Principle of comity:

See comity, principle of.

Prisoner's dilemma:

Situations where rational behavior at the micro level leads to irrational collective outcomes.

Private goods:

Items that one person can consume and preclude others from using.

Privatization

The conversion of publicly delivered services into private-sector provision of the same service.

Privatization:

Sale of publicly owned property to private investors.

Privatize:

To substitute private entities for government agencies to provide services. Also can mean to sell public enterprises to private investors or to allow citizens to choose among public service providers.

Product liability:

A firm's or person's legal responsibility for harm stemming from the use of a product that it made, sold, managed, or used.

Product life-cycle theory

The optimal location in the world to produce a product changes as the market for the product matures.

Production alliance:

Strategic alliance in which two or more firms each manufacture products or provide services in a shared or common facility.

Production management:

International operations management decisions and processes involving the creation of tangible goods.

Productivity

A measure of output for given level of input.

Productivity:

Economic measure of efficiency that summarizes the value of outputs relative to the value of inputs used to create them.

Productivity:

The value of output produced by a unit of labor or capital.

Product-support services:

Assistance a firm provides for customers regarding the operation, maintenance, and/or repair of its products.

Product:

International marketing mix component that comprises both tangible factors that the consumer can see or touch and numerous intangible factors.

Progressive movement:

A campaign for reform in the Unites States directed against Big Business and political machines, from around 1890 to 1920

Promotion mix:

Mix of advertising, personal selling, sales promotion, and public relations used by a firm to market its products.

Promotion:

Set of all efforts by an international firm to enhance the desirability of its products among potential buyers.

Property rights:

The permissible use of resources, goods, and services.

Property tax:

A payment levied by government based on the amount of property a taxpayer owns.

Protectionism

Actions taken by a government to limit foreign economic competition to its domestic enterprises.

Protectionism:

The imposition of substantial tariffs or other limitations on imports in order to insulate or "protect" domestic producers from foreign competition; hence, support of the imposition of such import barriers.

Protectionism:

A public policy of excluding imports to a country.

Protectionists:

See neo-mercantilists.

Protestant ethic:

Belief that hard work, frugality, and achievement are means of glorifying God.

Public choice analysis:

Branch of economics that analyzes public decision making.

Public choice:

The economic analysis of politics that assumes voters, politicians, and bureaucrats are mainly self-interested and not primarily motivated by the public welfare.

Public goods:

Items that are simultaneously available to many people.

Public interest group:

Organizations that claim to seek to advance causes that will benefit society as a whole.

Public Policy:

A government law or rule that expresses government's goals and provides rewards and punishment to promote their attainment.

Public relations:

Efforts aimed at enhancing a firm's reputation and image.

Public-private venture:

Joint venture involving a partnership between a privately owned foreign firm and a government.

Pull strategy

A marketing strategy emphasizing mass media advertising as opposed to personal selling.

Purchasing power parity (PPP)

An adjustment in gross domestic product per capita to reflect differences in the cost of living.

Purchasing power parity (PPP):

Theory stating that the prices of tradable goods, when expressed in a common currency, will tend to equalize across countries as a results of exchange-rate-changes.

Push strategy

A marketing strategy emphasizing personal selling rather than mass media advertising.

Put option:

Publicly traded contract granting the owner the right, but not the obligation, to sell a specific amount of foreign currency at a specified price at a stated future date.

Quad:

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Economic grouping of countries, consisting of Canada, the European Union, Japan, and the United States.

Quality circles:

Groups of employees who meet to brainstorm ways to boost a firm's output.

Quality:

Totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Quasi-judicial procedures:

Procedures through which law is made by regulatory agencies applying general statues to specific cases. On trade, procedures administered by the US International Trade Commission and the Department of Commerce determine the eligibility of petitioners for import relief under the escape clause, countervailing duty, antidumping, or other trade statues.

Quota:

A limit on the quantity of a product that may be imported by (or sold to) a country. Import quotas are enforced by the receiving nation, export quotas by the country of origin.

Quota:

Deposit paid by a member nation when joining the International Monetary Fund.

Quota:

Numerical limit on the quantity of a good that may be imported into a country.

R&D alliance:

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Strategic alliance in which two or more firms agree to undertake joint research to develop new products or services.

R&D consortium:

Confederation of organizations that band together to research and develop new products and processes for world markets.

Rationality:

The assumption in political economy that people make consistent, ordered decisions.

