Glossary of Economic and Business Terms - N, Glossary of International Economics, Business and Economic Terms, Abbreviations, Terms List, MBA Exam

"N"

NAFTA	North American Free Trade Agreement
NAFTA TAA	See trade adjustment assistance.
NAIRU	The level of the unemployment rate at which prices rise at the same rate that they are expected to rise, and thus at which (since expectations needn't change) the rate of inflation does not then rise or fall. Stands for Non-Accelerating Inflation Rate of Unemployment.
Narrow money	M1
Nash	Used as an adjective applied to a strategy in a game, this means that it is part of a Nash equilibrium.
Nash equilibrium	An equilibrium in game theory in which each player's action or strategy is optimal given the actions or strategies of the other players. E.g., in a tariff-and-retaliation game, with each country able to improve its terms of trade with a tariff, zero tariffs are not Nash, since each can do better by raising its tariff. A Nash equilibrium, with positive tariffs, is likely to be inferior to free trade for both.
Nation	As used in international economics, a nation is almost invariably a country, or occasionally a similar entity (e.g., Hong Kong) with a single, usually independent government.
National	1. (adj.) Of, relating to, or belonging to a nation. 2. (n.) A person who is a citizen or long-term resident of a nation.
National Bureau of Economic Research	A nonprofit, nonpartisan organization based in Cambridge, MA, that assembles economic data and sponsors economic research. Its Business Cycle Dating Committee also is traditionally responsible for identifying the beginnings and ends of recessions.
National debt	Although this term looks like it should mean the amount that a country owes to foreigners, in practice it is used instead to refer to the amount that a nation's government owes to anybody, including its own citizens. Thus it is the total of a national government's outstanding government bonds.
National defense argument for protection	The argument that imports should be restricted in order to sustain a domestic industry so that it will be available in case of trade disruption due to war. This is a second best argument, since there are a variety of ways of providing for defense at lower economic cost, including production subsidies, mothballing, and stockpiling.
National exhaustion	See exhaustion.
National income	The income generated by a country's production, and therefore the total income of its factors of production. Except for some adjustments that don't usually enter theoretical models, NI is the same as GDP.
National Income and Product Accounts	The statistics collected by the Bureau of Economic Analysis on aggregate economic activity in the United States.
National sovereignty	See sovereignty.
National treatment	The principle of providing foreign producers and sellers the same treatment provided to domestic firms.
Natural person	This term appears in the GATS where it deals with the international movement of employees of firms that are providing services in another country. Persons are called "natural" to distinguish them from "juridical persons," such as partnerships or corporations, which are given certain rights of persons under the law.
Natural resource	Anything that is provided by nature, such as deposits of minerals, quality of land, old-growth forests, fish populations, etc. The availability of particular natural resources is an important determinant of comparative advantage and trade in products that depend on them. Natural resources are primary factors of production.
Natural trade	Trade that is either free or restricted, but that is not artificially encouraged by subsidies or other stimulants.
Natural trading bloc	A trading bloc consisting of natural trading partners.
Natural trading partner	A country with whom another country's trade is likely to be large, because of low transport or other trade costs between them. Term introduced by Wonnacott and Lutz (1989) and used extensively by Frankel (1997).
NBER	National Bureau of Economic Research
NDP	Net domestic product
Necessity test	A procedure to determine whether a trade restriction intended to serve some purpose is necessary for that purpose.
Negative externality	A harmful externality; that is, a harmful effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to curtail the action. Examples are pollution from factories (a production externality) and smoke from cigarettes (a consumption externality).
Negative list	In an international agreement, a list of those items, entities, products, etc. to which the agreement will not apply, the commitment being to apply the agreement to everything else. Contrasts with positive list.
Neighborhood	In mathematical Euclidean space, a small set of points surrounding and including a particular point. Thus, for an economic variable, such as an allocation, the neighborhood of a particular allocation includes all those allocations that are sufficiently similar to it.
Neighborhood production structure	A structure of technology for a general equilibrium model due to Jones and Kierzkowski (1986). With an arbitrary but equal number of goods and factors, each factor produces two (different) goods, each good uses two (different) factors, in a way that yields more unambiguous results than one normally finds in high-dimension trade models without specific factors.
Neoclassical	A collection of assumptions customarily made by mainstream economists starting in the late 19th century, including profit maximization by firms, utility maximization by consumers, and market equilibrium, with corresponding implications for determination of factor prices and the distribution of income. Contrasts with classical, Keynesian, and Marxist.
Neoclassical ambiguity	In the specific factors model, the fact that the effect of a change in relative prices on the real wage of the mobile factor cannot be known a priori, since the wage rises relative to one price and falls relative to the other.
