Social security: A government program that provides economic assistance to persons faced with unemployment, disability, or agedness, financed by assessment of employers and employees.

Reinsurance: The purchase of insurance by an insurance company form another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured.

Sanction: The penalty for noncompliance specified in a law or decree.
Speculation: Engagement in risky business transactions on the chance of quick or considerable profit.

Value added tax: An indirect tax imposed on consumption that is reflective of the incremental increases on the value of goods through the chain of production, from the raw material phase to final consumption.
Fair trade: Trade that conforms to a fair-trade agreement.

Subsidy: A financial benefit, direct or direct, provided through financial contribution, policy measures or practices of a Government or any public body to producers or processors.
Rebate: A deduction from an amount to be paid or a return of part of an amount given in payment.
Trade liberalization: Reduction of tariffs and removal or relaxation of national trade barriers.
Trade barrier: Any barrier that may impede the import of goods, such as testing or certification.

Waiver: Permission granted by WTO members allowing a WTO member not to comply with normal commitments. Waivers have time limits and extensions have to be justified.
Arbitration: The process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent or statutory provision.
Dispute Settlement: Those institutional provisions in a trade agreement which provide the means for settling differences of view between the parties.
Copyright: The legal right granted to an author, a composed, a playwright, a publisher, or a distributor to exclusive publication, production, sale, or distribution of a literary, musical, dramatic, or artistic work.
Trade sanction: Use of a trade policy as a sanction, most commonly an embargo imposed against a country for violating human right.
Trade reciprocity: The practice by which government extend similar concessions to each other, as when one government lowers its tariffs or other barriers impeding its imports in exchange for equivalent concessions from a trading partner on barriers affecting its exports.
Appellate Body: An independent body that , upon request by one or more parties to the dispute, reviews findings in panel reports.

Balance sheet: A financial statement that reports the assets and equities of a company at a particular time.
Re-capitalization: The act or process of changing the capital structure of a company.
Cash flow: The cash receipts or net income from one or more assets for a given period, reckoned after taxes and other disbursements, and often used as a measure of corporate worth.
Labor-intensive: Requiring or having a large expenditure of labor in comparison to capital.

The chain of command: A system whereby authority passes down from the top through a series of executive positions or military ranks in which each is accountable to the one directly superior.
Productivity: The rate at which goods or services are produces, especially output per unit of labor.
Marker share: The proportion of total sales volumes of a certain market that a company captures.
Intellectual capital: Assets or capital in the form of knowledge, patent or technology. Etc.
Emerging markets: Markets which are newly formed or have just come into prominence.

Portfolio investment: Investment in securities such as bonds and stocks with the aim to earn interest and dividends rather than participate in the management of companies.
Direct investment: Investment made in a firm which attempts to exercises control over the management of the firm.
Electronic commerce: Maintaining business relationships and selling information, service, and commodities by means of computer telecommunications networks.
Bond: .A certificate of debt issued by a government or corporate guaranteeing payment of the original investment plus interest by a specified future date.
Equity: Common stock and preferred stock which represent ownership to a business organization.

Just-in-time: It is a management philosophy that strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time.
Stock turnover: The number of times a particular stock of goods is sold and restored during a given period of time.
Outsource: To farm out(work, for example) to an outside provider or manufacture in order to cut costs.
Supply chain: A number of business establishments through which products are moved from producers to end-users.
Lead time: The period of time between the actual ordering of parts or equipment and the delivery of them.

Investment banker: Companies that help other companies raise capital through the sale of new stock and bonds.

Initial public offering: Private company’s first offer of stock to the public.
Second market: Where securities are trade after their initial issuance.

Spending sprees: Overindulgence in spending
Liquidity squeeze: Financial pressure caused by shortage or narrowing economic margins.

Mutual fund: An investment company that continually offers new shares and buys existing shares back on demand and uses its capital to invest in diversified securities of other companies.

Money market: The trade in short-term, low-risk securities. Such as certificates of deposits an U.S Treasury notes.

Bull market: A market, especially securities market, which is going up or expected to go up.
Liquidity: The quality of being readily convertible into cash..

Hedge fund: An investment company that uses high-risk techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains.
Up market: Appealing to or designed for high-income consumers.

Personal disposable income: Personal income less personal direct taxes and other current transfers from persons to government.

Zero-sum game:
Zero-sum describes a situation in which a participant's gain (or loss) is exactly balanced by the losses (or gains) of the other participant(s). It is so named because when you add up the total gains of the participants and subtract the total losses then they will sum to zero.

Floating exchange rate system: A system in which a rate whose value is determined purely by the market forces of supply and demand with no direct intervention of the central bank. (Also referred to as a flexible exchange rate.)

