International Economics Glossary

The ability to produce a good using fewer inputs or resources than another producer or country.

A systematic record of all economic transactions between residents of a country and the rest of the world over a given period.

Economic policies that benefit the implementing country at the expense of its trading partners, such as competitive devaluations or protectionist tariffs.

The component of the balance of payments that records capital transfers and the acquisition or disposal of non-produced, non-financial assets.

The ability to produce a good at a lower opportunity cost than another country, forming the basis for mutually beneficial trade.

An increase in the value of a currency relative to another currency in foreign exchange markets.

A decrease in the value of a currency relative to another currency, making exports cheaper and imports more expensive.

The balance of payments component recording trade in goods and services, net primary income, and net secondary income.

A trade agreement where member countries eliminate tariffs among themselves and adopt a common external tariff against non-members.

Selling goods in a foreign market at a price below the normal value (often below production cost), typically to gain market share or dispose of surplus inventory.

The price at which one country's currency can be exchanged for another country's currency.

A government payment or tax benefit to domestic firms to encourage exports, which can distort trade and invite retaliation.

Cross-border investment in which a resident of one country obtains lasting interest and management influence in an enterprise in another country.

A region where member countries have eliminated tariffs among themselves but maintain independent external trade policies.

The General Agreement on Tariffs and Trade (1947-1994), a multilateral agreement governing international trade that was succeeded by the WTO.

A trade model predicting that countries export goods intensive in their abundant factor of production and import goods intensive in their scarce factor.

A newly established domestic industry that is not yet competitive with foreign producers and may require temporary protection to develop.

A WTO principle requiring that trade advantages granted to one member must be extended to all members, preventing discrimination.

A company that operates in multiple countries through foreign direct investment, establishing production facilities or subsidiaries abroad.

A geographic region in which economic efficiency would be maximized by sharing a single currency, based on criteria such as labor mobility and fiscal integration.

Government policies that restrict international trade to shield domestic industries from foreign competition, including tariffs, quotas, and subsidies.

The theory that exchange rates should adjust so that an identical basket of goods costs the same in any two countries.

A tax levied on imported goods that raises domestic prices, protects domestic producers, and generates government revenue.

The ratio of a country's average export price to its average import price, indicating the purchasing power of its exports.

The international organization established in 1995 that administers trade agreements, resolves disputes, and provides a forum for trade negotiations among its member nations.