flash cards

Exam 3 Exam 3(301)

Question Answer
Pragmatic Nationalism FDI has both benefits (inflows of capital,technology, skill and jobs) and costs
Paul krugman argues that strategic trade policies aimed at establishing domestic firms in a dominant position in a global industry are beggar neighbor policies that boost national income at the expense of other countries
Common Market has no barrier to trade between member countries, a common external trade policy, and the free movement of the factors of production
Free Trade Occurs when governments do not attempt to restrict what citizens can buy from another country or what they can sell to other country.
Tariffs Taxes levied on imports that effectively raise the cost of imported products relative to domestic products
Specific tarrifs levied as a fixed charge for each unit of a good imported
Ad varolem tariffs Levies as a proportion of the value of the imported goods
Subsidies government payments to domestic producers
Import Quotas Restrict the quantity of some good that may be imported into a county
Tarrif rate quotas A hybrid of a quota and a tariff where a lower tariff is applied to import within the quota than to those over the quota
Quota Rent The extra profit 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 request of the importing country government
Local Content Requirements demand that some specific fraction of a good be produced domestically
Administrative Policies Bureaucratic rules designed to make it difficult for import to enter a country
Dumping selling goods in a foreign market below their costs of production or selling goods in a foreign market below their fair market value
Political Arguments Political ArgumentsConcerned with protecting the interests of certain group within a nation (normally producers) often at the expense of other group ( normally consumers)
Economic arguments Concerned with boosting the overall wealth of a nation – benefits both producers and consumers
Protecting Jobs the most common political reason for trade restrictions
Retaliation for unfair foreign competition when governments take, or threaten to take spefici actions, other countries may remove trade barriers
Furthering the goals of foreign policy preferential trade term can be gran
Protecting the human rights of individuals in exporting countries Through trade policy action
Protecting the environment International trade is associated with a decline in environmental quality
The Infant industry argument an industry should be protected until it can develop and be viable and competitive internationally
Strategic trade policy first mover advantages can be important to success
Voluntary Export restraint may limit a firm's ability to serve a country from locations outside that country
Foreign direct Investment (FDI) Foreign direct Investment (FDI)occurs when a firm invests directly in new facilities to produce and / or market in a foreign country
Greenfield Investments the establishment of a wholly new operation in a foreign country
Flow of FDI the mount of FDI undertaken over a given time period
Outflows of FDI the flow of FDI out of a county
Inflows of FDI the flow of FDI into a country
Flow of FDI the mount of FDI undertaken over a given time period
Outflows of FDI the flow of FDI out of a county
Inflows of FDI the flow of FDI into a country
The stock of IDS the total accumulated value of foreign owned assets at a given time
Gross fixed capital formation the total amount of capital invested in factories, store, office buildings, and the like
Exporting producing goods at home and then shipping them to the receiving country for sale
Multipoint competition Multipoint competitionwhen two or more enterprises encounter each other in different regional markets national markets, and industries
Location -specific advantages that arise from using resource endowments or assets that are tied to a particular location and that a firm finds valuable to combine with its own unique assets
Radical view the multinational enterprise (MNE) is an instrument of imperialist domination and a tool for exploiting host countries to the exclusive benefit of their capitalist imperialist home countries.
Free Market view international production should be distributed among countries according to the theory of comparative advantage
Resource transfer effects FDI brings capital, technology, and management resources
Employment effects FDi can bring job
Balance of payments effects FDi can help a country to achieve a current account surples
Effects on competition and economic growth Greenfield investments increase the level of competition in a market, driving down prices and improving the welfare of consumers
Regional economic integration agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other
Free trade area eliminates all barriers to the trade of goods and services among member countries
Customs union eliminates trade barriers between member countries and adopts a common external trade policy
Economic Union has the free flow of products and factors of production between members, a common external trade policy, a common currency, a harmonized tax rate, and a common monetary and fiscal policy.
Political Union involved a central political apparatus that coordinates the economic, social and foreign policy of member states.
Trade creation occurs when lost cost producers within the free trade area replace high cost domestic producer
Trade diversion occur when higher cost suppliers within the free trade area replace lower cost external supplier
European Council the ultimate controlling authority within the EU
European Commission responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states
European Parliament European Parliamentdebates legislation proposed by the commision and forwarded to it by the council
Cout of Justice The supreme appeals court for EU law
Maastricht Treat committed the EU to adopt a single currency
Central American Trade Agreement (CAFTA) to lower trade barriers between the U.S and member
Caribbean Single Market and Economy (CSME) to lower trade barriers and harmonize Marco-economic and monetary policy between member

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