Globalization and international trade concepts, including trade blocs, tariffs, and comparative advantage.
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- Comparative advantage
- The ability of one country to produce a good at a lower opportunity cost than another country
- Ricardo's comparative advantage theory
- Countries should specialize in goods where they have comparative advantage and trade for others
- Absolute advantage
- The ability to produce more output with the same input of resources compared to another country
- Tariff
- A tax imposed on imported goods to make them more expensive than domestic alternatives
- Trade bloc
- A group of countries that have agreed to reduce or eliminate trade barriers among themselves
- European Union
- A trade bloc and political union of 27 member states with a common market and single currency
- USMCA
- United States-Mexico-Canada Agreement, a free trade agreement that replaced NAFTA in 2020
- ASEAN
- Association of Southeast Asian Nations, a regional trade bloc of ten Southeast Asian countries founded in 1967
- Dumping
- Selling goods in a foreign market at a price lower than the cost of production
- Import quota
- A government limit on the quantity of a good that can be imported during a specific period
- Foreign Direct Investment (FDI)
- Investment by a firm or individual from one country into assets or operations in another country
- Multinational corporation
- A company that owns or controls operations in multiple countries
- Heckscher-Ohlin theorem
- Countries export goods that intensively use their abundant factors of production
- Factor endowments
- The amount and type of productive resources available in a country, such as labor, capital, or natural resources
- Economic specialization
- When a country focuses production on goods and services where it has competitive advantage
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