Globalization, Trade, and Sustainability: Key Concepts
Globalization: A process of growing integration and interdependence of nations, characterized by the intensification of international links of all types – commercial, financial, cultural.
Globalization: Globalization at a lower price.
Trade and Economics
Direction of Trade Statistics (DOTS): Presents the value of merchandise exports and imports disaggregated according to a country’s primary trading partners.
Gravity Model: Predicts bilateral trade flows between two countries/regions based on their economic sizes and distance between them. Larger trade flows occur between larger, closer economies.
Border Effect: Asymmetries in trade patterns between cities and regions of different countries and those located in the same country. Trade volume is less between different countries.
Liberalization: A process initiated after WWII that consists of removing restrictions on something in a political system or economy. It aims to seek world peace through wealth sharing and is most visible in international trades and financial markets. Average tariffs have decreased from 40% to 5%. Lower transaction costs are due to technological advances and more freedom.
Mercantilism: A trade model (XVI-XVIII) based on the idea of fixed wealth in the world, where it is better to export than import.
Absolute Advantage: Producing a good more cheaply.
Comparative Advantage: Highest labor productivity based on technology, when it has a lower opportunity cost.
Marginal Product of Labor: Extra output obtained by using one more unit of labor.
Opportunity Cost: The next best use for the resources used in the production of a good.
Revealed Comparative Advantage: A measure of a country’s relative advantage or disadvantage in a specific industry as evidenced by trade flows.
If RCA > 1, then there is a comparative advantage.
Economies of Scale: Large-scale production reduces average costs.
Inter-Industrial Trade: A country specializes in producing and exporting certain goods to import others (traditional trade theories).
Intra-Industrial Trade: Some goods are exchanged across goods.
Ad Valorem Tariff: A fraction of the value of imported goods (e.g., 25%).
Compound Duty: A combination of both tariffs.
Import Quota: A restriction on the quantity of a good that may be imported.
Voluntary Export Restraint: A limit imposed by the government on the amount of a good that may be exported.
Domestic Content Requirements: Regulations that require a specified fraction of a final good to be produced domestically.
Red Tape: Bureaucratic and administrative barriers.
Public Procurement Requirements: Government agencies are obligated to purchase from domestic suppliers.
Sustainability
Economics: The social science that studies the production, distribution, and consumption of goods and services. The study of how society manages its scarce resources.
Sustainability: Meeting the needs of the present without compromising the ability of future generations to meet their needs. Includes environmental, economic, and social considerations.
Economic Growth: Sustained increases in material living standards over time (GDP).
Eco-Efficiency: Do more with less, but with less pollution (producing more goods with fewer resources and less pollution).
Eco-Effectiveness: Optimize positive impact. C2C (Cradle-to-Cradle): materials are constantly reused or re-purposed as inputs for other products.
Environmental Accounting: An attempt to improve actual accounting books of other products.
SDGs: Sustainable Development Goals: end extreme poverty, inequalities, and climate change by 2030.
Population and Migration
Mobility: All forms of population movement, temporary or permanent.