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

"T"

TAA	Trade adjustment assistance
Takeover	The acquisition by one firm of another.
Target	1. Any objective of economic policy. 2. The value of an economic variable that policy makers regard as ideal and use as the basis for setting policy. Contrasts with instrument. 3. The level of an exchange rate that guides exchange market intervention by a central bank or exchange stabilization fund.
Tariff	A tax on trade, usually an import tariff but sometimes used to denote an export tax. Tariffs may be ad valorem or specific.
Tariff Act of 1930	Smoot-Hawley Tariff.
Tariff-and-retaliation game	The game of countries setting tariffs knowing that by doing so they alter the terms of trade to their own advantage. This is one very specific form of trade war.
Tariff binding	A commitment, under the GATT, by a country not to raise the tariff on an item above a specified level, called the bound rate or bound tariff.
Tariff classification	See tariff heading.
Tariff Commission	The name of what is today the International Trade Commission as of its founding in 1916, until it was renamed the ITC in 1975.
Tariff equivalent	The level of tariff that would be the same, in terms of its effect, usually on the quantity of imports, as a given NTB.
Tariff escalation	In a country's tariff schedule, the tendency for tariffs to be higher on processed goods than on the raw materials from which they are produced. This causes the effective rate of protection on these goods to be higher than the nominal rate and puts LDC producers of primary products at a disadvantage.
Tariff factory	A production facility established by a foreign firm through FDI in a country in spite of its higher production costs, in order to serve its market without paying a tariff.
Tariff heading	The descriptive name attached to a tariff line, indicating the product to which it applies. Same as tariff classification.
Tariff items 806 & 807	Lines 806.30 and 807.00 of the U.S. tariff schedule, which permit goods that have been sent abroad for processing or assembly to be admitted subject to duty only on the value added abroad.
Tariff jumping	The establishment of a production facility within a foreign country, through FDI or licensing, in order to avoid a tariff.
Tariff line	A single item in a country's tariff schedule.
Tariff peak	In a tariff schedule, a single tariff or a small group of tariffs that are particularly high, often defined as greater than three times the average nominal tariff.
Tariff preference	A lower (or zero) tariff on a product from one country than is applied to imports from most countries. This violation of the MFN principle is permitted in special cases, including some preferential trade arrangements and the GSP.
Tariff protection	Protection provided by a tariff.
Tariff quota	A tariff rate quota.
Tariff rate quota	A combination of an import tariff and an import quota in which imports below a specified quantity enter at a low (or zero) tariff and imports above that quantity enter at a higher tariff. Also called a tariff quota.
Tariff redundancy	See redundant tariff.
Tariff revenue	See revenue.
Tariff schedule	The list of all of a country's tariffs, organized by product.
Tariff Schedule of the United States	The official product nomenclature for specifying tariffs in the United States used until 1988, when it was replaced with the harmonized system.
Tariff wall	A tariff, presumably a high one, perhaps in lots of industries. The term is used to highlight the difficulty foreign sellers have in getting their products past the tariff, often in the context of the incentive therefore provided for FDI. See foreign investment argument for protection.
Tariffication	Conversion of NTBs to tariffs at the level of their tariff equivalents. In the Uruguay Round, agricultural NTBs were tariffied and bound, the purpose being to replace unwieldy NTBs with tariffs that can then become the subject of negotiation.
Tariffs and retaliation	The process of one country raising its tariff to secure some advantage, to which another country responds by raising its tariff, the first raises its tariff still further, etc. See retaliation, trade war. Classic treatment is Johnson (1954).
Tax base	The amount on which a taxpayer pays taxes, as for example their taxable income in the case of an income tax, or the taxable value of their property in the case of a property tax.
Tax break	Any provision of the tax code, such as a tax credit or tax deduction, that reduces the amount of tax that a firm or individual will pay, perhaps in return for behavior that the government wishes to encourage.
Tax buoyancy	A measure of how rapidly the actual revenue from a tax rises (including that due to any change in the tax law) as the tax base rises. It is defined, like an elasticity , as %DR/%DB where R is the real revenue from the tax, B is the real tax base, and %D is percent change. It differs from tax elasticity in not holding the tax law constant.
Tax credit	A provision of the tax code that specifies an amount by which a taxpayer's taxes will be reduced in return for some behavior.
Tax deduction	A provision of the tax code that specifies an amount by which a taxpayer's tax base will be reduced in return for some behavior, resulting in a lowering of the amount of tax paid that depends on their tax rate.
