Lesson 1 Economic Regulation PDF

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VOCABULARY - ECO.MUNDIAL

AUTARCHY: Economic system in which a state supplies itself with its own resources, avoiding imports as much as possible. ALGORITHMS: They are robots or machines that carry out capital movements. TOXIC ASSETS:An expression that has become popular in the financial markets as a result of the so-called subprime crisis, and that identifies precisely that type of poor quality assets, that is, with a lot of risk in terms of the probability of recovering their value. The problem for financial institutions is having a very high percentage of this type of damaged assets on their balance sheets, which can generate large losses and place them in financial situations that are very difficult to resolve, which has caused the governments of practically all countries to countries seek different measures to favor the liquidity of financial institutions that are in this situation. EUROPEAN FREE TRADE ASSOCIATION (EFTA):It was formed in 1960 with the objective of developing economic relations between its members and free trade with other countries. Currently, it is made up of Norway, Liechtenstein, Switzerland and Iceland. SOCIALIST / CAPITALIST BLOCK: We call the socialist bloc the set of socialist countries led by the Soviet Union and confronted by the capitalist bloc led by the United States between the end of World War II (1945) and the fall of the Berlin Wall (1989), after which it was dissolved. the bloc and the Soviet Union itself (1991). WORLD BANK:It is a source of financial and technical assistance for developing countries mainly and its objective is to reduce poverty through low-interest loans, interest-free loans at the bank level and economic support. Born in Bretton Woods.

EUROPEAN CENTRAL BANK (ECB): It is the central bank of the 19 EU countries that have adopted the euro. The ECB was established by the Treaty of Amsterdam in the year 1998, is based in Frankfurt am Main (Germany) and is chaired by Mario draghi. Its main function is to maintain price stability in the euro area to preserve the purchasing power of the single currency. It focuses on defining and executing the monetary policy of the euro area; carry out foreign exchange operations; owning and managing the official foreign exchange reserves of the euro area member countries (portfolio management); promote the proper functioning of payment systems; and contribute to the proper functioning of the policies adopted by the competent authorities, as regards the prudential supervision of credit institutions and the stability of the financial system. HOUSING BUBBLE: excessive and unjustified increase in real estate or real estate, generally caused by speculation, due to the desire of people to acquire goods and then sell at a better price, taking advantage of precisely this increase in prices. Then, to 1

satisfy the requests of investors, real estate and construction companies are dedicated to building more and more assets to serve the market demanded by them, forming a speculative spiral that will grow and grow. In a bubble, the supply of goods does not increase in function of the real needs of society but in function of satisfying the investor. Thus, for example, more goods are built than society can consume, and when that happens is when the entire speculative structure collapses. FINANCIAL BUBBLE:Phenomenon that occurs in the markets, due to speculation. It is characterized by an abnormal and prolonged rise in the price of a product in a way that moves further and further from reality GLOBAL VALUE CHAINS:These are international production systems organized to optimize production, marketing and innovation, by locating products, processes and functions in different countries, seeking benefits due to differences in cost, technology, marketing and logistics, among other variables. GVCs play an important role in the international division of labor and have an impact on the economic development of countries.

CAPITALISM: Socio-economic system carried out by private property and whose main objective is to obtain maximum profit. FINANCIAL CAPITALISM: it corresponds to a type of capitalist economy in which large retailers and large industry are controlled by the economic power of commercial banks and other financial institutions.