Neoclassical economics	Most of modern, mainstream economics based on neoclassical assumptions. Tends to ascribe inevitability, if not necessarily desirability, to market outcomes.
Neoclassical growth model	A model of economic growth in which income arises from neoclassical production functions in one or more sectors, displaying diminishing returns to saving and capital accumulation. Due to Solow (1956)and Swan (1956).
Neoclassical production function	A production function with the properties of constant returns to scale and smoothly diminishing returns to individual factors.
Neoliberalism	A view of the world that favors social justice while also emphasizing economic growth, efficiency, and the benefits of free markets.
NES	Not Elsewhere Specified. This abbreviation, "nes," appears frequently in classifications, of goods and of industries for example, to encompass all other items in a category that have not been included explicitly.
Net domestic product	Gross domestic product minus depreciation. This is the most complete measure of productive activity within the borders of a country, though its accuracy suffers from the difficulty of measuring depreciation.
Net economic welfare	Same as MEW
Net exports	Exports minus imports; same as the balance of trade.
Net foreign asset position	The value of the assets that a country owns abroad, minus the value of the domestic assets owned by foreigners. Equals balance of indebtedness.
Net foreign factor income	The income of a country's factors earned abroad minus the income paid to foreign-owned factors domestically.
Net international reserves	International reserves minus reserves that have been borrowed from the IMF and other governments.
Net national product	Gross national product minus depreciation. This is the most complete measure of productive activity by a country's nationals, though its accuracy suffers from the difficulty of measuring depreciation.
Net output	The output of a product that is available for final users, after deducting amounts of it used up as an intermediate input in producing itself and other products. Contrasts with gross output.
Net present value	Same as present value, being sure to include (negative) payments as well as (positive) receipts.
Network	A set of connections among a multiplicity of separate entities sharing a common characteristic. Networks of firms or individuals in different countries are thought to facilitate trade.
Neutral	1. Said of a technological change or technological difference if it is not biased in favor of using more or less of one factor than another. This can be defined in several different ways that are not normally equivalent: Hicks-neutral, Harrod-neutral, and Solow-neutral. 2. Said of economic growth if it expands actual or potential output of all goods at the same rate, not being biased in favor of one over another. In the Heckscher-Ohlin Model neutral growth will occur if all factor endowments grow at the same rate or if there is Hicks Neutral technological progress at the same rate in all industries. 3. Said of a trade regime if the structure of protection favors neither exportables nor importables. See bias.
NEW	Net economic welfare
New bancor	A proposed non-national world currency to be used for payment and reserve purposes, to be issued by the IMF and intended to maintain a fixed purchasing power in the dollar and euro countries.
New Economic Geography	The study of the location of economic activity across space, particularly a strand of literature begun by Krugman (1991a) using agglomeration economies to help explain why industries cluster within particular countries and regions.
New Economy	This term was used in the late 1990's to suggest that globalization and/or innovations in information technology had changed the way that the world economy works. Conjectures included changes in productivity, the inflation-unemployment tradeoff, the business cycle, and the valuation of enterprises.
New International Economic Order	A set of proposals put forward during the 1970s by developing countries through UNCTAD to promote their interests by improving their terms of trade, increasing development assistance, developed-country tariff reductions, and other means.
New Trade Theory	Models of trade that, especially in the 1980s, incorporated aspects of imperfect competition, increasing returns, and product differentiation into both general equilibrium and partial equilibrium models of trade and trade policy. Many contributed to this literature, but the most prominent was Krugman, starting with Krugman (1979).
Newly Industrializing Country	Refers to a group of countries previously regarded as developing that then achieved high rates and levels of economic growth.
Newly Industrializing Economy	Newly Industrializing Country
News	Unexpected information. In an efficient market, as the exchange market is supposed to be, price reflects all available information. It can change, therefore, only in response to news.
NGO	Non-governmental organization
NIC	Newly Industrializing Country
NIE	Newly Industrializing Economy
NIEO	New International Economic Order
NIPA	National Income and Product Accounts
NNP	Net national product
Nominal	1. In the form most directly observed or named, in contrast to a form that has been adjusted or modified in some fashion. 2. As measured in terms of money, usually in contrast to real.
Nominal anchor	The technique of fixing a nominal variable in an economy as a means of reducing inflation. For example, by firmly pegging the nominal exchange rate, a central bank or government reduces its own ability to expand the money supply.
Nominal exchange rate	The actual exchange rate at which currencies are exchanged on an exchange market. Contrasts with real exchange rate.