Tax elasticity	The elasticity of the real revenue from a tax with respect to the real tax base, for a given tax law.
Tax rebate	The refund of a tax that has been overpaid. Some countries rebate certain taxes that have been paid on goods that are then exported.
TBT	Technical barrier to trade
Technical barrier to trade	A technical regulation or other requirement (for testing, labeling, packaging, marketing, certification, etc.) applied to imports in a way that restricts trade.
Technical inefficiency	See X-efficiency.
Technical progress	Same as technological progress.
Technical regulation	A requirement of characteristics (such as dimensions, quality, performance, or safety) that a product must meet in order to be sold on a country's market. See standards.
Technique	1. A specific method of production, using a particular combination of inputs. 2. A point on an isoquant.
Technique of analysis	A method used for displaying or manipulating economic models.
Technological change	A change in a production function that alters the relationship between inputs and outputs. Normally it is understood to be an improvement in technology, or technological progress, and it is of interest in international economics for its implications for trade and economic welfare.
Technological difference	A difference in production functions, usually for the same industry compared between two countries, such that one country has higher output for any given input than the other.
Technological progress	A technological change that increases output for any given input.
Technology	1. The complete set of knowledge about how to produce in an economy at a point in time, including techniques of production that are available but not economically viable. 2. The set of production functions available to an economy. 3. Referring to industries that are experiencing, or recently have experienced, technological progress.
Technology gap	The presence in a country of a technology that other countries do not have, so that it can produce and export a good whose cost might otherwise be higher than abroad.
Technology spillover	Same as technology transfer, though usually not done intentionally by the transferor.
Technology transfer	The communication or transmission of a technology from one country to another. This may be accomplished in a variety of ways, ranging from deliberate licensing to reverse engineering.
Temporary admission	Permission to import a good duty free for use as an input in producing for export. See drawback, export processing zone.
Temporary producer movement	A mode of supplying a traded service through the temporary movement of persons employed by the supplier into the buyer's country.
Tender	To offer a product for sale at a specified price, usually in response to a specific request from a potential purchaser. Government procurement, for example, that is not open to international tendering is a form of nontariff barrier.
Tequila Crisis	Refers to the economic and financial crisis that began in late 1994 when the Mexican peso devalued, causing disruption in the Mexican economy that then spread through other countries of Latin America.
Terms of trade	1. The relative price, on world markets, of a country's exports compared to its imports. See improve the terms of trade.* 2. Outside of the economics of international trade, this expression often refers more broadly to the policies, facilities, and other arrangements that characterize the trade between one country or group of countries and another.
Terms of trade argument	Same as the optimal tariff argument, which works by restricting the quantity of trade in order to improve the terms of trade.
Terms of trade effect	The effect of a tariff on the terms of trade. By reducing the demand for imports, a tariff levied by a large country causes the prices of those imported goods to fall on the world market relative to the country's exports, improving its terms of trade.
Textbook Heckscher-Ohlin Model	The 2x2x2 model.
Textiles	Cloth. The textile sector is important for trade, along with apparel, because with some exceptions (synthetics) it is a very labor intensive sector, and it is therefore a likely source of comparative advantage for developing countries. See textiles and apparel.
Textiles and apparel	These largely labor intensive sectors are often the first manufactured exports of developing countries. Because of the threat to employment in developed countries, however, they have long been protected there. This is only now changing under the WTO's ATC.
TFP	Total Factor Productivity
Theoretical proposition	A property of an economic model that is derived (deduced) from its assumptions. It usually takes the form of a prediction about something that would be true in the world if the world conformed to the model's assumptions, and perhaps also to additional assumptions specified in the proposition.
Theory of second best	See second best.
Third World	Refers to all less developed countries as a group. Term originated during the Cold War, when the "first world" was the developed capitalist countries and the "second world" was the communist countries, although these terms were seldom used.
Tied aid	Aid that is given under the condition that part or all of it must be used to purchase goods from the country providing the aid.
Tiger economy	Any one of several economies that have developed extremely rapidly over a period of years. Especially the Four Tigers, but also a number of others who began to grow more recently.
TLC	Tratado de Libre Comercio (Spanish for Free Trade Agreement)
TNC	Transnational corporation.
Tobin tax	A small tax on international currency transactions, proposed by James Tobin in 1978 to discourage destabilizing short-term international capital movements. Advocates suggest a tax of 0.1-0.25% with revenue used for urgent global priorities. Others question enforceability.
