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Poli Econ Chapter 6


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Washington consensus
The viewpoint, often evidenced in the policy proposals of the U.S. treasury department, the World Bank, and the International Monetary Fund, that less developed countries should adopt policies to reduce inflation and fiscal deficits, privatize, deregulate and create open markets.
World Trade Organization (WTO)
Successor organization to GATT
Most Favored Nation (MFN)
Trade status under the World Trade Organization, whereby imports from a nation are granted the same degree of preference as those from the most preferred nations.
A principal of the World Trade Organization system whereby products of different nations are treated equally (and equally with domestic products once imported). The products of a specific nation cannot be discriminated against under this rule.
nontariff barriers (NTBs)
Alternative ways of limiting imports, including government health and safety standards, domestic content legislation, licensing requirements, and labeling requirements. Such measures make it difficult for imported goods to be marketed or significantly raise the price of imported goods.
opportunity cost
The value of the best foregone opportunity when a choice is made.
When a firm transfers part (or all) of the production process for a good or service to another country. Many economic liberals consider outsourcing to be part of the process of the globalization of international production and trade. This is a controversial idea due to the number of people who are displaced when job move overseas.
production and trade structure
The institutions and practices that condition the production, exchange, and distribution of goods and services in the international political economy. International trade is a key component of the production structure. Essentially the factors that determine what is produced, where, how, by whom, for whom, and on what terms.
International Trade Organization (ITO)
An original element of the Bretton Woods system that was not successfully implemented. A weaker institution, the GATT, was eventually created to take the place of the ITO alongside the World Bank and the International Monetary Fund.
intraregional trade bloc
A trade agreement where nation states in a particular region remove barriers to trade with the other members of the region. The Asian Pacific Economic Cooperation Forum (APEC) is an example of an intraregional trade bloc that aims to integrate 18 Asian and Pacific nations into a nonbinding arrangement that would gradually remove trade barriers among member by 2020.
law of comparative advantage
-Free trade increased efficiency and had the potential to make everyone better off -Suggests that when people and nations produce goods and services, they give up something else they could have produced, but that would have been more expensive to make than the goods they actually created (Opportunity Cost)
Ministry of International Trade and Industry (MITI)
A Japanese government ministry that is credited by some for Japan's rapid industrialization in the 1960's and 1970's. Now known as the Ministry of Economy, Trade, and Industry.
A principal of the World Trade Organization system whereby trading partners simultaneously reduce trade barriers, providing each greater access to foreign markets.
Trade related investment measures
Trade related intellectual property rights (copyrights, patents, and trademarks on computer software) -International agreements regarding the protection of copyright, digital software, production technologies, and drug patents.
strategic trade policies
Efforts on the part of the state to create comparative advantage in trade by methods such as subsidizing research and development of a product, or providing subsidies to help an industry increase production to the point at which it can move down the "learning curve" to achieve greater production efficiency than foreign competitors. Strategic trade practices are often associated with state industrial policies-- that is, intervention in the economy to promote specific patterns of industrial development.
regional trade agreements (RTAs)
Agreements between different states in a geographical area to reduce trade barriers between them. RTAs are often easier to form than global trade agreements because there are fewer interests to reconcile. Some economic liberals oppose RTAs out of fear that they deter global free trade.
regional trade blocs
A formal process of intergovernmental collaboration between two or more states in geographical area that promotes a mix of economic liberal and mercantilist trade policies, bringing down barriers within the trade bloc while retaining trade barriers with nonmember nations.
Part of the economic liberal argument-- an economic motive-- for free trade. Adam Smith and others advocated that trading nations should concentrate their production on sectors where they possess a comparative advantage. When nations traded with one another they would see an increase in efficiency, and, in turn, wealth. In an age of competitive globalization, different states ad regions of the world are driven to specialize in particular parts of the production process. Quite often this specialization does not reflect a natural advantage but one that is fostered by different state policies, resulting in tensions over the motives behind different trade policies.
modern imperialism
(Toward the end of the 19th Century) Capitalist countries used trade to spread capitalism into underdeveloped regions of the world
20/20/20 Deal
The US would limit its subsidies to $20 million, the EU would agree to the G-20's proposal to cut farm tariffs, and developing countries would limit their industrial tariffs to 20%
Dispute Settlement Panel (DSP)
A part of the WTO composed of impartial panels of trade experts that rule on trade disputes. The panel can impose trade sanctions on member states that violate trade agreements. By creating an enforcement mechanism for trade agreements, the WTO is a significant evolution from the preceding GATT regimen.
Doha lite
a watered down compromise that does not require nations to give up too much out of fear that not reaching an agreement will undermine the WTO as an institution
free trade
One of the popular policies advocated by economic liberals. In keeping with the laissez-faire notion that government intervention in the economy undermines efficiency and overall wealth, a regime of free trade would remove protectionist measures (tariffs, quotas, etc.) that are designed to insulate domestic producers from international competition.
General Agreement of Tariffs and Trade (GATT)
An international agreement, based in Geneva, that negotiated reductions in trade barriers among its many member nations. GATT negotiations took place over a period of years and were termed "rounds," as in the Kennedy round and the Tokyo round, which reduced trade barriers for manufactured goods, and the Uruguay round, which aimed to create freer trade in services and in agricultural goods. Replaced by the World Trade Organization.
international division of labor
The organization of global economic activity, often with special emphasis on the activities of the core and periphery.
Super 301
Aggressive US trade policy designed to open foreign markets to US exports.
fair trade
Often presented as an alternative to free trade, fair trade mixes protectionism and free trade to "level the playing field" for domestic producers. The fair trade movement is also an initiative spearheaded by international nongovernmental organizations to provide higher prices for certified goods such as coffee, timber, and a host of other products of workers in developing countries.
structural adjustment policies/programs (SAPs)
Economic policies that seek to reduce state power and introduce free-market reforms to help less developed countries establish a foundation for economic growth. The International Monetary Fund often makes the adoption of structural adjustment policies a condition for financial assistance.
race to the bottom
Problem that nations encounter when TNCs move out of one country as increased labor costs and regulations lead international enterprises to look elsewhere for lower-wage labor and fewer regulations.
managed trade system
A mixture of liberal and mercantilist trade policies. Strong political and social interests often call for trade protection that often creates a political climate incompatible with completely free trade. A managed trade system often reflects a political compromise most states and even the WTO can adhere to.

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