MGMT 450 Final - Chapter 9

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Free Trade Implies that the national government exerts minimal influence on the exporting and importing decisions of private firms and individuals
Fair Trade/Managed Trade Suggests that the national government should actively intervene to ensure that domestic firms' exports receive an equitable share of foreign markets and that imports are controlled to minimize losses of domestic jobs and market share in specific industries
National Defense Argument A country must be self-sufficient in critical raw materials, machinery, and technology or else be vulnerable to foreign threats
Infant Industry Argument Argument in favor of governmental intervention in trade: a nation should protect fledgling industries for which the national will ultimately possess a comparative advantage
Strategic Trade Theory Suggests that a national government can make its country better off if it adopts trade policies that improve the competitiveness of its domestic firms in certain oligopolistic industries
Export Promotion Strategy A country encourages firms to compete in foreign markets by harnessing some advantage the country possesses, such as low labor costs. Also encourages the diversification of exports.
Import Substitution Strategy Encourages the growth of domestic manufacturing industries by erecting high barriers to imported goods
Industrial Policy The national government identifies key domestic industries critical to the country's future economic growth and then formulates programs that promote their competitiveness
Public Choice Analysis A branch of economics that analyzes public decision making. The special interest will often dominate the general interest on any given issue for a simple reason: special-interest groups are willing to work harder for the passage of laws favorable to their interests than the general public is willing to work for the defeat of laws unfavorable to its interests,
Tariffs A tax placed on a good that is traded internationally
Non-tariff Barriers Any government regulation, policy, or procedure other than a tariff that has the effect of impeding international trade
Export tariff Levied as the goods leave the country
Transit tariff Levied as the goods pass through one country bound for another
Import tariff Collected on imported goods
Ad valorem tariff Assessed as a percentage of market value of the imported goods
Specific tariff Assessed as a specific dollar amount per unit of weight or other standard
Compound tariff Has both an ad valorem and specific tariff component
Quota A numerical limit on the quantity of a good that may be imported into a country during some time period, such as a year
Tariff Rate Quota (TRQ) Imposes a low tariff rate on a limited amount of imports of a specific good; above that threshold, imposes a prohibitively high tariff rate on the good
Voluntary Export Restraint (VER) A promise by a country to limit its exports of a good to another country to a pre-specified amount or percentage of the affected market
Embargo An absolute ban on the exporting (and/or importing) of goods to a particular destination
Foreign Trade Zone (FTZ) A geographic area where imported or exported goods receive preferential tariff treatment
Countervailing duties Ad valorem tariff on an imported good to counter the impact of foreign subsidies
Anti-dumping regulations Two types of dumping: (1) international price discrimination, (2) predatory pricing