Tokyo Round	The 7th round of multilateral trade negotiations that took place under GATT auspices, commencing 1973 and completed in 1979. This was the first trade round to deal with NTBs, by negotiating the Tokyo Round Codes.
Tokyo Round Codes	The codes of behavior negotiated in the Tokyo Round covering several NTBs, arising from customs valuation, standards, government procurement, etc. Participation was optional, each code covering only those countries that chose to sign.
TOT	Terms of trade
Total factor productivity	A measure of the output of an industry or economy relative to the size of all of its primary factor inputs. The term, and its acronym TFP, often refers to the growth of this measure, as measured by the Solow residual. See also Hicks-neutral technical progress.
TPA	Trade Promotion Authority
TPRM	Trade Policy Review Mechanism
Tradable	1. Capable of being traded among countries. 2. A good or service that is tradable; with tradables referring to an aggregate of such goods and services.
Trade	1. To exchange one item for another, one person or firm providing an item (good, service, asset, etc.) to another person or firm, with the latter providing a different item to the first in return, as payment. 2. To export and/or import. 3. The quantity or value of exports and/or imports.
Trade Act of 1974	Actually signed on Jan. 3, 1975, this major piece of trade legislation not only renewed and revised the authority to negotiate trade agreements, it also dealt with an expanded list of issues including tariff preferences, unfair trade, the escape clause, and adjustment assistance, and it introduced fast track authority.
Trade adjustment assistance	A program of adjustment assistance for workers and firms in industries that have suffered from competition with imports. In the U.S., TAA began with the Trade Expansion Act of 1962, and it has been renewed and expanded since then, including as part of the NAFTA.
Trade and investment	The interactions between, and the rules and policies governing, international trade and foreign direct investment. One of the Singapore Issues.
Trade-and- transformation- curve diagram	One of the most frequently used diagrams of trade theory, using a transformation curve together with one or more price lines and sometimes community indifference curves to illustrate production, consumption, and trade and the effects on them of tariffs and other exogenous changes.
Trade and Wages Debate	The debate between and among trade economists and labor economists as to the reason for the increase in the relative wages of skilled labor, compared to unskilled labor, in the U.S. starting in the 1980s. A central issue was the importance of "trade" as a contributing cause.
Trade balance	Balance of trade.
Trade barrier	An artificial disincentive to export and/or import, such as a tariff, quota, or other NTB.
Trade bias	See bias of a trade regime.
Trade bloc	Trading bloc.
Trade cost	Any cost incurred in order to engage in international trade, including transport cost, insurance, etc.
Trade creation	Trade that occurs between members of a preferential trading arrangement that replaces what would have been production in the importing country were it not for the PTA. Associated with welfare improvement for the importing country since it reduces the cost of the imported good. Concept due to Viner (1950).
Trade credit	1. An amount that is loaned to an exporter to be repaid when the exports are paid for by the foreign importer. 2. Credit extended by an exporter to an importer, permitting them to pay at some time after they take delivery.
Trade deficit	Imports minus exports of goods and services. See deficit.
Trade deflection	Entry, into a low-tariff member of a free trade area, of imports intended for a purchaser in its higher-tariff partner.
Trade dispute	Any disagreement between nations involving their international trade or trade policies. Today, most such disputes appear as cases before the WTO dispute settlement mechanism, but prior to the WTO, some were handled by the GATT while others were dealt with bilaterally, sometimes precipitating trade wars.
Trade diversion	Trade that occurs between members of a preferential trading arrangement that replaces what would have been imports from a country outside in the PTA. Associated with welfare reduction for the importing country since it increases the cost of the imported good. Concept due to Viner (1950).
Trade Expansion Act of 1962	The legislation authorizing US participation in the Kennedy Round, replacing the Reciprocal Trade Agreements Act of 1934. It also established Trade Adjustment Assistance.
Trade facilitation	One of the Singapore Issues, this refers in the Doha Declaration to "expediting the movement, release and clearance of goods, including goods in transit." This includes customs procedures and other practices that may add to the cost or time requirements of trade.
Trade flow	The quantity or value of a country's bilateral trade with another country.
Trade imbalance	A trade surplus or trade deficit.
Trade in services	The provision of a service to buyers within or from one country by a firm in or from another country. Because such transactions do not involve a physical product crossing borders, they were not regarded as "trade" and were not covered by GATT. In the mid-1980s they were recognized as a form of trade and were incorporated into the WTO's GATS.
