Term
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Definition
| the ability of a country or firm to produce a particular good or service more efficiently than 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 the actor might undertake, not to the efficiency of other countries or firms. |
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Term
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Definition
| the ability of a country or firm to produce more of a particular good or service than other countries or firms using the same amount of effort and resources |
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Term
| Heckscher-Ohlin trade theory |
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Definition
| the theory that a country will export goods that make intensive use of the factors of production in which it is well endowed. Thus, a labor-rich country will export goods that make intensive use of labor |
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Term
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Definition
| the imposition of barriers to restrict imports. Commonly used protectionist devices include tariffs, quantitative restrictions (quotas) and other nontariff barriers |
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Term
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Definition
| any government limitation on the international exchange of goods. Examples include tariffs, quantitative restrictions (quotas), import licenses, requirements that governments only buy domestically produced goods, and health and safety standards that discriminate against foreign goods |
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Term
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Definition
| a tax imposed on imports; this raises the domestic price of the imported good and may be applied for the purpose of protecting domestic producers from foreign competition. |
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| quantitative restrictions (quotas) |
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Definition
| quantitative limits placed on the import of particular goods |
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Term
| nontariff barriers to trade |
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Definition
| obstacles to imports other than tariffs (trade taxes). Examples include restrictions on the number products that can be imported (quantitative restrictions or quotas); regulations that favor domestic over imported products; and other measures that discriminate against foreign goods or services |
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Term
| Stolper-Samuelson theorem |
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Definition
| The theory that protection benefits the scarce factor of production. This view flows from the Heckscher-Ohlin approach: if a country imports goods that make intensive use of its scarce factor, then limiting imports will help that factor. So in a labor-scarce country, labor benefits from protection and loses from trade liberalization |
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Term
| Ricardo-Viner (specific-factors) model |
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Definition
| A model of trade relations that emphasizes the sector in which factors of production are employed, rather than the nature of the factor itself. This differentiates it from the Heckscher-Ohlin approach, for which the nature of the factor-labor, land, capital-is the principal consideration |
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Term
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Definition
| In international trade relations, a mutual agreement to lower tariffs and other barriers to trade. Reciprocity involves an implicit or explicit arrangement for one government to exchange trade policy concessions with another |
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Term
| most favored nation (MFN) status |
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Definition
| 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 |
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Term
| World Trade Organization (WTO) |
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Definition
| An institution created in 1995 to succeed the GATT and to govern international trade relations. The WTO encourages the policies the multilateral reduction of barriers to trade, and it oversees the resolution of trade disputes |
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Term
| General Agreement on Tariffs and Trade (GATT) |
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Definition
| An international institution created in 1948 in which member countries committed to reduce barriers to trade and to provide similar trading conditions to all other members. In 1995, the GATT was replaced by the World Trade Organization. |
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Term
| Three Groups that lose from trade protection |
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Definition
Consumers
Exporters
Politicians |
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