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World Politics
Frieden/Lake/Schultz World Politics Ch. 7
| Term | Definition |
|---|---|
| Comparaitve advantage | the ability of a country or firm to produce a particular good/service more efficiently than other goods/services, such that its resources are most efficiently employed in this activity |
| Absolute advantage | The ability of a country/firm to produce more of a particular good/service than other countries/firms using the same amount of effort and resources |
| Hecksher-Ohlin trade theory | theory that a country will export goods that make intensive use of the factors of production in which it is well-endowed. |
| Protectionism | The imposition of barriers to restrict imports. |
| Trade barriers | Any governmental limitation on international exchange of goods. |
| Tariff | A tax on imports. May protect domestic producers from foreign competition |
| Quantitative restriction (quota) | Quantitative limit placed on the import of particular goods. |
| Nontariff barriers to trade | Obstacles to imports which are not tariffs. Ex: quotas. |
| Stolper-Samuelson theorem | Theory that protection benefits the scarce factor of production. If a country imports goods that make intensive use of its scarce factor, then limiting imports will help that factor. |
| Ricardo-Viner (specific-factors) model | A model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself. |
| Reciprocity | A mutual agreement to lower tariffs and other barriers to trade. |
| Most favored nation (MFN) 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 3rd parties. |
| WTO | World Trade Organization. Created in 1995 to succeed GATT and govern international trade relations. Encourages multilateral reductions of trade barriers. |
| GATT | General Agreement on Tariffs and Trade. Created in 1947 in which member countries committed to reduce trade barriers. Replaced by WTO in 1995. |
| Regional Trade Agreements (RTA's) | Agreements among 3 or more countries in a region to reduce barriers to trade among themselves. |
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