INTERNATIONAL ECONOMICS – WOORDENLIJST
7 ANALYTICAL ELEMENTS THROUGHOUT THE BOOK
Countries There are the states of the world economy, their national governments,
serving as “home” to both firms and residents.
Sectors The are categories of production defined largely in terms of final goods.
An example is the automotive sector.
Tasks On occasion, we are going to need to recognize that production in a
particular sector involves a number of steps or separate tasks.
Automobile production moves from a chassis to engine mounting to body
mounting, for example.
Firms Production in any sector of a country undertaken by a firms, either purely
local or MNEs.
Factors of Production in any sector of a country undertaken by a firm makes use of
production various factors of production. Automobile production uses labor and
physical capital.
Currencies Most (not all) countries in the world economy have a separate currency in
which transactions with other countries take place through foreign
exchanges.
Financial assets Both countries and firms issue various types of financial assets,
denominated in a particular currency, which can be bought to be part of
wealth management portfolios by other countries, other firms, and
residents of any country.
INTERNATIONAL TRADE
HC 1 – hfdst 1&2: Introduction & Absolute advantage
Absolute advantage The possibility that, because if differences in supply conditions, one
country can produce a product at a lower price than another country.
Assets Financial objects characterized by a monetary value that can change over
time and making up individuals’ and firms’ wealth portfolios.
Autarky A situation of national self-sufficiency in which a country does not import
or export.
Balance of payment A detailed set of economic accounts focusing on the transactions between
a country and the rest of the world. Two important sub-accounts are the
current account and the capital/financial account.
Capital flight A situation in which investors sell a country’s assets and reallocate their
portfolios towards other countries’ assets. It tends to cause a capital
account deficit for the country in question.
Capital flows The annual flows resulting from exchange of assets between the
countries of the world.
Changes in demand A shift of a demand curve because of a change in income, wealth,
preferences, expectations, and prices of related goods.
Change in quantity A movement along a demand curve because of a change in the price of a
demanded good
Change in quantity A movement along the supply curve because of a change in the price of
supplied the good.
Consumer surplus The benefit accruing to consumers from the fact that, in equilibrium, the
consumers receive a price lower than their willingness to pay for lesser
quantities.
Foreign direct Occurs when a firm acquires shares in a foreign-based enterprise that
investment (FDI) exceeds a threshold of 10%, implying managerial influence over the
, foreign enterprise. Contrasts with portfolio investment. FDI may be
horizontal, backward vertical, or forward vertical.
Gains from trade Advantages that accrue to a country form engaging in importing and
exporting relationships.
§ In an absolute advantage framework, gains from trade are
identified as a net gain between consumer and producer surplus
effect.
§ In a comparative advantage framework, gains from trade are
identical as the increase in consumption of all goods.
Global value chain A system of value chains linked together in buyer-supplier or ownership
(GVC) relationships across countries. Als known as global production
network
Gross domestic The value of all final goods and services produced within a country’s
product (GDP) borders during a specific period of time (BBP).
Human development A conception of economic development introduced by the United Nations
index (HDI) Development Programme that stresses health and education levels
among with per capita income. The human development index (HDI) is
reported in the annual human development rapport.
Illicit trade International trade in goods and services that are deemed illegal.
Information and A driver of economic globalization that is based on computer hardware
communication and software as well as telecommunications.
technology
International A concept with many meanings, including increases in per capita income,
development improvements in health and education, structural change, and
institutional “modernization”.
International finance The exchange of assets between the countries of the word economy
International trade The exchange of two goods and services between the countries of the
world economy.
Migration The movement of persons from one country to another particularly
outside the country of residence.
Multilateral Agreement on any environmental issue negotiated and codified between
environment a large number of countries.
agreement (MEA’s)
Multinational Also known as a multinational corporation or a transnational corporation.
enterprise (MNE’s) A firm operating production, sales, and services operations in more than
one country.
Producer surplus The benefit accruing to producers from the fact that, in equilibrium,
producers receive a price higher than their willingness to accept for lesser
quantities.
HC 2 – hfdst 3&4: Ricardian model & Heckscher-ohlin model
(2 models of comparative advantages)
Autarky A situation of national self-sufficiency in which a country does not import
or export
Comparative A situation in which country’s relative autarkic price ratio of one good in
advantage terms of another is lower than that of other countries in the world
economy.
Gains from trade Advantages that accrue to a country form engaging in importing and
exporting relationships.
§ In an absolute advantage framework, gains from trade are
identified as a net gain between consumer and producer surplus
effect.
In a comparative advantage framework, gains from trade are identical as
the increase in consumption of all goods.
