestic producers from foreign competition
Quota
a limit placed on the amount of a particular good that is allowed to be imported and sold domestically
Nontariff barriers to trade
obstacles to imports other than tariffs/ restriction that on number of imported products, regulations that favor domestic over imported products, and other measures that discriminate against foreign goods or services. “Buy American”
Stolper-Samuelson Theorem
The theorem that trade protection benefits the scarce factor of production. Abundant owners win and scarce owners loose (factor ownership) govt. protecting industries that suck
Ricardo-Viner (specific-factors) model
A model of trade relations that emphasizes the sector in which factors of production are used rather than the nature of the factor itself. Preference is employment in that specific industry. winners - employed in exporting industries and losers are employed in importing-competed industries.
Reciprocity
in international trade relations, a mutual agreement to lower tariffs and other barriers to trade. Reciprocity induces on implicit or explicit arrangement for one government to exchange trade policy concessions with another.
Most-favored Nation (NFM) status
A status established by most modern trade agreements guaranteeing that the signatories will extend to each other any favorable trading terms offered in agreements with third parties.
World Trade Organization (WTO)
An institution created in 1995 to succeed the GATT and to govern int. trade relations. The WTO encourages and policies the multilateral reduction of barriers to trade, and it oversees the resolution of trade disputes.
General Agreement on Trade and Tariffs (GATT)
an international institution created in 1947, replaced by WTO in 1955, same goals.
Regional Trade Agreements (RTAs)
Agreements among three or more countries in a region to reduce barriers to trade among themselves.