Concessional Sale: A sale on terms that are more generous than normal commercial conditions would otherwise dictate. Such terms may include reduced sales prices, special low-interest financing or extended payment terms, or acceptance of a "soft" currency in settlement of the transaction. Concessional sales are often made in conjunction with foreign aid programs, but they may also be an aspect of governmental or corporate competitive policies and practices .
 
Cross-licensing: An arrangement in which a firm grants a license to another firm to exploit proprietary rights in its patents, trademarks, or trade secrets, in exchange for similar licensure to use intellectual property rights of the recipient firm.

Cross-subsidization. The use of financial resources accumulated by a multinational f1rn1 in one part of the world to fight a competitive battle in another region or country .See globalization.

Glossary
(See related pages)
"Gnomes of Zurich"   Epithet coined by Britain's chancellor of the Exchequor for the speculators he thought were abandoning the British pound and making it increasingly difficult to defend a pegged exchanged rate in the mid-1960s.
"The Snake in the Tunnel"   A scheme set up by members of the EEC in 1971 whereby each currency would float inside a specified band against every other member currency (the snake), and a maximum limit was set on the difference between the most appreciating and most depreciating currencies (the tunnel). This was a predecessor to the EMS.
(Foreign) Exchange Rate   The price of one country's currency expressed in terms of another country's currency. (Note that in this text, the exchange rate is expressed in terms of domestic currency units required to purchase one unit of foreign currency.)
Absolute Advantage   A nation has an absolute advantage in a commodity it produces more efficiently (with higher productivity) than the rest of the world.
Adjustable Peg   A system in which a country tries to keep its exchange rate fixed for long periods of time and only changes the pegged rate when there is a substantial disequilibrium at that rate.
Adjustment assistance   Government financial assistance to relocate and retrain workers (and firms) for re-employment in expanding sectors and away from sectors that are declining as a result of import competition.
 
Ad Valorem Tariff   A tariff is set as a percentage of the value of the goods when they reach the importing country.
Aggregate Demand Policy Dilemma   Refers to the difficulty of improving the levels of both national income and balance of payments by manipulating only the level of aggregate demand.
Agricultural Policy   Government tends to tax exportable-good agriculture and to subsidize (protect) importable-good agriculture.
Antidumping Duty   Tariffs sanctioned under the International Anti-Dumping Code (signed by most members of the WTO) to counteract or prevent dumping. Antitrade Pattern of
 
Appreciation/Depreciation   An increase (decrease) in the market price of a currency under a floating exchange rate system.
 
Appropriability Theory   Explains FDI as a way for firms to appropriate the potential gains from firm-specific advantages; a firm seeks to earn returns from key productive inputs.
 
Arbitrage   Buying something at a low price in one market and reselling it at a higher price in another market.
Article XX   Lists general exceptions to its main free-trade rules, including allowing trade barriers that are necessary to protect human, animal, or plant life, and that relate to the conservation of exhaustible natural resources. The WTO is wary of the use of Article XX by countries simply seeking protection for their import-competing industries.
 
Asset Market Approach to Exchange Rates   Explains exchange rates in terms of demands and supplies of all assets denominated in different currencies. The monetary approach to exchange rates is a variant of this approach in which only demands and supplies of the money asset are considered.
 
Assignment Rule   A guideline for assigning goals to fiscal and monetary policies. Fiscal policy should aim at achieving internal balance, while monetary policy should aim at achieving external balance.
 Average-Income Paradoxes   The counterintuitive results that the receiving country can gain from immigration, even if its per capita income falls after the arrival of the new immigrants; and the sending country can lose, even if its per capita income rises after the departure of the new emigrants.
Balance of Payments   The systematic set of accounts that record all economic transactions between residents of that country and the rest of the world during a given period of time.
Bandwagon   A situation in which investors expect the recent trend in exchange rates to be carried on in the future.
Barter Trade   A method of exchanging goods and services directly for other goods and services without using a separate unit of account or medium of exchange.
Basis for Trade   The mechanism that explains differences in (relative) prices in different countries, which in turn gives rise to trade between countries
Beggary-thy-Neighbor Policies   Policies such as devaluations or tariffs intended to benefit one country's economy at the expense of another. Such policies were widespread during the Great Depression of the 1930s.
Brady Plan   A method devised by the U.S. Treasury for solving the 1980s debt crises. Bank borrowing of 18 debtor countries was restructured with some debt reduction and some repackagaging of loans as Brady bonds.
Brain Drain   The emigration mainly from developing countries of highly skilled and educated people toward better paying countries (usually industrial economies, but recently some OPEC nations as well).
Bretton Woods System   Under this post-World War II agreement, countries were allowed devaluations and revaluations of an adjustable peg exchange rate when faced with fundamental disequilibria that would otherwise require drastic domestic adjustment to keep the exchange rate fixed. Keynes was one of the architects of the Bretton Woods system.

