International Business Test 2

Front 1

political economy

Back 1

the political, economic, and legal systems of a country

Front 2

political risk

Back 2

the governmental and societal actions and policies, originating either within or outside the host country, and negatively affecting either a select group of, or the majority of foreign business operations and investments

Front 3

expropriation

Back 3

A specific type of political risk in which a government seizes foreign assets

Front 4

local content requirement

Back 4

A requirement that some specific fraction of a good be produced domestically.

Front 5

tariff

Back 5

Taxes on imported goods and services, levied by governments to raise revenues and create barriers to trade

Front 6

quota

Back 6

The quantity of goods of a specific kind that a country permits to be imported without restriction or imposition of additional duties.

Front 7

voluntary export restraint

Back 7

One country promises another country to limit its imports; this is often done when the promising country fears increased tariffs or quotas if it does not self-regulate.

Front 8

value added tax

Back 8

A sales tax collected at each stage of production in proportion to the value added during that stage.

Front 9

index of economic freedom

Back 9

an index created by the Heritage Foundation that measures the freedom of a country's economic system. The index has 10 different components, including business freedom, trade freedom, fiscal freedom, and government size.

Front 10

privatization

Back 10

A process whereby publicly owned enterprises are sold to private investors

Front 11

deregulation

Back 11

the removal of various government controls on an economy

Front 12

export substitution vs. complement

Back 12

the concept that outward FDI can either substitute or complement exports.

Front 13

Balance of payment accounts

Back 13

summary of a country's transactions with other countries, including two main elements: the balance of payments on current account and the balance of payments on financial account

Front 14

sovereign wealth fund

Back 14

A state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments.

Front 15

Committee on Foreign Investments in the U.S. (CFIUS)

Back 15

An inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States. Representatives are from 9 different agencies including the Defense, State, and Commerce departments.

Front 16

U.S. Treasury securities

Back 16

Debt financing instruments used by the United States Federal government, which include treasury bills, treasury notes, treasury bonds, and treasury inflation protected securities (TIPS)

Front 17

international labor organization

Back 17

a specialized agency of the UN that deals with labor issues

Front 18

universal declaration of human rights

Back 18

a declaration crafted by the UN General Assembly which consists of 30 articles that cover basic, civil society, and religious, and socio-economic rights of the individual.

Front 19

GATT

Back 19

A post-World War II agreement designed to promote freer international trade among the nations of the world. The GATT was replaced by the World Trade Organization (WTO) in 1994.

Front 20

WTO

Back 20

The WTO is a multilateral organization that promotes free and fair trade among the nations of the world. It was created in 1994 by 121 nations at the Uruguay Round.

Front 21

World Bank

Back 21

An international organization created at Breton Woods in 1944 to help in the reconstruction and development of its member nations. Its goal is to improve the quality of life for people in the poorer regions of the world by promoting sustainable economic development. See also International Bank for Reconstruction and Development.

Front 22

IMF

Back 22

An international organization designed to promote global economic stability and development. It compiles statistics on cross-border transactions and publishes a monthly summary of each country’s balance of payments.

Front 23

National treatment

Back 23

A country accords no less favorable treatment to imported goods than it does to domestic goods.

Front 24

Most Favored Nation

Back 24

A status granted to one country by another; the granting country then accords the recipient's imports and exports the most favorable treatment that it accords any country.

Front 25

The General Agreement on Trade in Services (GATS)

Back 25

A treaty of the WTO that extends the multilateral trading system to service sector.

Front 26

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Back 26

A treaty of the WTO that sets down minimum standards for many forms of intellectual property (IP) regulation.

Front 27

Advalorem Tariff

Back 27

A tariff assessed as a percentage of the value of an import.

Front 28

infant industry argument

Back 28

The rationale for the “temporary protection” of a new industry or firm in order to help it become established domestically and later become competitive worldwide. These protections consist of tariff and non-tariff barriers to imports, preventing global competition from entering the market.

Front 29

European Union (EU)

Back 29

An intergovernmental organization which coordinates foreign, economic, and judicial policy among its 27 member nations.

Front 30

European Coal and Steel Community (ECSC)

Back 30

An international organization that sought to unify Western Europe and eventually lead to the creation of the European Union.

Front 31

European Monetary System

Back 31

An exchange rate system based on cooperation between European Union central banks.

Front 32

Copenhagen criteria

Back 32

The rules and regulations that all applicant countries to the European Union must meet, and to which all EU member nations must maintain.

Front 33

Spot exchange rate

Back 33

Exchange-rate today for settlement in two days.

Front 34

Forward exchange rate

Back 34

An agreement to purchase or sell a defined amount of forward currency in the future at a certain fixed rate.

Front 35

Appreciation

Back 35

An increase in a currency value relative to another currency in a floating exchange rate system.

Front 36

Depreciation

Back 36

A decrease in a currency value relative to another currency in a floating exchange rate system.

Front 37

Transaction exposure

Back 37

Changes in the value of contractual (monetary) cash flows as a result of changes in currency values.

Front 38

Economic exposure

Back 38

Change in the value of a corporation’s assets or liabilities as a result of changes in currency values.

Front 39

treaties

Back 39

agreements between countries, which may be bilateral or multilateral; also called conventions, covenants, compacts, or protocols

Front 40

extraterritorial application of laws

Back 40

a country's attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside its borders

Front 41

arbitration

Back 41

a process, agreed to by parties to a dispute in lieu of going to court, by which a neutral person or body makes a binding decision

Front 42

nonrevenue tax purposes

Back 42

purposes such as redistributing income, discouraging consumption of products such as tobacco and alcohol, and encouraging purchase of domestic rather than imported products

Front 43

foreign tax credits

Back 43

allowances by which U.S. taxpayers who reside and pay income taxes in another country can credit those taxes against U.S. income tax

Front 44

tax treaties

Back 44

treaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement; often called tax conventions

Front 45

national tax jurisdiction

Back 45

a tax system for expatriate citizens of a country whereby the country taxes them on the basis of nationality even though they live and work abroad

Front 46

territorial tax jurisdiction

Back 46

a tax system in which expatriate citizens who neither liver nor work in the country - and therefore receive non of the services for which taxes pay - are exempt from the country's taxes

Front 47

foreign corrupt practices act (FCPA)

Back 47

U.S. law against making payments to foreign government officials for special treatment

Front 48

floating exchange rate system

Back 48

An exchange rate system under which a government is not obligated to declare that its currency is convertible into a fixed amount of another currency. Rather, the exchange rates are settled by market forces

Front 49

fixed exchange rate system

Back 49

An exchange rate system in which governments stand ready to buy and sell currency at official exchange rates. Fluctuations of this currency are not possible.