Nominal interest rate	The interest rate actually observed in the market, in contrast to the real interest rate.
Nominal rate of protection	The protection afforded an industry directly by the tariff and/or NTB on its output, ignoring effects of other trade barriers on the industry's inputs. Contrasts with the ERP.
Nominal return	The earnings on an asset or other investment, comparable to a nominal interest rate, thus not adjusted for inflation.
Nominal tariff	The nominal protection provided by a tariff; that is, the tariff itself. Contrasts with effective tariff.
Nominal wage	The wage of labor in units of currency, not adjusted for inflation, and thus not in terms of the goods that it will buy. Contrasts with real wage.
Non-actionable subsidy	A subsidy that is not subject to countervailing duties under the rules of the WTO. These include non-specific subsidies, subsidies for industrial research, regional aids, and some environmental subsidies.
Non-automatic licensing	Import licensing that is discretionary, based on an import quota, or performance related.
Non-governmental organization	A not-for-profit organization that pursues an issue or issues of interest to its members by lobbying, persuasion, and/or direct action. In the arena of international economics, NGOs play an increasing role defending human rights and the environment, and fighting poverty.
Non-market-clearing	A situation or economic model in which a market or markets do not clear, perhaps because something prevents prices from adjusting to discrepancies between supply and demand.
Non-market economy	A country in which most major economic decisions are imposed by government and by central planning rather than by free use of markets. Contrasts with a market economy.
Non-specific subsidy	A subsidy that is available to more than a single specific industry and is therefore non-actionable under WTO rules.
Nonbinding	Refers to a restriction that currently has no effect because the behavior that it would prevent would not happen even without the restriction. For example, if a quota limits imports to no more than 1,000, but actual imports are only 900, then the quota is nonbinding.
Nonconvexity	The property of an economic model or system that the sets representing technology, preferences, or constraints are not mathematically convex. Because convexity is needed for proof that competitive equilibrium is efficient and well-behaved, nonconvexities may imply market failures.
Nondistorted	Without distortions. Many propositions in trade theory are strictly valid, often only implicitly, only in nondistorted economies.
Nondistorting lump sum	Redundant appellation for a lump sum tax or subsidy.
Noneconomic objectives argument for protection	The view that a restriction on imports may serve a purpose outside of conventional economic models. Unless that purpose is itself the restriction of trade, then this is a second-best argument, since changes in output, consumption, etc. can be achieved at lower economic cost in other ways.
Nonhomothetic	Any function that is not homothetic, but usually applied to consumer preferences that include goods whose shares of expenditure rise (and others that fall) with income.
Nonproduction worker	A worker not directly engaged in production. In empirical studies of skilled and unskilled labor, data on nonproduction workers are often taken to represent skilled labor.
Nonprohibitive tariff	A tariff that is not prohibitive.
Nonsterilization	Refers to exchange market intervention that is done without sterilizing its effects on the domestic money supply.
Nontariff barrier	Any policy that interferes with exports or imports other than a simple tariff, prominently including quotas and VERs.
Nontariff measure	Any policy or official practice that alters the conditions of international trade, including ones that act to increase trade as well as those that restrict it. The term is therefore broader than nontariff barrier, although the two are usually used interchangeably.
Nontradable	1. Not capable of being traded among countries. 2. A good or service that is nontradable, with nontradables referring to an aggregate of such goods and services.
Nontradable good	A good that, by its nature, is nontradable.
Nontraded good	A good that is not traded, either because it cannot be or because trade barriers are too high. Except when services are being distinguished from goods, they are often mentioned as examples of nontraded goods, or at least they were until it became common to speak of trade in services.
Nonviolation	In WTO terminology, this is shorthand for a complaint that a country's action, though not a violation of WTO rules, has nullified or impaired a member's expected benefits from the agreement.
Normal good	A good the demand for which rises with income if relative prices do not change. Contrasts with inferior good.
Normal value	Price charged for a product on the domestic market of the producer. Used to compare with export price in determining dumping.
Normative	Refers to value judgments as to "what ought to be," in contrast to positive which is about "what is."
North American Free Trade Agreement	The agreement to form a free trade area among the United States, Canada, and Mexico that went into effect January 1, 1994.
North-South model	An economic model in which two countries, North and South, represent developed and less developed countries respectively.
NTB	Nontariff barrier
NTM	Nontariff measure
Nullification	See nonviolation
Numeraire	The unit in which prices are measured. This may be a currency, but in real models, such as most trade models, the numeraire is usually one of the goods, whose price is then set at one. The numeraire can also be defined implicitly by, for example, the requirement that prices sum to some constant.

(DOU 18082007)