Chapter 2- Global Dynamics

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1

Dynamic

characterized by constant change, activity, or progress. “A dynamic economy”
International trade

2

Trade barriers

government-induced restrictions on international trade

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Quota

limit on the number of units that can be imported or exported

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Global Competition

services or products provided by competing companies that serve international customers

5

Economic interdependence

Entities which have come to rely on other entities to sustain their livelihood (example: supply chain partners)

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Economic depression

sustained, long-term downturn in economic activity in one or more economies

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Industrialization

the development of industries in a country or region on a wide scale

8

Balance-of-payments

statement for US that records three accounts (current account, capital account and reserves account)

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Current account

a record of all merchandise exports, imports and services plus unilateral transfers of funds

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Capital account

a record of direct investment, portfolio investment and short-term capital movements to and from countries

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Reserves account

a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks

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Exchange rate

the value of one currency for the purpose of conversion to another

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Protectionism

the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports

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Non-tariff measures

trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs

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Blocked currency

a currency that can't freely be converted to other currencies on the foreign exchange (FX) market as a result of exchange controls

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Differential exchange rates

encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want by adjusting the exchange rate

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Exchange permit

in countries with severe shortage of foreign exchange an exchange permit to import foreign goods is required from the government

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General Agreement on Tariffs and Trade (GATT)

a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas

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The World Trade Organization (WTO)

an institution that sets rules governing trade for it’s members, provides a panel of experts to hear and rule one trade disputes between members and issues binding decisions; developed as part of the Uruguay round of the GATT talks

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The International Monetary Fund (IMF)

created to assist countries to become economically viable, loan money to countries to assist in economic efforts and help to maintain stability in world financial markets

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The World Bank Group (WBG)

lends money to countries for financial development projects, assistance to projects in developing countries, loan money to private sector for long term projects, provide investment guarantees to banks, and provide source for conciliation and arbitration of disputes between governments and foreign investors