COMMERCE:Socio-economic activity that consists of the transaction of goods and services in exchange for a good of equal value. We can also say that commerce is the establishment where this activity is carried out. VICIOUS CIRCLE OF POVERTY:The doctrine of the vicious circle constitutes one of the great poles of modernization theory. A vicious circle is understood as "a situation in which various factors are so interconnected that together they tend to produce a state of stagnation from which it is very difficult to get out." SOUTH COMMISSION: The Commission of the South, an independent international body, was established to examine the socio-economic problems of the South and is the result of deep reflections and conversations between intellectuals and statesmen from underdeveloped nations. COMMODITIES:Raw material that is present in nature or that is created by the human factor. It must have value and utility to be called this way. COMPETITIVENESS: Capacity of any public or private organization to obtain profitability over your competitors. For example, we speak of a competitive company when it is 2

generates products of equal or higher quality at lower costs than the competition. ECONOMIC CRISIS:Decline of the economic process produced by a continuing loss in economic activity. It can be due to overproduction, a large decrease in profit and investments, etc ... DOMESTIC TRADE:It is configured by the set of exchanges that take place within the borders of a country. There are two main types of domestic trade: Wholesale or wholesale trade. It is the first phase of commercial activity. FOREIGN TRADE: Foreign trade is the exchange of goods or services between two or more nations with the purpose that each one can satisfy their internal and external market needs. ASYMMETRIC TRADE:It refers to the irregularities that exist in world trade due to the fact that the countries that act in it are very unequal from each other. Example: what you can contribute to the US or China market is much more than what any of the third world countries can contribute, such as Uganda, Iraq ... TRADE IN SERVICES: refers to the supply of a service through 4 modes, practically all the services object of international commercial transactions being included. INTRA-INDUSTRY TRADE: It is an international trade in which products of the same industry are exchanged, that is, that trade that is developed through the exchange of products of industries of the same nature.

CRACK 1929: It was the most devastating stock market crash in the history of the US Stock Market, taking into consideration the global reach and long duration of its aftermath, and it led to the 1929 Crisis also known as The Great Depression. DEBT CRISIS: The sovereign debt or public debt of a country is the set of debts that a state maintains against its creditors. These creditors can be individuals (companies, banks, individuals), countries or other organizations (central bank, federal reserve, etc.) Sovereign debt is a way for governments to finance investments in their countries. The problems can be manifested in the impossibility of paying the commitments assumed by the State, the difficulty in finding investors willing to make new loans or in the increase in the interest rate that the States have to pay for the issuance of new debt. STOCK MARKET CRISIS: Also called a "stock market crash", it can be defined as a sudden and precipitous fall in the prices of most of the securities traded on one or more Stock Exchanges. They are generally triggered by the financial panic that arises after the bursting of a speculative bubble and are usually the prelude to an economic recession, although in certain situations, the fears that trigger the crash disappear little by little and normality is restored without having experienced serious consequences. negative. 3

ECONOMIC DEVELOPMENT: Capacity or condition of improvement that countries have in generating wealth with the intention of maintaining or improving the well-being of their citizens. EXTERNAL DEBT: External debt is the sum of the debts that a country has with entities foreign. It is made up of public debt (that contracted by the State) and private debt (that contracted by individuals). HUMAN DEVELOPMENT: Prosperous process of the capacities and living conditions of the people. We can highlight health, education, etc ... Human Development is a development paradigm that goes far beyond increasing or decreasing the income of a country. It includes the creation of an environment in which people can develop their full potential and lead a productive and creative life in accordance with their needs and interests. SUSTAINABLE DEVELOPMENT: Development that promotes the satisfaction of the demands of the current population without harming the future. DOLLARIZATION: Process that consists of abandoning the national currency to later use the US currency as the only one in force. Hence its term. DEVALUATION AND REVALUATION: terms used for changes in exchange rates when there is a non-gradual intervention of the monetary authority. DEPRECIATION AND APPRECIATION: when the change in the interest rate is a consequence of the market trend.

INTERNATIONAL POLITICAL ECONOMY: Political-economic branch dedicated to the study of relationship between countries. WORK EXPLOITATION: Abuses both in wages and in working conditions by employers or employers on their employees. ECONOMY: Science that studies resources, the creation of wealth and the production, distribution and consumption of goods and services, to satisfy human needs. System of production, distribution, trade and consumption of goods and services of a society or a country.

