APHuG unit 7 chap 20 (copy)

comparative advantage refers to the products that a country can produce more cheaply or easily than other countries (benefits trade because they are saving money doing something easier to produce and trading it for something they need; specializing in a product)

Both countries can benefit from specializing in their respective areas of comparative advantage and trading with each other. example: mexico imports speciality apples from the US and the US imports avocados from mexico because it is more expensive to grow them in their own countries than to import them)

the belief that open markets and free trade (characteristics of capitalism) across the globe will lead to economic development everywhere (encouraging free markets and less political interference)

opportunity that can potentially develop from an economic change

example: a company chooses to install a new machine, this means more jobs in the area, the machine and workers need support services (office supplies, lunch, gasoline to and from work) the money spent on local goods and services could result in the area adding staff

an area within a country that is subject to different and more beneficial economic regulations than other areas.

Companies doing business in SEZ usually receive a tax incentive and are subject to lower or no tariffs

offshoring. The practice of exporting U.S. jobs to lower paid employees in other nations

Outsourcing includes both foreign and domestic contracting, and sometimes includes offshoring (relocating a business function to a distant country) or nearshoring (transferring a business process to a nearby country).

moving production to a place outside the country in which they are headquartered so they can have cheap labor workers

example: US and UK have established customer service call centers in the philippines and india where lower wages and english language can make outsourcing effective

attract multinational organizations to invest in labor-intensive assembly ( manufacturing in the host country

provides no interest loans to low income countries and offers financial assistance to member countries to help stabilize the world economy

policies aim to reduce government structural deficit (a debt that is persistent for some time and that is not affected by market forces)

includes: tax increases, spending cuts, or both

put in place when country’s deficit or the amount its spending exceeds its revenues, rises and falls as economy reduces and expands.

policies in hope of lessening the long term impact of the crisis and to prevent it from happening again

looking at for a global response to a global crisis

financial support (loans and bailouts) for troubled countries

counteracts natural forces of an economy

failing to invest in a weak economy may cause tax revenues (the total amount of money brought in by a company's operations, measured over a set amount of time) to fall further while spending on benefits go up

must consider cross border effects (includes emerging economies)

places of economic activity clustered around one or more high-growth industries that stimulate economic growth by capitalizing (take the chance to gain advantage from) on special asset (a useful or valuable thing, person, or quality.)

Agglomeration means that businesses and industries tend to gather together in the same area. This can create a network of interconnected companies. (physical or virtual communications link between two or more networks operated by different organizations or operated within the same organization but within different authorization boundaries.)

Now, the growth pole theory suggests that if we focus on developing specific areas, like these clusters of businesses, it can help stimulate economic growth. These areas, called growth poles, attract more industries, investments, and job opportunities. The idea is that when these growth poles thrive, it can have a positive impact on the surrounding areas and contribute to overall economic growth.

So, in simpler terms, agglomeration is when businesses gather together, and the growth pole theory is about focusing on specific areas to promote economic growth.