Reaganomics:

See supply-side economics.

Real value

Value measured in dollars of a constant purchasing power or adjusted by some index serving the same purpose.

Recession

A real (actual adjusted for price changes) decline in GDP for two consecutive quarters.

Reciprocal Trade Agreements Act of 1934:

The law that provided authority for the US government to enter into bilateral agreements for reciprocal tariff reductions. Through successive extensions and amendments, it also authorized US participation in the first five GATT rounds of multilateral trade negotiation. It was superseded by the Trade Expansion Act of 1962.

Reciprocity:

The general principle or practice of nations' negotiating mutual reductions in import barriers. See also sectoral reciprocity.

Redistributive Policy:

Policies such as progressive taxation and welfare programs that redistribute income from one group to another.

Re-exporting:

Process of importation of a good into a country for immediate exportation, with little or no transformation of the good.

Referendum:

The procedure by which citizens vote on a piece of legislation.

Regional development banks:

Banks whose mission is to promote economic development of poorer nations within the region they serve.

Regulation

The rule-making process of those administrative agencies charged with the official interpretation of a statue.

Regulatory barrier

This type of trade barrier (sometimes known as nontariff barriers) includes regulations and product standards that imported products must satisfy.

Regulatory Policy:

Government action to control firms' price, sale, and production in the public interest.

Related diversification:

Corporate-level strategy in which the firm operates in several different but related businesses, industries, or markets at the same time.

Relative factor endowments, theory of:

Theory stating that a country will have a comparative advantage in producing goods that intensively use factors of production it has in abundance; also called Heckscher-Ohlin theory.

Relative poverty

A measure of poverty that is indexed in terms of the well-being enjoyed by everyone else in the society, rather than defined as a fixed benchmark that constitutes absolute poverty.

Religious law:

Law based on officially established rules governing the faith and practice of a particular religion.

Rent seeking:

Efforts to get government to create economic rents that can then be captured for private gain.

Repatriate:

To return to a home country.

Repatriation:

Moving a manager back home after a foreign assignment has been completed.

Representative democracy

A political system in which citizens periodically elect individuals to represent them in government.

Research and Development (R&D):

Research and development to find and apply new technology.

Resource depletion:

The using up of nonrenewable resources.

Resource deployment:

Component of strategy that answers the question "Given that we are going to compete in these markets, how will we allocate our resources to them?"

Responsibility center control:

Form of organizational control based on decentralized responsibility centers.

Restraint of trade:

An attempt by a company or companies to stifle or eliminate competition.

Retaliation:

Import-restrictive action taken by a country in response to similar measures by a trading partner. GATT rules permit a country whose exports are hurt by new restrictions to retaliate by imposing trade barriers on products sold by the nation taking the initial protectionist action. In principle, the volume of trade affected by retaliation should be comparable to that affected by the measures against which it is targeted.

Retention:

Extent to which a firm is able to retain its employees.

Revocable letter of credit:

Letter of credit that can be changed by the bank without the consent of the buyer and the seller.

Right wing totalitarianism

A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to a rise of communism.

Rights:

Advantages that can be legitimately claimed according to law or tradition.

Ringi system:

Japanese approach to ensuring that decisions are made collectively, rather than by an individual.

Royalty:

Compensation paid by a licensee to a licensor.

Rules of origin:

Rules to determine which goods will benefit from reduced trade barriers in regional trading blocs.

Safeguards:

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See Antidumping investigation; CVD investigation; Escape clause.

Sales promotion:

Specialized marketing efforts using such techniques as coupons and sampling.

San Antonio Independent School District vs. Rodriquez (1973)

The Supreme Court decision that examined the constitutionality of the Texas school finance structure and, by a narrow majority, refused to extend the "equal protection" clause of the Fourteenth Amendment to cover state school finance plans.

Sanctions:

Government-imposed restraints against commerce with a foreign country.

Savings:

All income not spent for current consumption.

Scarcity price:

A payment given in a transaction that is set by the forces of supply and demand.

Scientific management:

The management of organizations based on careful study of plant layout, work schedules, and job content, and on the use of wage incentives.

Scope of operations:

Component of strategy that answers the question "Where are we going to conduct business?"

Screwdriver plant:

Domestic factory that assembles imported parts in which little value is added to the parts.

Section 201

See Escape clause.

