AK - Definitions

from
Sheets and Book
AK - MID 01
 Sheet 01

Chapter 01 - Introduction to International Economics

International Economics: A branch of economics that studies economic interactions among

different countries, including foreign trade (exports and imports), foreign exchange, balance of
payments, and balance of trade.

Comparative Advantage: The guiding principle in the study of international

economics, indicating that every country, regardless of its level of development, can find
something it can
produce more efficiently than another country.

Pure Theory of International Trade: A micro-economic theory covering various aspects,

such as the bases and causes of trade, patterns of trade, effects of trade on production and
distribution
of income, gains from trade, and impact of trade barriers.

International Monetary Theory: Deals with matters related to the balance of payments
(BOP) and the international monetary system, including causes and correction of BOP
disequilibria, exchange rate determination, and the relationship between BOP position and
other macro-
economic variables.

Global Economic Integration: The process facilitated by factors like international

trade, production sharing, international investment, economic integration, cross-border
mergers, acquisitions, and various business strategies, fostering world economic
integration and
transnationalization.
 Sheet 02

Chapter 0 5 - International Trade Theory

Trade Linkage: The economic connection between countries through importing, exporting,
and
transferring production factors.

Types of Trade Theories:

. Descriptive: Examining natural trade patterns under laissez-faire conditions.

. Prescriptive: Addressing government interference in the free movement of goods

and services.

. Mercantilism: Economic thought from 1500- 1800, emphasizing trade surpluses,

wealth determined by holding treasure (usually gold), and government interventions in
trade.

Neomercantilism: An attempt to achieve favorable trade balances for social or

political
objectives.

Absolute Advantage: Introduced by Adam Smith, where different countries produce some
goods
more efficiently, leading to increased global efficiency.

Comparative Advantage: David Ricardo's theory that countries should specialize in

products
they can produce most efficiently, even if other countries have an absolute advantage.

Production Possibility Frontier (PPF): Represents the maximum feasible combinations of

goods
that can be produced.

Heckscher-Ohlin Theory: Proposes that countries excel in producing and exporting products
that
use their abundant and cheaper production factors.

Product Life Cycle Theory of Trade (PLC): Raymond Vernon's theory suggesting that
the
production location for products changes depending on the stage in the product's life cycle.

Country-Similarity Theory: Companies tend to turn to markets perceived as most similar to

their
own after developing a new product for a local market.
Strategic Trade Policy: Governmental influence affecting acquired advantage within their
borders, targeting specific industries.

Porter Diamond: Four conditions for competitive superiority - demand conditions, factor
conditions, related and supporting industries, firm strategy, structure, and rivalry.

Companies' Role in Trade: Decisions to trade are usually made by companies, leveraging
strategic advantages such as cost reduction, risk spreading, and accessing global markets.

Extra Sheet - Ricardian Theory of Absolute Advantage

Ricardian Theory of Comparative Advantage: The classical theory of international

trade formulated by David Ricardo in his "Principles of Political Economy and Taxation
(1815)." It explains how and why countries gain by trading, emphasizing the idea of
comparative cost
advantage.

Comparative Cost Advantage: The concept that a country tends to specialize in and
export commodities in which it has a maximum comparative cost advantage or minimum
comparative
disadvantage, as per Ricardo's theory.

Absolute Cost Difference: If there is an absolute cost difference, a country will specialize
in producing a commodity with an absolute advantage, as illustrated in the model with
hypothetical
data.

Terms of Trade: The exchange ratio between two goods that determines the gains from trade
for
each country. It conditions the relative gains of two countries involved in international trade.

Gains of International Trade: The principle that each country can consume more through
trading than in isolation with the same amount of resources. The relative gains depend on the
terms of
trade, but both countries are expected to gain.
Principle of Comparative Costs: Shows that both countries can gain from trade, even if one
is more efficient than the other in all lines of production. Specialization based on comparative
cost
advantage represents a gain for trading countries.
Free Trade: Emphasized by Ricardo's theory as a prerequisite for gains and improvement of
the world's welfare. Free trade is seen as a means to increase the general mass of production
and
benefit nations universally.

Extra Sheet - David Hume

David Hume (1711-1776): Scottish philosopher known for contributions to philosophy,

history, politics, and essential contributions to economic thought. His empirical argument
against British
mercantilism influenced classical economics.