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SPECULATION: set of commercial or financial operations aimed at obtaining an economic benefit, based exclusively on price variations over time. Any investment is included, whether made in tangible, intangible or financial assets, but it is agreed to define as speculation the investments that are made without having any type of control over the management of the assets in which the investment is made.

APPLIED ECONOMY:(or Economic Policy) is defined as the set of strategies and actions carried out by governments to influence and lead the economy of their respective countries. These economic strategies are made up of the set of tax benefits, laws, plans, public investment, regulations, taxes, subsidies, etc. used to obtain specific ends (either for the short or long term) by modifying the behavior of the different economic subjects. ECONOMIC STRUCTURE: includes the relationship between the various sectors of the economy, especially between the three main sectors, known as primary, secondary, tertiary. EUROPEAN ECONOMIC AREA: countries that are European that do not want to belong to the EU. SPECIALIZATION: Concentration of production in those lines or products in which the individual or the firm has some advantages, whether they are natural or acquired. WELFARE STATE: Set of actions and activities developed by Governments in search of greater attention to the redistribution and social welfare of the population through State budgets: cash transfers, health care, education services and provision of housing, food and others care services. TRANSNATIONAL COMPANY: A transnational company is called a large company, dedicated to the production of goods or services, which has subsidiaries in countries other than the original one (parent company) and with this they manage to expand their influence and economic gravitation worldwide, controlling not only a good part of the economy and the International Trade, but also the technology and the growth, charging huge importancein the globalized and capitalist world. With 10% of the capital of the parent entity being placed in a foreign subsidiary, the company is considered multinational or transnational.

SUBSIDIARIES:are those entities that are controlled directly or indirectly by a parent company. Control is usually carried out through a significant shareholding package, which usually involves exceeding 50% of the voting rights. Ultimately, the subsidiaries are under the direct dependence of the parent company.

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PARENT COMPANIES:(also called business epicenter) is a company that has one or more dependent companies or subsidiaries, that is, it owns at least 50% of the capital of other companies. All these companies is what is known as a group of companies. The parent company usually provides management, administration and control through one or more persons, directors or managers, who have been appointed by the board of the parent company IMF (INTERNATIONAL MONETARY FUND):international institution, which wants to promote international monetary cooperation, facilitate the expansion and balanced growth of international trade, promote exchange rate stability and help establish a multilateral system of payments. Born in Bretton Woods.

FORDISM: Successful production system based on serial or chain manufacturing causing an increase in production, wages, etc ... GLOBALIZATION: A process that brings together all areas of the different countries, thereby ensuring that the existing barriers to their economic, social and cultural relations are minimal. GLOBAL GOVERNANCE: Grouping of rules which are used for the regulation of human relations worldwide. GROUP OF SEVEN:(1975) instrument of control and coordination that brought together most of the richest countries and most of the economic power. It begins to become a world government. G7 / G8 / G20:The G7 is the forum where the prime ministers of the seven most industrialized countries meet: the US, Canada, Japan, Germany, France, Italy and the United Kingdom. The G8 is the G7 plus Russia. The G20 is joined by the G8 by emerging countries: Argentina, China, India, Brazil, South Africa, Mexico and Saudi Arabia. COLD WAR:historical period of political, economic, technological, ideological, social confrontation between the United States and the Soviet Union. It began at the end of the Second World War, in 1945 and ended with the extinction of the USSR in 1989. HEDGE FUNDS: (hedge fund in Spanish) is a type of investment fund that is characterized by having a high degree of freedom in managing its assets. This freedom can also be used to carry out risk hedging strategies or to the contrary, increasing risk exposure in order to maximize expected profitability. They can invest in a wide variety of markets and products with different levels of leverage. It is therefore a vehicle to invest, a collective investment institution, although it can take different legal forms (society, investment fund or others).

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SUBPRIME MORTGAGES: (popularly called `` Basura Mortgages '') are mortgage loans that American banks granted to borrowers with very low solvency and high risk, since they lacked income and properties with which to support their repayment. It is a speculative behavior in which home buyers took as their only reference the expectation of selling ac / pa at a price higher than what they had bought.