Trade indifference curve	In a diagram measuring quantities of exports and imports, a curve representing amounts of trade among which a freely trading country is indifferent, based on its community indifference curves and its transformation curve. Due to Meade (1952).
Trade integration	The process of increasing a country's participation in world markets through trade, accomplished by trade liberalization.
Trade intensity index	For a group or bloc of countries, usually in a PTA, the ratio of the bloc's share of intra-bloc trade to the bloc's share in world trade. If greater than one, this is said to suggest that the bloc displays trade diversion. Index seems to be due to Frankel (1997).
Trade liberalization	Reduction of tariffs and removal or relaxation of NTBs.
Trade minister	The government official, at the ministerial or cabinet level, primarily responsible for issues of international trade policy; the minister of international trade. In the U.S. that is the USTR.
Trade mission	1. An office or other facility maintained in one country by the government of another to help residents of both to engage in international trade between them. 2. A group of persons from business and government of a country that travels to another country to promote its exports.
Trade negotiation	A negotiation between pairs of governments, or among groups of governments, exchanging commitments to alter their trade policies, usually involving reductions in tariffs and sometimes nontariff barriers.
Trade pattern	What goods and services a country trades, with whom, and in what direction. Explaining the trade pattern is one of the major purposes of trade theory, especially which goods a country will export and which it will import. This may be done directly, as the commodity pattern of trade, in indirectly as the factor content pattern of trade.
Trade policy	Any policy affecting international trade, including especially tariffs and nontariff barriers.
Trade Policy Review Mechanism	The periodic review of the trade policies and practices of the member countries of the WTO, conducted and published by the WTO.
Trade Promotion Authority	New (in 2000) name being used for Fast Track.
Trade regime	The rules and practices prevailing in a country's international trade relationships.
Trade-related intellectual property rights	This was the term used for bringing intellectual property protection into the Uruguay Round of trade negotiations under the pretense that only trade-related aspects of the issue would be included. In practice, that did not constrain the coverage of the resulting agreement.
Trade-related investment measure	Any policy applied to foreign direct investment that has an impact on international trade, such as an export requirement. The Uruguay Round included negotiations on TRIMs.
Trade remedy	Protection provided by any of the following: anti-dumping duties, countervailing duties, or safeguards protection.
Trade restriction	Any policy that reduces the amount of exports or imports, such as a tariff, quota, or other nontariff barrier.
Trade Restrictiveness Index	A theoretically consistent index of the restrictiveness of trade policy -- both tariffs and NTBs -- developed by Anderson and Neary (1996).
Trade round	A set of multilateral negotiations, held under the auspices of the GATT and WTO, in which countries exchange commitments to reduce tariffs and agree to extensions of the GATT rules. Most recent were the Kennedy, Tokyo, Uruguay, and Doha Rounds.
Trade sanction	Use of a trade policy as a sanction, most commonly an embargo imposed against a country for violating human rights.
Trade share	This can mean a variety of things, but most commonly it refers either to imports or exports as a percentage of GDP.
Trade surplus	Exports minus imports of goods and services, or balance of trade. See surplus.
Trade theory	The body of economic thought that seeks to explain why and how countries engage in international trade and the welfare implication of that trade, encompassing especially the Ricardian Model, the Heckscher-Ohlin Model, and the New Trade Theory.
Trade triangle	In the trade-and-transformation-curve diagram, the right triangle formed by the world price line and the production and consumption points, the sides of which represent the quantities exported and imported.
Trade war	Generally, a period in which each of two countries alternate in further restricting trade from the other. More specifically, the process of tariffs and retaliation.
Trade-weighted average tariff	The average of a country's tariffs, weighted by value of imports. This is easily calculated as the ratio of total tariff revenue to total value of imports.
Trade-weighted exchange rate	The weighted average of a country's bilateral exchange rates using bilateral trade -- exports plus imports -- as weights. Also called an effective exchange rate.
Traded good	A good that is exported or imported or -- sometimes -- a good that could be exported or imported if it weren't for those pesky tariffs.
Trademark	A symbol and/or name representing a commercial enterprise, whose right to the exclusive use of that symbol is, along with patents and copyrights, one of the fundamental intellectual property rights that are the subject of the WTO TRIPS agreement.
Trading arrangement	An agreement between two or more countries concerning the rules under which trade among them will be conducted, either in a particular industry or more broadly.
Trading bloc	A group of countries that are somehow closely associated in international trade, usually in some sort of PTA.