British Mercantilism: Economic belief that prosperity is achieved by limiting imports,

encouraging exports, and maximizing gold holdings in the home country. Opposed by Hume
and
classical economists.

Price-Specie-Flow Mechanism: An adjustment mechanism explained by Hume, where

an increase in gold inflow raises domestic prices, discourages exports, encourages imports, and
limits
the surplus in exports.

Monetarist Quantity Theory of Money: Hume's argument that prices change directly
with
changes in the money supply, influencing the economic dynamics related to exports and gold
flow.

"You cannot deduce ought from is": Hume's assertion that value judgments cannot be
made purely based on factual observations, distinguishing between normative (what should
be) and
positive (what is) economics.

Microeconomics: A branch of economics focusing on individual consumers and firms,

analyzing
their choices, behavior, and resource allocation at a micro-level.
 Macroeconomics: A branch of economics studying the behavior and performance of an
economy
as a whole, focusing on aggregate indicators, cycles, and growth.

Gross Domestic Product (GDP): A broad measure of a country's economic

performance,
representing the total market value of finished goods and services produced in a given year.
 Consumer Price Index (CPI): A measure of retail price changes, indicating the level of
inflation
by comparing price changes in a basket of goods and services overtime.

Economic Systems: Various historical practices to allocate resources, including

primitivism,
feudalism, capitalism, socialism, and communism.

Neoclassical Economics: A framework illustrating the virtues of capitalism, emphasizing

market
equilibrium, supply and demand forces, and optimal resource valuation.

Keynesian Economics: Economic theory developed by John Maynard Keynes during the
Great Depression, advocating for restrained markets, government intervention, and monetary
policies to
stabilize the economy.

Marxian Economics: Economic theory defined in Karl Marx's work, rejecting classical
views,
arguing against the benefits of free markets and capitalism for the majority.

Command Economy: An economy where production, investment, prices, and incomes

are
centrally determined by the government, typical in communist societies.

Behavioral Economics: A field combining psychology and economics to understand

human
behavior, judgment, and decision-making.

Economic Indicators: Key metrics like GDP, CPI, retail sales, industrial production,
and
employment data used to assess economic performance and trends.

Extra Sheet - Theory of Absolute Advantage

Absolute Advantage: The ability of a company, country, or region to produce a greater

quantity
of a product while maintaining the same production time, often resulting in the use of fewer
inputs.
Unit Cost: The cost per unit of production, crucial for analyzing operational efficiency
and
determining if a company is producing content efficiently.

Comparative Advantage: An economic theory that focuses on the opportunity cost of

production, suggesting that countries should specialize in producing goods and services for
which they have a
lower opportunity cost than other countries.
 Opportunity Cost: The potential benefit lost by choosing to produce more of one product
instead
of producing the maximum amount of both products.

Specialization: The concentration of a country, company, or individual on the production of a

limited range of goods or services to achieve higher efficiency and productivity.

Division of Labor: The allocation of specific tasks or jobs to individuals or groups,

contributing
to increased efficiency and productivity.

Trade Barriers: Obstacles, such as tariffs or quotas, that hinder or restrict international
trade
between countries.

Gains from Trade: Benefits derived from specialization and trade between countries,
allowing
them to obtain goods in which they do not have an absolute advantage.

Production Possibility Frontier (PPF): A graphical representation showing the maximum

output
combinations of two goods that a country can produce, given its level of technology and inputs.

Barter Exchange Rate: The rate at which one country's goods can be exchanged with
another
country's goods in a barter system.

Theory of Comparative Advantage: An economic theory developed by David Ricardo

that
emphasizes specialization in producing goods and services with lower opportunity costs.

Resource Allocation: The process of distributing resources, such as labor, capital, and land,
to
different tasks or sectors for optimal productivity.

Free Trade: The absence of trade barriers, allowing countries to engage in international
trade
without restrictions.

Transportation Costs: The expenses associated with moving goods from one location to
another,
which can impact trade patterns.

Real-world Examples: Instances illustrating how countries benefit from specialization based
on their absolute advantage, such as Saudi Arabia in oil production and Japan in
electronics
manufacturing.
Assumptions (of the Absolute Advantage Theory): Conditions considered in the
theory, including the existence of only two countries, homogeneous resources, and constant
opportunity
cost.

Output: The quantity of goods produced by a country or entity.

Self-Sufficiency: The scenario where countries produce goods according to their own needs
without engaging in international trade.

