The International Economy Trade Restrictions and free trade

The International Economy

Trade Restrictions and free trade agreements • Tariffs-tax on imports • Quota- legal limit on amount that can be imported • Free Trade agreements • Reduce tariffs and quotas • Lower trade barriers • European Union, NAFTA

Balance of payments • Trade surplus and Trade Deficit

Developing economies and industrial Market Economies • Developing Countries • • • Lower GDP Lower literacy rate High Unemployment Underemployment Rapid population growth • Industrial Market Economies • Most western countries • Economically advanced

Foreign Trade and Migration • Import Substitution- name new products similar to imported ones • Export Promotion • International Migration • Move from poor countries to rich countries • Brain Drain

Foreign Aid • Foreign Aid- funds given by large economies to spur economic development • Bilateral Aid- one country to one country • Multilateral Aid- organizations provide aid • US Agency for International Development (USAID) • Further us interest by expanding democracy and free markets • Improve standard of living around the world

Infrastructure • Physical Infrastructure • • • transport, communication, energy Sanitation airports

Economies in Transition • Privatization • Convergence Theory- developing countries can close gap and can grow at faster rate