Transaction cost	On the foreign exchange markets, this includes broker's fees and/or the bid/ask spread.
Transaction value	The actual price of a product, paid or payable, used for customs valuation purposes.
Transfer payment	Payment made by the government or private sector of one country to another as a gift or aid, not as payment for any good or service nor as an obligation. Also called a unilateral transfer.
Transfer price	Literally this only refers to the price charged on goods and services that are traded between subsidiaries of a multinational corporation. However, the term usually connotes the setting of such prices high or low so as to minimize the total taxes paid to different governments, in response to differences in corporate tax rates.
Transfers	Transfer payments.
Transformation curve	Same as production possibility frontier. The name comes from the idea that, by devoting resources to producing one good instead of another, it is as though one good is being transformed into another.
Transition	The process of converting from a centrally planned, non-market economy to a market economy.
Translog function	The transcendental logarithmic production function, a flexible functional form due to Christensen et al. (1973). With output Y and inputs Xi, it takes the form lnY=α0+SiαilnXi+1/2SiSjβijlnXilnXj.
Transnational corporation	1. Same as multinational corporation, though for some reason this term seems to be preferred by those who don't like them. 2. A corporation whose national identity is a matter of convenience only, and that will move its headquarters readily in response to incentives.
Transparency	The clarity with which a regulation, policy, or institution can be understood and anticipated. Depends on openness, predictability, and comprehensibility. Lack of transparency can itself be a NTB
Transport cost	The cost of transporting a good, especially in international trade.
Transportation cost	See transport cost.
Treaty of Rome	The 1957 agreement among six countries of Western Europe to form the European Economic Community, which went into effect January 1, 1958.
Trend	The long-term movement of an economic variable, such as its average rate of increase or decrease over enough years to encompass several business cycles.
TRI	Trade Restrictiveness Index
Triad	1. Europe, North America, and Japan. 2. The EU, the U.S., and Japan.
Triangular arbitrage	Arbitrage among three currencies. For example (letting x/y be the currency x per unit of currency y exchange rate), if $/¥ > ($/£)(£/¥), then an arbitrager can make a profit buying £ with $; buying ¥ with those £; and then selling those ¥ for $.
Triffin's Dilemma	A flaw in the dollar-based international monetary standard created by the IMF: To provide the growing reserves that other central banks needed to sustain growing economies, the U.S. needed to run balance of payments deficits that would undermine confidence in the dollar as a reserve asset. Due to testimony before Congress by Robert Triffin in 1960.
Trigger price	See minimum price system.
TRIMs	Trade-Related Investment Measures
TRIPs	Trade-Related Intellectual Property Rights
TRIPs Agreement	The agreement negotiated in the Uruguay Round that incorporated issues of intellectual property into the WTO. It provides a set of minimum standards for intellectual property protection to which all but the poorest member countries of the WTO must conform.
Trough	The point in the business cycle when an economic contraction reaches its lowest level before turning up. Contrasts with peak.
TRQ	Tariff rate quota
TSUS	Tariff Schedule of the United States
Tuna-dolphin case	Actually a pair of cases, resulting from the U.S. ban on imports of tuna, under the Marine Mammal Protection Act, from countries that did not effectively prohibit tuna fishers from killing dolphins by catching them together with whole schools of tuna in large ("purse seine") nets. Cases filed under GATT in 1991 and 1994 led to panel decisions against the U.S.
Tunnel	See snake in the tunnel.
Twin deficits	Refers to the budget deficit and trade deficit of a country (in spite of the fact that, although they are related, they are far from being the same or necessarily equal).
2x2x2 Model	The Heckscher-Ohlin Model with 2 factors, 2 goods, and 2 countries.
Two cone equilibrium	A free-trade equilibrium in the Heckscher-Ohlin Model in which prices are such that all goods cannot be produced within a single country, and instead there are two diversification cones. This, or a multi-cone equilibrium, will arise if countries' factor endowments are sufficiently dissimilar compared to factor intensities of industries. Contrasts with one cone equilibrium.
Two gap model	A model of economic development that focuses on two constraints: the need for savings to finance investment, and the need for foreign exchange to finance imports.
Two-ness	The property of simple versions of many trade models that they have two of everything: goods, factors, and countries especially. An important issue, addressed by Jones (1977), who coined the term, and by Jones and Scheinkman (1977) is the extent to which the results of these models depend on this two-ness.

(DOU 16082007)