Theory Origin: Adam Smith's "The Wealth of Nations," where the theory of absolute
advantage
was first developed.

Limitations: Constraints and unrealistic assumptions associated with the theory, such as the
assumption of fixed factors of production and the absence of government policies.

Extra Sheet - The Heckscher-Ohlin

Heckscher-Ohlin (H-O) Model: A model of international trade that introduces a second factor
of production (capital) and explores interactions across factor markets, goods markets, and
national
markets simultaneously.

Factor Proportions Model: Another term for the Heckscher-Ohlin (H-O) Model, emphasizing
its
focus on factors of production and their proportions.

Factor Intensity: The degree to which a particular factor (capital or labor) is used in
the
production of a good.

Factor Abundance: Refers to the relative quantities of capital and labor available for use in the
production process within a country.

Capital Abundancy: When a country has a larger ratio of aggregate capital per unit of labor
compared to another country.
Labor Abundancy: When a country has a larger ratio of aggregate labor per unit of
capital
compared to another country.

Capital "Rents": Income earned by the owner of capital in the production process.

Capital-Labor Ratio: The ratio of the quantity of capital to the quantity of labor used in a
production process.

Heckscher-Ohlin Theorem: Predicts the pattern of trade between countries based on their
relative factor abundances, stating that a capital-abundant country will export the capital-
intensive good,
while a labor-abundant country will export the labor-intensive good.

Stolper-Samuelson Theorem: Describes the relationship between changes in output prices

and changes in factor prices within the Heckscher-Ohlin model, indicating that arise in the price
of a
capital-intensive good leads to an increase in capital rents and a decrease in wages.

Rybczynski Theorem: Demonstrates the relationship between changes in national

factor
endowments and changes in the outputs of final goods within the Heckscher-Ohlin model.

Factor-Price Equalization Theorem: States that when output goods' prices are
equalized
between countries through trade, the prices of factors (capital and labor) will also be equalized.

Aggregate Economic Efficiency: The improvement in productive and consumption efficiency

in
both countries when they move to free trade, as demonstrated by the Heckscher-Ohlin model.

Compensation Principle: The principle stating that as long as total benefits exceed total losses
in the movement to free trade, income can be redistributed from winners to losers to ensure
everyone
has at least as much as before trade liberalization.

Perfect Competition: Assumes many firms, profit maximization, homogeneous output, free
entry
and exit, and perfect information in all markets.
Barter Economy: An economy without money where goods are exchanged for other
goods
directly.

Factors of Production: Labor and capital are the two factors of production used to produce

goods.

Homogeneous: Both labor and capital are assumed to be homogeneous in this model.
Factor Constraints: Limitations on the total amount of labor and capital used in production,
constrained by the country's endowment.

Endowments: Differences in the quantities of capital and labor between countries.

Capital Abundant: A country is capital abundant relative to another if it has more capital
endowment per labor endowment.

Labor Abundant: If a country is capital abundant, the other country is considered labor
abundant.

General Equilibrium: The H-O model is a general equilibrium model where factor income
is
used to purchase goods.

Fixed Factor Proportions: Assumes a fixed capital-labor ratio in each production process.

Variable Factor Proportions: Assumes the capital-labor ratio can adjust to changes in factor
prices.

Production Possibility Frontier (PPF): Represents the maximum feasible combinations of

goods
that can be produced.

Stolper-Samuelson Theorem: Demonstrates how changes in output prices affect the prices of
factors, assuming positive production and zero economic profit in each industry.
 BOOK
Chapter 01

Gains from trade - The idea that countries benefit from trading with each other, even when
one
country is more efficient or has lower wages. A key insight in international economics.

Pattern of trade - Trying to explain who trades what with whom, based on differences in
factors like resources, productivity, wages, etc. Theories by Ricardo, Heckscher-Ohlin and
more recent
random/scale models try to explain observed trade patterns.

Protectionism - Government policies like import quotas and export subsidies that shield
domestic industries from foreign competition or help them compete globally. A major
policy issue in
international trade.

Balance of payments - The record of a country's monetary transactions with the rest of the
world.
Surpluses or deficits can have different implications depending on the context.

Exchange rates - The relative price between two countries' currencies, like dollars per
euro.
Modern theories try to explain how floating exchange rates are determined.

Policy coordination - Countries setting their trade, macroeconomic or other policies in

harmony
to avoid negative spillovers on other countries. Attempts are increasing but remain controversial.

