Economic Terms Definitions

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Comparative Advantage

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The ability of a country to produce a good at a lower opportunity cost than another country.

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Trading Blocs

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Groups of countries that have agreed to reduce or eliminate trade barriers among themselves.

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Globalization

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The process by which businesses or other organizations develop international influence or start operating on an international scale.

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Transnational Corporations

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Companies that operate in multiple countries but are managed from one (home) country.

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Newly Industrialized Country

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A country that has recently transitioned from an agrarian economy to an industrialized economy.

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Outsourcing

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The practice of obtaining goods or services from an outside supplier.

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Offshoring

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The relocation of a business process from one country to another.

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Special Economic Zones

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Areas in which the business and trade laws are different from the rest of the country.

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Economy of Scale

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The cost advantage that arises with increased output of a product.

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Just-in-Time Delivery

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An inventory strategy that aligns raw-material orders from suppliers directly with production schedules.