Section 301

Under this provision of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988, the USTR is required to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international agreement or is unjustifiable, unreasonable, or discriminatory, and burdens or restricts US commerce. In practice, it has been employed increasingly on behalf of American exporters fighting foreign import barriers or subsidized competition in third-country markets.

Sectoral reciprocity:

The principle or practice of comparing the openness of national markets to imports sector by sector, and negotiating restraints sector by sector, rather than across entire economies. US advocates of a sectoral reciprocity approach to trade in telecommunications or wine, for example, propose to compare the levels of US and foreign barriers to imports of these products, and to equalize them, either by negotiating reductions in foreign restraints or by raising our own. A modified version of sectoral reciprocity was enacted into law as Title III of the Trade and Tariff Act of 1984.

Securities and Exchange Commission (SEC)

Federal Commission that seeks the fullest possible disclosure to the investing public and seeks to protect the interests of the public and investors against malpractice in the securities and financial markets.

Self-interest:

The idea that individuals are motivated mainly to seek their own advantage.

Self-reference criterion:

Unconscious use of one's own culture to assess and understand a new culture.

Semiconductor Trade Arrangement (STA):

Bilateral agreement between the United States and Japan on foreign access to the Japanese semiconductor market and dumping by Japanese companies in the United States and third-country semiconductor markets. The STA, which went into effect in 1986 and was extended in 1991, is important in its use of numerical targets. The 1991 agreement set an explicit market share of 20 percent for foreign suppliers in the Japanese market by the end of 1992.

Separation of Powers

Constitutional doctrine that divides government power into three independently tenured branches granted legislative, executive, and judicial power.

Separation of Powers:

The division of state power across several institutions that must cooperate in policy making.

Service export:

Sale of a service to a resident of a foreign country.

Service exports and imports:

Trade involving intangible products.

Service import:

Purchase of a service from a resident of a foreign country.

Service operations management:

International operations management decisions and process involving the creation of intangible services.

Sexual harassment:

Unwanted offers of or requests for sex at the workplace, prohibited under U.S. federal law.

Shared management agreement:

Management arrangement in which each partner in a strategic alliance fully and actively participates in managing the alliance.

Sherman Act (1890)

Federal statute that held "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.. is hereby declared to be illegal." While the statute was directed at industrial monopolies, the courts used the act punitively against the budding union movement. Subsequent legislation (The Clayton Act of 1914) exempted unions from the Sherman prohibitions on the restraint of trade.

Short-term portfolio investments:

Portfolio investments with maturities of one year or less.

Sight draft

A draft payable on presentation to the drawee.

Sight draft:

Draft that requires payment upon transfer of the goods to the buyer.

Singe-business strategy:

Corporate-level strategy that calls for a firm to rely on a single business, product, or service for all its revenue.

Single European Act

A 1987 act, adopted by members of the European Community, that committed member-countries to establishing an economic union.

Smithsonian Conference:

Meeting held in Washington, D.C. in December 1971, during which central bank representatives from the Group of Ten agreed to restore the fixed exchange-rate system but with restructured rates of exchange between the major trading currencies.

Smoot-Hawley Act:

The Tariff Act of 1930, which raised US tariffs on over 20,000 dutiable items to record levels and contributed to the deepening of the Great Depression.

Smoot-Hawley Tariff

Enacted in 1930 by the U.S. Congress, this tariff erected a wall of barriers against imports into the United States.

Social charter:

EU policy promoting common job-related benefits and working conditions throughout the EU; also called Social Policy.

Social democrat:

An advocate of a gradual passage to state economic planning and state ownership. Also see socialism.

Social Democrats

Those committed to achieving socialism by democratic means.

Social insurance:

Government programs that provide protection against financial losses associated with work.

Social market economy:

Germany's distinctive system of seeking consensus among workers, management, and government.

Social mobility

The extent to which individuals can move out of the social strata into which they are born.

Social mobility:

Ability of individuals to move from on stratum of society to another.

Social orientation:

Cultural beliefs about the relative importance of the individual and the groups to which an individual belongs.

Social Policy:

See social charter.

Social regulation:

Government control of the activities of firms and other organizations to promote a better quality of life, as opposed to narrow economic concerns.

Social Security

Otherwise known as the Old Age Survivors Disability Insurance program (OASDI), created during the Great Depression in 1935 to provide income support for dependent populations without the means of self support.