Capital Account   Records the values of financial assets purchased and sold abroad by private residents (not monetary authorities) of the home country.
Capital Controls   Government limits placed on the use of the foreign exchange market to make payments related to international financial activity as opposed to payments for goods and services.
Capital Flight   When investors flee a country (taking their capital with them) because of doubts about government policies.
Capital Inflow   Either an increase in foreign assets in the nation, such as when a foreigner purchases a U.s. stock; or a reduction in the nation's assets abroad, such as when an American sells a foreign stock.
Capital Outflow   Either an increase in the nation's assets abroad, such as when an American purchases a foreign asset; or a reduction in foreign assets in the nation, such as when a foreigner sells his American assets.
Central Bank   The official authority that controls monetary policy and also (usually) undertakes the official intervention in the foreign exchange market.

CITES   The Convention on International Trade in Endangered Species of Wild Fauna and Flora, first signed in 1973 and now with over 130 member countries. Calls for strict regulation of trade in products related to species threatened with extinction.
Clean Float   Exchange rates determined by a freely functioning foreign exchange market.
Clearing   Permitting payments to be made between entities who want to hold or use different currencies. Community Indifference

Common Market   An international union going beyond a customs union by also allowing for the free movement of labor and capital (factor flows) among member nations.

Comparative Advantage   A nation has a comparative advantage in the production of those goods which (compared to other goods and countries in the world) it produces less inefficiently than other commodities. A country will have a comparative advantage in one or more commodities, whether or not it has absolute advantages.
Consumer Surplus   The difference between what a person would be willing to pay and what she actually has to pay to buy a certain amount of a good. It is the area below the demand curve and above the price level.
Consumption Effect   The welfare loss to consumers in the importing nation that corresponds to their being forced to cut their total consumption as a result of the tariff.
 

Countervailing Import Duties   Retaliatory duties against a foreign government subsidizing exports into your national market.
Covered Interest Arbitrage   Buying a country's currency spot and selling it forward to make a net profit off the combination of higher interest rates in the country and any forward premium on its currency.
Covered Interest Parity   The condition where the forward rate on a currency exceeds the spot rate by the percentage that its interest rate is lower than the other country's interest rate.
 
Covered International Investment   When the exchange rate at which anticipated foreign investment returns will be redeemed is determined in the present through a forward contract. The agent is protected from exchange rate risk when "covered."
 
Crawling Peg   An exchange rate system in which the pegged rate is changed frequently according to a set of indicators or in response to monetary authority direction.
Currency Board   One system for fixing a country's exchange rate. The board stands ready to exchange domestic currency for foreign currency at a rate specified and fixed rate, and can issue new domestic currency only in exchange for foreign reserves. In essence, the domestic currency is fully backed by reserves of foreign exchange. Currency boards are popular in emerging economies.
 
Currency Futures   Contracts to buy or sell a foreign currency on a specific date in the future at a price set today. In this sense, futures are exactly like forward exchange contracts. The difference lies in their form. While forward contracts are tailored to the needs of the customer in terms of amount of funds, due date of contract, and so on, futures contracts have standardized denominations and due dates. As a consequence they can be traded in organized markets such as the Chicago Mercantile Exchange. Almost anyone with some up-front funds can enter into a futures contract; only very large firms get forward contracts from their banks.
Currency Options   A currency options contract gives parties the right (but not the requirement) to buy/sell foreign exchange in the future at a price set today. If someone purchases a call option she buys the right to obtain the currency at the strike price at a given date in the future. A person purchasing a put option buys the right to sell the currency at the strike price. A person expecting foreign currency to become pricier in the future might buy a call option; a person expecting the currency to fall in value might buy a put option.
Currency Swaps   A contract to buy/sell a currency now with a provision that the currency will be resold (or brought back) later. Often used by large corporations in financing debt.
Current Account   Records the values of goods and services sold and purchased abroad, plus net interest and other factor payments and net unilateral transfers and gifts.
Curves   An illustration of the different combinations of commodity quantities that would bring the whole community (here, the nation) the same level of satisfaction.
Customs Union   One in which members remove all barriers to trade among themselves and adopt a common set of external barriers, thereby eliminating the need for customs inspection at internal borders (e.g., MERCOSUR today, and the EEC from 1957-1992). D