International capital markets - Markets that allow exchange of financial assets across
borders.
Involve risks like currency fluctuations and national default. Growing in importance recently.

International trade - Analysis of the real economy transactions between countries involving
trade
in goods, services, labor etc.

International money - Analysis of cross-border monetary and financial transactions, like

 currency
values and asset trading.
 Chapter 02

Gravity model - An equation relating the trade between two countries to the sizes of
their
economies and the distance between them. Helps explain and predict trade patterns.

Gross domestic product (GDP) - The total value of all goods and services produced within
a
country. A measure of the size of an economy.

Anomaly - When trade between two countries is much more or less than predicted by the
gravity
model. Indicates other factors are at play.

Distance - Has a strong negative effect on trade volumes. Represents transport costs but
also
cultural affinity.

Borders - National borders reduce trade significantly even between friendly neighbors,
equivalent
to 1,500+ miles of distance.

Globalization - High degree of economic integration between countries through trade,

investment,
etc. Two major waves of globalization with a long interruption.

Manufactured goods - Currently the largest category of internationally traded products by

value,
but less so in the past.

Developing countries - Poorer nations, many former European colonies. Shifted their
exports
from primary to manufactured goods.

Service offshoring - Internationally trading services that can be delivered electronically

overlong
distances. Expected to grow.

Tradability - Whether a service can be provided remotely. About 40% of U.S.jobs are
estimated
to be tradable.
 Chapter 03

Absolute advantage: When a country can produce a good using fewer resources than another
country.

Comparative advantage: When a country has a lower opportunity cost of producing a good
compared to another country.

Opportunity cost: The value of the next best alternative when a choice needs to be made
between
several options.

Production possibility frontier: A graph showing the maximum possible output combinations of
two goods that can be produced given limited resources.

Unit labor requirement : The number of hours of labor required to produce one unit of output.

Gains from trade: The net economic benefits countries receive from specializing based on
comparative advantage and trading with each other.

Derived demand: Demand for a factor of production that is derived from the demand for the
goods
that the factor is used to produce.

Nontraded goods: Goods and services that are not traded internationally due to high
transportation
costs or barriers.

Pauper labor argument : The argument that international competition based on low wages in
poor
countries is somehow unfair.

Ricardian model: A model showing how countries can benefit from specialization and trade
based
solely on labor productivity differences across countries.

General equilibrium analysis : Economic analysis that takes into account linkages
between
different markets.

Partial equilibrium analysis: Economic analysis that focuses on and isolates a single market.
Relative demand curve: A demand curve that shows the ratio of demand for one good to
another.

Relative supply curve: A supply curve that shows the ratio of supply of one good to another.
Relative wage: The wage rate in one country compared to the wage rate in another country.

Labor theory of value: Theory that the relative prices of goods are equal to their relative
unit
labor requirements.

Transport costs: Costs associated with shipping goods between countries.

AK - MID 02
 Sheet 02

Chapter 15 - Balance of Payments

(By Hridita Tasnia)

 Sheet 02

Chapter 7 — Gains from trade & terms of

trade
(By Kh Ariba Anjum Nikita)
 Sheet 03
Chapter 1 — The basic geometry of
comparative
advantage and the gains from trade
(By Kh Ariba Anjum Nikita)
 Sheet 04

Chapter 10 - Trade Barriers

(By Sanjida Binte Earshad)
Rest from the Sheets and Book
 BOOK
Chapter 04

1. Specific factors model: An economic model developed by Paul Samuelson and

Ronald Jones that allows for factors of production besides labor that are specific to
particular sectors and cannot move between sectors. The model shows how trade
affects income distribution.

2. Mobile factor: A factor of production like labor that can move freely between
different sectors of the economy.

3. Specific factor: A factor of production like capital or land that can only be employed in
a particular sector and cannot easily move between sectors.

4. Production function: An equation representing the relationship between factor inputs

like labor and capital and the output of a sector.

5. Marginal product: The extra output generated by adding one more unit of a factor
input like labor, holding other inputs fixed.

6. Diminishing returns: The tendency for the marginal product of a factor input to
decline as more of that input is employed holding other inputs fixed.

7. Relative supply: The supply of one good relative to another, captured by the ratio of
their quantities supplied at a given relative price.