Social Security Administration (SSA)

U.S. government agency, originally part of the Department of Health and human Services, that administers the national program of contributory social insurance whereby employees, employers, and the self-employed pay contributions that are pooled in special trust funds used to provide income to those eligible for Social Security.

Social stratification:

Organization of society into hierarchies based on birth, occupation, wealth, educational achievements, and/or other characteristics.

Social structure

The basic social organization of a society.

Socialism

An economic system that would have the government or guilds of workers own and operate all means of production thus restricting, if not entirely eliminating, private enterprise.

Socialism

A political philosophy advocating substantial public involvement, through government ownership, in the means of production and distribution.

Socialism:

A political doctrine emphasizing collective ownership of the means of production, ascribing a large role to the government in running the economy.

Soft currencies:

See inconvertible currencies.

Soft loans:

Loans made by the World Bank Group that bear significant risk of not being repaid.

Sogo shosha

Japanese trading companies; a key part of the keiretsu, the large Japanese industrial groups.

Sogo sosha:

Large Japanese trading company.

Sourcing:

Set of processes and steps a firm uses to acquire the various resources it needs to create its own products.

Southern African Development Coordination Conference (SADCC):

Free trade area created by ten Southern African countries.

Special 301

This clause is in the 1988 Omnibus Trade Act requires the USTR to investigate countries determined to have a history of violating existing laws and agreements dealing with intellectual property rights. Such countries must have their current practices reviewed each year, and, if they are not found to be improving, are subject to mandated retaliation under Section 301.

Special drawing rights (SDRS):

Credits granted by the IMF that can be used to settle transactions among central banks; also called paper gold.

Special Representative for Trade Negotiations (STR):

See United States Trade Representative.

Specialized asset

An asset designed to perform a specific task, whose value is significantly reduced in its next-best use.

Specific tariff

Tariff levied as a fixed charge for each unit of a good imported.

Specific tariff:

Tax assessed as a specific dollar amount per unit of weight or other standard measure.

Spot exchange rate

The exchange rate at which a foreign exchange dealer will convert one currency into another on that particular day.

Spot market:

Market for foreign exchange involving immediate delivery of the currency in question.

Stakeholders:

An organization's constituencies, who can affect its actions in significant ways.

Standard price policy:

Pricing policy under which a firm charges the same price for its products and services regardless of where they are sold.

State-owned enterprise:

A nationalized company that sells goods or services.

State:

Statistical process control:

Family of mathematically based tools for monitoring and controlling quality.

Statutory law:

Law created by legislative bodies.

Statutory laws:

Laws enacted by legislative action.

Sterling-based gold standard:

Gold standard in which the British pound is commonly used as an alternative means of settlement of transactions.

Stock of foreign direct investment

The total accumulated value of foreign owned assets at a given point in time.

Strategic alliance:

Business arrangement in which two or more firms choose to cooperate for their mutual benefit.

Strategic alliances

Cooperative agreements between two or more firms.

Strategic business units (SBUs):

"Bundles" of businesses created by a firm using a corporate strategy of either related or unrelated diversification.

Strategic control:

Process of monitoring how well an international business formulates and implements its strategies.

Strategic Defense Initiative (SDI)

A program of the U.S. Department of Defense designed to create an air defense shield against ballistic missiles.

Strategic goals:

Major objectives a firm wants to accomplish through the pursuit of a particular course of action.

Strategic planning:

Process of developing a particular international strategy.

Strategic trade policy

Government policy aimed at improving the competitive position of a domestic industry and/or domestic firm in the world market.

Strategic trade theory:

Theory addressing the optimal policies through which a government may benefit its country by aiding domestic firms in monopolistic or highly oligopolistic industries.

Strict liability:

A no-fault theory of product liability, when neither care nor good faith can absolve the manufacturer of a defective product.

Structural Impediments Initiative

A 1990 agreement between the United States and Japan aimed at trying to decrease nontariff barriers restricting imports into Japan.

Structural Impediments Initiative:

A series of negotiations begun in 1989 by the United States and Japan to identify and attempt to reduce structural impediments to trade between the two countries. The SII has focused on issues such as marketing and distribution systems, saving and investment patterns, and government-business relations. The United States has used the negotiations to seek Japanese government actions that would increase Japanese imports of American goods.

Structural unemployment

Unemployment that is a result of a basic change in the economic circumstances and work skills required in a region or nation that leaves some without jobs or the long-term prospects of finding full-time, paid employment.