Topic 4 - International Trade and the Global Economy

• Transnational Corporation


  a firm that has its head office in one country , but has its operations in a number of other countries
• Less Developed Country

  a country with a developing economy that has lower GDP per capita, lower levels of industrialisation and weaker indicators of wellbeing
• Developed Country


  a country with high GDP per capita and established industry and service sectors
• Development


  the process of increasing people's standard of living and wellbeing over time
• Globalisation


  expansion of world trade in good and services, together with capital flows, leading to greater international interdependence
• Exchange Rate


  price of one currency in terms of another
• Currency


  the system of money in a country or group of countries
• Transfers

  covers things like foreign aid and money sent home relatives working in another country
• Income Flows


  earnings on investments abroad
• Current Account Deficit


  where the sum of exports plus the inflow of income and transfers is less than the sum of imports plus the outflow of income and transfers
• Current Account Surplus


  where the sum of exports plus the inflow of income and transfers is greater than the sum of exports plus the outflow of income and transfers
• Balanced Current Account


  where the sum of exports plus the inflow of income and transfers is equal to the sum of imports plus the outflow of income and transfers
• Balance of Payments on Current Accounts


  total net trade in goods and services, income flows and transfers between one country and the rest of the world
• Current Account


  the record of trade in goods and services, income flows and transfers between one country and the rest of the world
• Balance of Payments

  record of all financial transactions between one country and the rest of the world
• Protectionism


  a policy that discriminates between foreign and domestically produced goods and services by placing tariffs and quotas on the imported goods
• Free Trade Agreement


  arrangement to move goods and services between countries without any restrictions
• European Union (EU)


  an economic and political group of countries in europe that have free trade with each other
• Exports


  goods and services sold abroad, there is an inflow of money into the domestic country
• Imports


  goods and services bought from abroad, there is an outflow of money from the domestic country
• International Trade


  the exchange of goods and services between countries