8. Budget constraint: An equation representing the constraint that the value of a

country's consumption cannot exceed the value of its production. Determines how much
a country can afford to import based on how much it exports.

9. Political economy of trade: The analysis of who wins and loses from trade and how
that affects trade policy decisions. Losers often lobby effectively for protectionist
policies.

10. Specific factors model: A model that allows for a distinction between general-
purpose factors that can move between sectors and factors specific to particular uses.
Used to analyze the income distribution effects of international trade.

11. Mobile factor: A factor of production like labor or capital that can move freely
between different sectors of the economy.
12. Immobile (specific) factor: A factor of production like land or other natural resources
that is specific to a particular sector and cannot move freely between sectors.

13. Marginal product of labor: The extra output produced by employing one additional
unit of labor, holding other factors fixed. Diminishes as more labor is employed
due to diminishing returns.

14. Production function: The technological relationship between inputs (factors of

production) and output of a good. Determines the marginal product.

15. Budget constraint: The limit on consumption bundles available to an individual based
on the prices of goods and the individual's income. Determines how changes in
income distribution affect welfare.

Chapter 05

1. Specific factors model - An economic model developed by Paul Samuelson and

Ronald Jones that analyzes trade between countries. It assumes some factors of
production like labor can move between industries, while others like land or capital are
specific to certain industries.

2. Mobile factor - A factor of production like labor that can move freely between
different industries or sectors of the economy.

3. Specific factor - A factor of production like land or capital that can only be employed
in one particular sector and cannot easily move.

4. Marginal product of labor - The additional output that can be produced by adding
one more unit of labor, holding other inputs fixed. Diminishing returns implies the
marginal product declines as more units of an input are added.

5. Production possibility frontier - Graphically represents the different combinations

of goods an economy can produce given its resources, technology, etc. The shape
reflects diminishing returns.

6. Budget constraint - An equation representing that the value of a country's

consumption of goods must equal the value of its production. Constrains the set of
consumption choices it can afford.
7. Heckscher-Ohlin model - An economic model that explains patterns of
international trade in terms of differences in factor endowments (capital, labor, land,
etc.) between countries.

8. Factor intensity - The ratio of capital to labor used in the production of a good.
Goods differ in terms of how much capital versus laboris required to produce them.

9. Factor prices - The returns or costs associated with factors of production, mainly
labor and capital. Key factor prices are wages and rental rates.

10. Factor abundance - When a country has a lot of a particular factor, such as labor
or capital, relative to other countries.

11. Heckscher-Ohlin theory - The theory that a country will export goods that utilize
its abundant factors intensively in production. For example, capital-abundant countries
will export capital-intensive goods.

12. Biased expansion of production possibilities - When an increase in one factor (labor
or capital) leads to increased output mainly in the sector that uses that factor
intensively, rather than an equal expansion in all sectors.

13. Factor content of trade - The amount of labor, capital, etc. that is effectively
embodied in a country's trade flows, measured by the factor inputs required to produce
the goods exported and imported.

14. Factor price equalization - The theoretical end result of free trade where factor
prices (wages, rents) converge across trading countries as goods prices converge.
Complete equalization is not observed in the real world.

15. Leontief paradox - The empirical finding by Wassily Leontief that U.S. exports were
less capital-intensive than imports, contrary to what factor proportions theory would
predict.
 Chapter 06

1. Standard trade model: A model that derives world relative supply and demand
curves to determine the price of exports relative to imports (terms of trade).

2. Terms of trade: The price of a country's exports divided by the price of its
imports. An increase generally raises a country's welfare.

3. Indifference curves: Graphical representation of a consumer's preferences

over consumption bundles. They indicate different combinations of goods that
provide the same level of utility.

4. Isovalue lines: Lines representing different combinations of production that have

the same total market value. Producers maximize profits by producing where the
highest isovalue line is tangent to the production possibility frontier.

5. Real interest rate: The intertemporal price that determines how much
future consumption can be exchanged for current consumption. It depends
on the opportunities for productive investment to enhance future consumption.

6. Intertemporal production possibility frontier: Illustrates the tradeoff

between producing consumption goods for current versus future periods. Its shape
differs across countries.

7. Intertemporal trade: Exchange of goods over time, such as through

international borrowing and lending.

8. Export-biased growth: Economic growth that disproportionately expands a

country's ability to produce goods it exports rather than import-competing goods.
Tends to worsen the country's terms of trade.

