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16.9: Key Terms

  • Page ID
    198819
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    absolute poverty
    living conditions under which basic human necessities like food, clean drinking water, sanitation, and shelter are not met
    absolutism
    the centralization of political power in the hands of the monarch in Western Europe during the 17th and 18th centuries
    anthropocentrism
    the idea that human beings are the most important component of the universe
    balance of payment
    in a given period, the difference in value between all payments made to a country and the payments the country has made to the rest of the world
    balance of trade
    in a given period, the difference between the value of exports and imports in a country
    capital flight
    the large-scale exit of money from a country as a result of market uncertainty, decreased investments, unemployment, and economic contraction
    capital mobility
    the ability investors have to move capital from one country to another
    Cold War
    a period of geopolitical tension between the two world powers at the time, the United States and the Union of Soviet Socialist Republics, from after World War II until the late 1980s
    competitive devaluation
    the devaluation of a country’s currency in relation to other countries’ currencies followed by other countries’ devaluation of their currencies
    conditionalities
    conditions attached to IMF loans prescribing the policy actions a country agrees to take in exchange for the loans
    constituents
    voting members of a community
    debt crises
    situations in which governments are unable to pay their debts
    degrowth
    a decrease in economic production and consumption levels
    environmental regulations
    the body of taxes and tariffs, quotas, subsidies, and regulations governments issue to promote environmental protection
    environmental, social, and governance (ESG)
    standards investors use to screen potential investments; environmental criteria describe a company’s performance as a steward of nature, social criteria report the company’s relationships where it operates, and governance is associated with executive pay, internal controls, and shareholder rights
    exchange rate
    the price of a currency against the value of another currency, basket of currencies, or gold
    financial integration
    the process that connects financial markets all over the world
    fixed (pegged) exchange rate
    situation in which the value of a currency is fixed against the value of another currency, basket of currencies, or gold
    floating (flexible) exchange rate
    situation in which the supply and demand of a currency in the market determine its value
    foreign direct investment (FDI)
    a company’s investment in a business based in another country
    General Agreement on Tariffs and Trade (GATT)
    legal agreement signed on October 30, 1947, by 23 countries to reduce international trade barriers through the elimination or reduction of quotas, tariffs, and subsidies in some sectors while preserving regulations in others
    gold standard
    the monetary system in which the standard unit of account is a fixed quantity of gold
    Great Depression
    the severe financial crisis sparked by the 1929 stock market crash in New York that led to bank closures and high unemployment
    gross domestic product (GDP)
    sum of everything produced in a country in a given period
    international financial institutions
    institutions established by several governments to regulate international finance issues, such as trade and investments
    international liquidity
    the amount of money or gold available in the international market
    International Monetary Fund (IMF)
    international institution with 190 member countries that promotes international financial stability and monetary cooperation, facilitates international trade, promotes employment and sustainable economic growth, and helps to reduce global poverty
    international political economy (IPE)
    field of study occupied with the investigation of political processes and their economic consequences, which have both domestic and international impacts
    International Trade Organization (ITO)
    proposed international institution for the regulation of trade in the Bretton Woods conference; was never established
    knowledge institution
    the World Bank’s role as an institution that collects and publishes data and reports
    laissez-faire
    free-market approach in which governments do not interfere in the market and let things take their own course
    Marshall Plan
    war recovery program through which the United States provided USD 26 billion between 1946 and 1949 to European countries and Japan to assist in the war recovery
    mercantilism
    an economic theory based on capital accumulation, or the increase of wealth, which according to mercantilists can be achieved through trade and protectionist policies
    Millennium Development Goals (MDGs)
    a set of eight goals agreed to by all the world’s countries and all the world’s leading development institutions to halve extreme poverty rates, halt the spread of HIV/AIDS, and provide universal primary education by the year 2015
    modernization theory
    theoretical model to explain the transition from a traditional to a modern society
    multilateral exchange rate
    exchange rate regime in which governments allow their currencies to fluctuate within margins
    non-tariff barriers
    non-tariff barriers to international trade, such as regulations, including environmental regulations, that specify how a product can be manufactured, handled, or advertised or a quota that limits the amount of a certain product that can be imported to a market
    oil shocks
    shortages of oil and oil derivatives in the Western world that resulted from oil-exporting countries’ decision to reduce oil production
    plurilateral agreements
    agreements between a small number of GATT member states in the 1970s
    political factors
    domestic and international components of politics and the policy-making process that result in specific public policies
    protectionist policies
    restrictions on imports by means of tariff and non-tariff barriers
    rationalism
    the belief that reason rather than experience is the foundation of knowledge
    reserves
    money, gold, and other highly liquid assets that a country’s central bank or other monetary authority could dispose of to meet financial obligations
    scientism
    the view that inductive methods of the natural sciences are the only source of genuine knowledge
    special drawing rights (SDR)
    the IMF’s unit of account; SDRs represent a claim to currency held by IMF member countries for which they may be exchanged
    subsidies
    payments or incentives the government grants to firms in the form of cash payments or tax cuts
    Sustainable Development Goals (SDGs)
    17 global goals established in 2015 focused on achieving a better and more sustainable future for all by the year 2030
    tariff concessions
    removal or reduction of a tariff
    trade rounds
    meetings of GATT signatories in a series of multilateral negotiations to discuss international trade
    Washington Consensus
    a program designed by the IMF to promote economic stability in borrowing countries and increase the odds that the countries pay their debts
    World Bank
    international financial institution that provides loans and grants with the objective of promoting development
    World Trade Organization
    international institution that promotes and regulates trade between nations; member state governments rely on the organization to establish, revise, and enforce the rules that govern international trade

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