International Economics

The increase in consumption made possible by specialization and trade.

The amount of output per unit of labor input.

The economic system that arose in western Europe in the 1500s, during the period in which modern nation states were emerging from feudal monarchies. Mercantilism has been called the politics and economics of nation building because it stressed the need for nations to run trade surpluses to obtain revenues for armies and national construction projects. Mercatilists favored granting monopoly rights to individuals and companies, they shunned competition, and they viewed exports as positive and imports as negative. Today, the term mercantilism is sometimes used to describe the policies of nations that pormote their exports while keeping their markets relatively closed to imports.

The value of the best forgone alternative to the activity actually chosen.

This curve shows the maximum amount of output possible, given the available supply of inputs. It also shows the trade-off that a country must make if it wishes to increase the output of one of its goods.

The price of one good in terms of another good. It is similar to a money price, which expresses the price in terms of dollars and cents, but relative price is in terms of the quantity of the first good that must be given up in order to buy a second good.

Government programs that offer temporary assistance to workers who lose jobs because of foreign trade or their firms moving abroad.

The costs and benefits of an activity cancel each other (equal zero).

Economic conditions in the receiving country that "pull" in migrants. (See also supply-push factors)

Demand for a good or service that is derived from the demand for something else. For example, the demand for labor is derived from the demand for goods and services.

These are relative terms because, strictly speaking, all factors are scarce. Relative factor abundance implies that an economy has more of a particular factor in relation to some other factor and by comparison to another economy. Relative factor scarcity impolies the opposite.

A foreign-based operation that is owned by a firm in the home country.

A trade theory that predicts the goods and services that countries export and import .The theorem states that countries will export goods that require the intensive use of relatively abundant factors to produce, and import goods that require relatively scarce fctors to produce.

International trade between two or more divisions of the same company that are located in different countries.

The idea that a rise or decline in goods prices has a larger effect in the same direction on the income of the factor used intensively in its production.

The movement of some or all of a firm's activities to a foreign country.

A model of the determinants of foreign direct investment that is based on the key variables Ownership-Location-Internalization

Outsourcing is the shifting of procurement from within a firm to outside a firm. It is often used to refer to services that are purchased abroad, such as the procurement of business services in India by a firm based in Europe or the United States.

The idea that manufactured goods go through a cycle of heavy research and development requiring experimentation in the product and the manufacturing process, followed by stabilization of design and production, and a final stage of complete standardization.

The economic and/or political problems caused by an abundance of one valuable natural resource such as petroleum.

Members of a migrant's family or village that provide support in the migrant's new location.

A trade model that allows for mobile and immobile factors of production.

A corollary of the Heckscher-Ohlin Theory stating that changes in import export prices lead to a change in the same direction of the income of factors used intensively in production of the imported or exported good.

The factors that "push" migrants out of their home country (see also Demand-pull factors)

The price of a good minus the value of intermediate inputs used to produce it. Value added measures the contribution of capital and labor at a given stage of production.