9. Import-biased growth: Economic growth that disproportionately increases a

country's ability to produce import-competing goods. Tends to improve the
country's terms of trade.
 Chapter 14
1. Exchange rate: The price of one currency in terms of another. For example, at 4
pm London time on June 3, 2020, the exchange rate was $1.1219 per euro.

2. Depreciation: A fall in the price of a country's currency in terms of another

currency. For example, a change in the dollar/pound exchange rate from $1.50 per
pound to $1.25 per pound is a depreciation of the pound against the dollar.

3. Appreciation: A rise in the price of a country's currency in terms of another

currency. For example, a change in the dollar/pound exchange rate from $1.50 per
pound to $1.75 per pound is an appreciation of the pound against the dollar.

4. Spot exchange rate: The exchange rate governing "on-the-spot" trading of

currencies. For example, two parties agree to exchange bank deposits denominated
in different currencies immediately.

5. Forward exchange rate: The exchange rate quoted for exchanging currency at
some future date. For example, a one-month forward dollar/euro rate of $1.15 per
euro.

6. Interest rate: The amount of a currency that an individual can earn by lending a
unit of that currency for a year. For example, a 10%-dollar interest rate means
lending $1 yields $1.10 after a year.

7. Interest parity: The requirement that expected returns on deposits denominated

in different currencies are equal when measured in the same currency. Interest
parity is satisfied when the foreign exchange market is in equilibrium.

8. Exchange rate: The price of one country's currency in terms of another

country's currency.

9. Foreign exchange market: The market where participants trade currencies.

Major participants include commercial banks, international corporations, nonbank
financial institutions, and central banks.

10. Spot exchange rates: Exchange rates for trades that settle immediately.
11. Forward exchange rates: Exchange rates agreed upon now for exchanging
currencies at some future date.

12. Appreciation: A fall in the home currency price of foreign currencies. Makes
exports more expensive and imports cheaper.
13. Depreciation: A rise in the home currency price of foreign currencies. Makes
exports cheaper and imports more expensive.
14. Interest rate: The payment made per unit time on an amount of money borrowed.
15. Rate of return: The rate at which the value of an asset is expected to rise over
time. Can be measured in different ways.

16. Real rate of return: The rate at which an asset's value rises over time measured
in terms of a representative basket of goods.

17. Interest parity condition: The equilibrium condition requiring that deposits of
all currencies offer the same expected return when measured in comparable terms.

18. Covered interest parity: A no-arbitrage condition linking interest rates

across currencies to spot and forward exchange rates.

Extra Sheet - Trade Policy Within Bangladesh

1. Trade Policy: A government policy that affects the number of goods and services
a country exports and imports.
2. Free Trade: When there are no government restrictions on trade.
3. Protectionism: When governments set trade restrictions to help domestic industries.
4. Foreign Trade Policy: A policy document based on continuity and responsiveness
to trade requirements. It emphasizes principles of 'trust' and 'partnership' with
exporters.

5. Instruments of Trade Policy: Various tools that governments use to implement

trade policies, including tariffs, import quotas, voluntary export restraints, local
content requirements, export subsidies, and administrative policies.

6. Tariff: A tax on an imported good or service.

7. Import Quota: A restriction on the amount of a good or service that can be
imported in a set time frame.
8. Export Subsidy: Money paid by the government to exporters of a good.
9. Voluntary Export Restraints (VER): An export quota that restricts the quantity of
a good that can be exported to another country.
10. Local Content Requirements (LCR): A trade policy that mandates a portion of
the goods be produced domestically.

11. Import: A good or service manufactured or provided in another country and

sold domestically.

12. Export: A good or service manufactured or provided domestically but sold in

another country.

13. Trade Barriers: Factors, such as tariffs and regulatory requirements, that
impede market access in international trade.

14. Foreign Trade Policies: Meant to reduce barriers between trading nations,
produce non-discriminatory trading practices, and make the trading process more
transparent through international organizations like the WTO.

15. Importance of Trade Policy: Trade policies are crucial for the economic well-
being of a nation, supporting domestic markets, influencing prices, and ensuring
efficient international trade.

Extra Sheet - Major Exports of Bangladesh

(Not so Important)

1. Readymade Garments (RMG): Clothing items that are ready for sale, including
a wide range of knitwear and woven garments like shirts, pants, T-shirts, jeans,
jackets, and sweaters.