REGIONAL INTEGRATION: Union of several countries to achieve common purposes after the unification of its different areas (political-economic and socio-cultural). BRANDT REPORT:it constitutes a testimony par excellence of Kantian or Enlightenment liberalism. Touch all points of interest. It speaks of moral imperatives, of the moral values of the whole world and of a global civilization. FOREIGN DIRECT INVESTMENT:It is about the placement of capital in a foreign country, it refers to the bets made by those companies that wish to internationalize, that is, to expand the market for their products or services outside their national territory. To do this, one of the logical steps is to settle in other countries, although they usually start by carrying out foreign market campaigns to capture the attention of consumers.

R&D (Research and Development): Applies to public or private research departments aimed at developing new products or improving existing ones through scientific research. HDI: (The Human Development Index)It is an indicator of human development by country prepared by the United Nations Development Program (UNDP). It is a synthetic indicator of the average achievements obtained in the fundamental dimensions of human development, namely, having a long and healthy life, acquiring knowledge and enjoying a decent standard of living. LIBERALIZATION: is an economic model based on the free market that consists of: -

Reduce or eliminate state regulations in the business sphere (free enterprise). Privatize public companies. Reduce or eliminate state economic aid to citizens and companies (benefits, subsidies, etc.). Reduce public spending and taxes on citizens and companies.

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LETTERS OF EXCHANGE: It is a credit security of formal and complete value that contains an unconditional and abstract order to make the borrower or to his order pay a sum of money at a specific place at maturity, jointly binding all those involved in it. LAISSEZ FAIRE, LAISSEZ PASSEZ: French expression which refers to complete freedom in the economy: free market, low taxes, minimal government intervention ... used for the first time by Gournay against government interventionism in the economy. MAQUILA: Part of the production obtained that corresponds to the person who has carried out the work as a payment method. ENVIRONMENT: Grouping of external conditions that make life possible for a society. MARKET: 1 Establishment where a seller offers his product and a buyer acquires it. 2 It is the relationship between a seller and a buyer when a transaction takes place. WORK MARKET: Place where employment is offered and demanded. FINANCIAL MARKETS: Space where the securities transaction is negotiated and its price is determined. MIGRATION: Displacement, of any social group, to a place other than the one of origin with the intention of inhabiting it. GLOBALIZATION: Process by which a certain fact, behavior or characteristic arises from a global or universal perspective. MONETARY: This term refers to the exchange mechanisms of the different countries. FOREX MARKET:first financial market to appear. There is one in each country where the floating exchange system governs; They are inserted within the current mechanisms that configure the exchange rates in the International Monetary system. STOCK MARKET:it is the second financial market. It is a market where securities are exchanged (stocks, bonds, bonds ...) and despite being regulated by national regulations, they are increasingly internationalized. EXCHANGE MARKET:It is a market to provide liquidity and it occurs between banks, therefore, the banking entities become each other in lenders or borrowers of transactions that take the form of short-term deposit. These markets constitute the fundamental nucleus of the Euromarkets.

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DERIVATIVES MARKET: markets for non-primary financial products, it is a speculative market. OFFSHARE MARKET: exchanges are made between foreigners. ENTREPOT MARKET: all kinds of exchanges are allowed. NEOLIBERALISM:Ecco model that is framed within the doctrines of jecco liberalism, in turn within the capitalist system. Whoever supports it supports fully open markets, thus promoting free trade. NAPHTHA: North American Free Trade Agreement economic bloc whose objective was to reduce or eliminate trade barriers between the US, Canada and Mexico, all in order to compete with the European Union. INTERNATIONAL ECONOMIC ORDER (OEI):It is a dynamic concept, not static, in continuous evolution as a result of the changes that are taking place in the world reality that it is trying to regulate. In other words, the characteristics of the IEO must be a clear reflection of the international economic reality of the moment. UN: It is the most important international entity today, made up of governments from ar...