Term
| Central American Common Market |
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Definition
| Coalition between costa rica, el salvador, guatemala, Honduras, and Nicaragua for free trade between countries. This was made to bring in investors. |
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Definition
| policy of developing industries to make products that would otherwise be imported |
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Definition
| identification and development of target industries to be competitive internationally |
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Term
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Definition
| countries should export more then they import to receive gold from countries that run defecits |
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Term
| favorable balance of trade (206) |
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Definition
| country that is exporting more then its importing. not necessarilly a good thing |
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Term
| unfavorable balance of trade (206) |
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Definition
| opposite of favorable. Called a defecit |
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Term
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Definition
| Runs export surplus to achieve a social or political objective |
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Term
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Definition
| some countries produce goods more effeciently then others. advocates free trade. Adam Smith |
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Definition
| Considers climate, natural resources, and labor force availability. |
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Term
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Definition
| Consists of either product or process technology |
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Term
| Comparative advantage (209) |
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Definition
| Ricardo. States that gains from trade will occur even in a country that has absolute advantage in all products because the country must give up less efficient output to produce more efficient output. |
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Term
| Assumptions and limitations of the theories of specialization part 1 (comparative advantage (211)) |
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Definition
Full employment-if people cannot stay busy it may not work
Economic efficiency objective-may avoid specialization because they enjoy other things or because they don't want the vulnerability
Division of Gains- Don't want trading partner to receive to much
Transport costs-if it costs more to transport then it saves
Statics and dynamics- The theory looks at countrys output efficiency at one point in time (static) but it is constantly changing (dynamic) |
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Term
| Assumptions and limitations of the theories of specialization part 2 (comparative advantage (211)) |
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Definition
Services- deals with commodities rather then services
Mobility- assumes resources can move from production of one good to another but a steelworker cannot become a software engineer. Also assumes that resources can not move internationally but they can |
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Term
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Definition
| Products and services seldom practical to export like haircuts and groceries |
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Term
| Theory of country size (213) |
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Definition
| Large countries depend less on trade then small countries. Big countries have higher transportation costs for foreign trade. |
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Term
| factor proportions theory (214) |
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Definition
| Factors in relative abundance are cheaper then factors in relative scarcity. |
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Term
| Country-similarity theory (217) |
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Definition
| once a company has developed a new product in response to observed market conditions in its home market, it will turn to markets it sees as most similar to those at home. |
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Term
| Product life cycle theory (219) |
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Definition
| The production location for many products moves from one country to another depending on the stage in the products life cycle. |
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