North American Economic Integration
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North American Economic Integration Theory and Practice

Theory and Practice

Norris C. Clement, Gustavo del Castillo Vera, James Gerber, William A. Kerr, Alan J. MacFayden, Stanford Shedd, Eduardo Zepeda and Diana Alarcón

This highly accessible book explains the theoretical, historical and political background of the North American Free Trade Agreement (NAFTA), its impact and the debates surrounding its existence. In addition the authors provide a brief introduction to the theory of economic integration as well as a succinct overview of the evolution of the global economy, and the institutions that manage it, in the post World War II period.
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Glossary

Norris C. Clement, Gustavo del Castillo Vera, James Gerber, William A. Kerr, Alan J. MacFayden, Stanford Shedd, Eduardo Zepeda and Diana Alarcón

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Page 327  Glossary  Absolute advantage: the production situation where one country is more resource efficient in the production of a good than another country. It underlies a theory for  why countries will engage in international trade. Trade based on absolute advantage is a situation where one country has an absolute advantage in production of one  good and the other country has an absolute advantage in the production of another good. Each country specializes in the production of the good it is more efficient at  producing and exports that good, while at the same time importing its requirements of the good it would produce inefficiently.  Accepted retaliation: a GATT principle whereby a country accepts that if it violates its GATT commitments in a way that injures trading partners, those partners have  the right to impose trade penalties on the offending country up to the value of the damage suffered without the fear of retaliation from the original offending country. In  short, if injured by a GATT violation, a country can impose trade sanctions without fear of re­retaliation, thus preventing trade wars.  Ad valorem: a term usually applied to taxes (particularly tariffs) which are calculated as a percentage of the value of a good.  Aggregate demand: the sum of the demands of all individuals participating in a market.  Anti­dumping duties: tariffs imposed on the goods of a foreign firm deemed to be trading unfairly by selling below the full cost of production — it is dumping.  Autarky: the situation where a...

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