| absolute advantage | Theory that a nation has absolute advantage when it can produce a larger amount of a good or service for the same amount of inputs as can another country or when it can produce the same amount of a good or service using fewer inputs than could another country
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| ad valorem duty | An import duty levied as a percentage of the invoice value of imported goods
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| comparative advantage | Theory that a nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative or relative advantage in the production of the good in which its absolute disadvantage is less
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| compound duty | A combination of specific and ad valorem duties
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| countervailing duties | Additional import taxes levied on imports that have benefited from export subsidies
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| cross investment | Foreign direct investment by oligopolistic firms in each other's home countries as a defense measure
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| currency devaluation | The lowering of a currency's price in terms of other currencies
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| dumping | Selling a product abroad for less than the cost of production, the price in the home market, or the price to third countries
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| dynamic capability | Theory that for a firm to successfully invest overseas, it must have not only ownership of unique knowledge or resources but the ability to dynamically create and exploit these capabilities over time
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| eclectic theory of international production | Theory that for a firm to invest overseas, it must have three kinds of advantages: ownership-specific, internalization, and location-specific
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| exchange rate | The price of one currency stated in terms of another currency
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| factor endowment | Heckscher-Ohlin theory that countries export products requiring large amounts of their abundant production factors and import products requiring large amounts of their scarce production factors
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| internalization theory | An extension of the market imperfection theory: the concept that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary rather than sell it in the open market
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| international product life cycle (IPLC) | A theory explaining why a product that begins as a nation's export eventually becomes its import
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| mercantilism | An economic philosophy based on the belief that (1) a nation's wealth depends on accumulated treasure, usually gold, and (2) to increase wealth, government policies should promote exports and discourage imports
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| monopolistic advantage theory | Theory that foreign direct investment is made by firms in oligopolistic industries possessing technical and other advantages over indigenous firms
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| national competitiveness | A nation's relative ability to design, produce, distribute, or service products within an international trading context while earning increasing returns on its resources
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| nontariff barriers (NTBs) | All forms of discrimination against imports other than import duties
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| orderly marketing arrangements | Formal agreements between exporting and importing countries that stipulate the import or export quotas each nation will have for a good
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| quotas | Numerical limits placed on specific classes of imports
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| specific duty | A fixed sum levied on a physical unit of an imported good
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| subsidies | Financial contributions, provided directly or indirectly by a government, which confer a benefit; include grants, preferential tax treatment, and government assumption of normal business expenses
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| tariffs | Taxes on imported goods for the purpose of raising their price to reduce competition for local producers or stimulate local production
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| variable levy | An import duty set at the difference between world market prices and local government-supported prices
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| voluntary export restraints (VERs) | Export quotas imposed by the exporting nation
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