27 Questions
According to the absolute advantage theory, which country should produce and distribute a good?
The country that has absolute advantage in producing the good
What does the HO Model suggest about a country's specialization in production and export?
It should specialize in the production and export of the good that uses intensively the factor of production it has in abundance
What does the term 'competitive advantage' refer to in international trade?
Lower opportunity cost to produce a certain good than other countries
What does the Revealed Comparative Advantage (RCA) index measure?
A country’s relative advantage in a specific industry as evidenced by trade flows
What does the Gini coefficient measure?
The income distribution inequality
What does the term 'intergenerational elasticity' refer to?
The effect of parents' income changes on their children's situation
What is the 'Commitment to reducing inequality Index 2018'?
A measure of governments' efforts to address the wealth gap
What does the term 'replacement fertility' refer to?
The total fertility rate for population replacement without migration
What does the Lorenz curve illustrate?
The cumulative income distribution in a population
What is meant by 'market income'?
Income from market activities
What is the 'technological divide'?
Unequal access to digital technology
What does 'urbanization' refer to?
Increase in urban population
What is 'dependency ratio'?
The ratio of elderly people to working-age individuals
What does the term 'categorical inequalities' refer to?
Inequalities based on certain categories
What is 'slowbalization'?
A slower rate of globalization integration
What is a 'financial crisis'?
A situation where financial assets lose substantial value
What do economies of scale refer to?
Cost advantages due to operational scale, measured by the amount produced per unit of time
What does the Gravity Model state about trade?
Closer countries with higher GDP will trade more
What does inter-industrial trade involve?
Countries specializing in producing and exporting certain goods and importing others
When does Intra-Industrial Trade occur?
When a country both produces and exports the same goods it imports
What does the Grubel-Lloyd Index measure?
Intra-industrial trade of a specific product using a formula with a numerator and denominator
What is Protectionism?
The theory or practice of shielding domestic industries from foreign competition by taxing imports
What is Free Trade?
International trade without tariffs, quotas, or restrictions
How do Import Quotas restrict trade?
By limiting the quantity of a good that may be imported and enforcing through licenses
What are Voluntary Export Restraints (VERs)?
Limits imposed by the exporting country to protect consumers by limiting exports to a specific country
What are Domestic Content Requirements?
Regulations that specify a fraction of a final good to be produced domestically
What is the role of the World Trade Organization (WTO)?
Promotes free trade, reduces trade barriers, and provides stability and fair competition
Study Notes
International Trade and Economic Development
- Economies of scale refer to cost advantages due to operational scale, measured by the amount produced per unit of time.
- The Gravity Model states that closer countries with higher GDP will trade more.
- Inter-industrial trade involves countries specializing in producing and exporting certain goods and importing others.
- Intra-Industrial Trade occurs when a country both produces and exports the same goods it imports.
- The Grubel-Lloyd Index measures intra-industrial trade of a specific product using a formula with a numerator and denominator.
- Protectionism is the theory or practice of shielding domestic industries from foreign competition by taxing imports.
- Free trade is international trade without tariffs, quotas, or restrictions.
- Import Quotas restrict the quantity of a good that may be imported and are enforced through licenses.
- Voluntary Export Restraints are limits imposed by the exporting country to protect consumers by limiting exports to a specific country.
- Domestic content requirements are regulations that specify a fraction of a final good to be produced domestically.
- The World Trade Organization promotes free trade, reduces trade barriers, and provides stability and fair competition.
- Economic development encompasses multidimensional processes for improving living standards and goes beyond GDP growth.
Test your knowledge of international trade and economic development with this quiz. Explore concepts such as economies of scale, the Gravity Model, inter-industrial and intra-industrial trade, trade barriers like protectionism and import quotas, as well as the role of organizations like the World Trade Organization in promoting free trade and economic development.
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