2. Jute and Jute Products: Goods made from the fibers of the jute plant, a major
export item in Bangladesh. This includes items like bags, textiles, and other
products made from jute.

3. Aquaculture: The farming of aquatic organisms such as fish, shrimp, and prawns
for food and trade.

4. Home Textile: Textile products used in homes, including bed linen, bed
sheets, bedroom textiles, bath linen, carpets, rugs, blankets, kitchen linen, curtains,
cushions, and cushion covers.
5. Agricultural Products (Agro Products): Products derived from agriculture,
including vegetables, fruits, and spices, which are exported for revenue.

6. Pharmaceutical Products: Medicines and drugs manufactured and exported by

the pharmaceutical sector of Bangladesh.

7. Plastic and Plastic Products: Products made from plastic, including toys,
decorative pieces, car parts, medical equipment, and other plastic items.

8. Bicycle: Two-wheeled human-powered vehicles that are manufactured and

exported from Bangladesh.

9. Terry Towel: Towels made of terry cloth, a fabric with loops that can absorb
large amounts of water. This is a significant export item in home textiles.

10. Electronics Industry: The sector involving the manufacturing and export of
electronic products such as mobile phones and computer components.
11. Ceramic Products: Items made from ceramic, including tiles and sanitary ware.
12. Chemical Products: Substances used in various industries, including chemicals
used in the textile industry.

13. Wooden and Bamboo Furniture: Furniture items made from wood and bamboo.
14. Handmade Crafts and Traditional Items: Artisanal products and items
reflecting traditional craftsmanship.
15. Major Import Products of Bangladesh:

. Petroleum and Petroleum Products: Crude oil and refined petroleum

products.
. Machinery and Equipment: Various industrial machinery and equipment.
. Electrical and Electronics: Imported electrical and electronic products.

. Chemicals: Including fertilizers, industrial chemicals, and

pharmaceutical raw materials.
. Iron and Steel: Raw materials for construction and manufacturing.
. Food Products: Imported food items like edible oils, wheat, rice, and pulses.
. Plastics and Plastic Products: Raw materials and finished plastic products.
. Vehicles: Motor vehicles for transportation needs.
. Mineral Fuels and Oils: Natural gas and other mineral fuels.
 . Textile Raw Materials: Materials like cotton and yarn for the
textile industry.
. Metals and Metal Products: Various metal products for industrial use.

. Wood and Wood Products: Timber and wood products for construction
and furniture.

. Medicines and Pharmaceuticals: Certain pharmaceutical raw materials

and finished medicines.

. Luxury Goods: High-end luxury items such as designer clothing,

jewelry, and electronics.

Extra Sheet: Trade liberalization and poverty in Bangladesh

1. Trade Liberalization: Trade liberalization refers to the process of reducing or

eliminating restrictions on international trade, such as tariffs and non-tariff barriers,
with the aim of promoting free trade and economic openness.

2. Structural Adjustment Programme (SAP): A structural adjustment programme is

an economic policy package often recommended by international financial institutions
like the International Monetary Fund (IMF) and the World Bank. It typically includes
measures like trade liberalization, fiscal austerity, and privatization to address economic
imbalances and promote growth.

3. Import-Substitution Industrialization: Import-substitution industrialization is

an economic policy that emphasizes developing a country's domestic industries by
reducing reliance on imported goods and promoting local production.

4. Stolper-Samuelson Theorem: The Stolper-Samuelson theorem predicts that an

increase in the relative price of a good that uses a country's abundant factor of production
intensively will increase the real income for that factor and reduce the real returns to the
scarce factor.
5. Para-tariffs: Para-tariffs are additional import taxes imposed for purposes other
than revenue generation, such as protecting domestic industries. They include
charges like infrastructure development surcharge, supplementary duties, and regulatory
duties.

6. Panel Regression Analysis: Panel regression analysis involves using panel data (data
on multiple entities observed over multiple time periods) to estimate relationships
between variables. It allows for controlling both cross-sectional and time-series
variations in the data.

7. General Equilibrium Models (CGE): General Equilibrium Models,

particularly Computable General Equilibrium (CGE) models, are economic models that
analyze the interactions of multiple economic agents and sectors in an economy. They
are used to assess the overall impact of policy changes.

8. Export Orientation Ratio: The export orientation ratio is a measure that indicates
the degree to which a sector or industry relies on exports. It is often used to assess the
openness of an economy to international markets.