FVC1 Definitions

the process of allowing efficient geographic distribution of business activities within and among countries

Spatial Transformations

a group of free trade member countries that have adopted a common external tariff with nonmember countries

customs union

the study of principles that govern the efficient spatial allocation of economic resources and the resulting consequences

economic geography

a market formed when member countries of a customs union remove all barriers to allow the movement of capital and labor within the customs union

common market or single market

the union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country

political union

an area in which two or more countries agree to eliminate all barriers to trade such as tariffs, quotas, and non-tariff barriers like border restrictions, while at the same time keeping their own external tariffs (within WTO guidelines) against nonmembers

free-trade area

a union formed when members of a common market agree to implement common social programs (on education, employee benefits and retraining, health care, etc.) and coordinated macroeconomic policies (such as fiscal and monetary policies) that would lead to t

economic and monetary union

implementation of a multitude of economic and/or political steps by member states to increase their global competitiveness, including preferential trade access

Regional integration

the rules, enforcement mechanisms, and organizations that support market transactions


national laws aimed at maintaining competition in all sectors of the economy and preventing monopolistic behavior of firms

antitrust laws

the socio-economic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries, which in turn can lead to increased economic growth and geo-political integration and interdependence among nati


the system of exchange rates and international payments that enables countries and their citizens to purchase goods and services from one other

international monetary system

economic policy changes that promote private sector development, competitive markets, market-pricing, freer trade, and deregulation

economic reforms

countries that are implementing more open trade and free-market policies

emerging market economies

a stock exchange where longterm financial instruments such as stocks and bonds can be bought and sold

capital markets

the period of transformation that adjusts lifestyles to make the Internet and wireless technologies a part of everyday life

digital era

a system of responsibility in which an authority, such as the government, is answerable for its actions


a world economy in which the engines of growth could comprise several major industrialized and emerging market economies such as the United States, the European Union, China, India, Brazil, Russia, and South Africa rather than the United States alone

multi-polar world

the perceived economic gap between countries or people with easy access to digital and information technology (and its benefits) and those with very limited access, or none at all

Digital divide

a system of full disclosure and openness that aims to avoid any semblance of corruption and cronyism


government organizations that create strong incentives for private investment and operate under a system of checks and balances

Adaptive institutions

the amount of data and other information that can be transferred in a second via the Internet


lowering and/or removing trade barriers such as tariffs, quotas, and subsidies

liberalization of the trading system

economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially, or economically

sustainable development

the world wide web, abbreviated as "www" and commonly known as the web; a system of interlinked documents contained and accessed via the Internet

the web

agreement in which an exporter of goods or services to another country commits to import goods or services of corresponding value from that country


a non-tariff barrier in which an efficient exporting nation agrees to limit exports of a product to another country for a temporary period

Voluntary export restraint (VER)

a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade surplus


also known as Quantitative Restrictions (QRs are regulations that limit the amount or number of units of products that can be imported to a country

Import quotas

an agreement among WTO countries in which any tariff concession granted by one member to any other country will automatically be extended to all other countries of WTO

most favored nation (MFN)

an import tax that assigns a fixed dollar amount per physical unit

specific tariff

the two-way flow of exports and imports of goods (merchandise trade) and services (service trade)


the corporate practice of acquiring or producing quality goods or services abroad at a lower cost thereby eliminating domestic production


when the value of exports exceeds the value of imports; the opposite of a trade deficit

trade surplus

endowments used to produce goods and services: land (quantity, quality, and mineral resources beneath it), labor (quantity and skills), capital (cost), and technology (quality)

factors of production

inflows of capital from abroad for investing in domestic plant and equipment for the production of goods and/or services as well as for buying domestic companies

foreign direct investment (FDI)

an agreement where a large number of developed countries permit duty-free imports of a selected list of products that originate from specific countries

Generalized System of Preferences (GSP)

temporary provision of protection to nascent industries that have good prospects of becoming globally competitive in the medium term

infant industry argument

taxes meant to raise export cost and divert production for home consumption

export taxes

a negative tariff or tax aimed at boosing exports

export subsidies

all government actions that seek to alter the size of merchandise and/or service flows from and to a country

Trade policy

trade sanctions which are imposed upon a nation to restrict trade with that country


the ability of one country to produce a good or service more efficiently than another

absolute advantage

all commercial transactions, both private and public between nations of the world

international business

agreements, sometimes temporary, between countries (or a group of countries) that aim at achieving certain trade outcomes

Managed trade

the ability of one country that has an absolute advantage in the production of two or more goods (or services) to produce one of them relatively more efficiently than the other

comparative advantage

taxes on imports that are collected by a designated government agency responsible for regulating imports

custom duties

a group of countries that could effectively control export volume to keep their export prices, revenues, and economic growth stable or high

export cartels

a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good

ad valorem tariff

an especially advantageous or low import tariff established by a nation for all or some goods of certain countries and not applied to the same goods of other countries

Preferential duties

taxes on imports; also known as custom duties in some countries


regulations requiring that a certain percentage of the value of import be sourced domestically

Domestic content provisions