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Deardorffs' Glossary of International Economics
S5 Systemic 5.
S&D Special and differential treatment
S&ED Strategic and Economic Dialogue.
SA8000 A system of international labor standards and mechanisms for compliance and certification overseen by the nonprofit Social Accountability International with participation by corporations, unions, and NGOs.
SADC Southern African Development Community
SAFE State Administration of Foreign Exchange
Safe haven See haven asset.
Safeguard protection Import protection provided under the Safeguards Clause.
Safeguarding of Industries Act "In 1921 the 'Safeguarding of Industries Act' extended British tariffs of up to 50% ad valorem on a limited range of manufactured products like lace, silk, dyestuff, and cutlery." [Source]
Safeguards Clause Article XIX of the GATT, which permits countries to restrict imports if they cause injury. Restrictions must be for a limited time and nondiscriminatory. See escape clause.
Safety Perceptions Index "A comprehensive assessment [and ranking] of worries and experiences of risk across 121 countries," produced by the Institute for Economics and Peace.
SAFTA 1. Singapore-Australia Free Trade Agreement
2. South Asian Free Trade Area
SAI Social Accountability International
Sakoku The "policy of controlled and very limited external contact, for business or otherwise, imposed by the Edo [government of Japan (1603-1868)]. It consisted of monopoly of external trade by the [government], prohibition of Christianity and the ban on Japanese travel to/from abroad." [Source]
Samuelson-Stolper See Stolper-Samuelson Theorem.
Sanction 1. To approve or give permission for an action, as when an international organization sanctions the use of particular economic policies.
2. A coercive measure used by a nation or group of nations against another as a penalty for violating international law or international norms, such as economic sanction. Usually plural: sanctions.
3. See primary sanction and secondary sanction
Sanitary and phytosanitary regulations Government standards to protect health, of humans, plants, and animals. SPS measures are subject to rules in the WTO to prevent them from acting as NTBs.
Santiago Principles Formally called the Generally Accepted Principles and Practices, these are guidelines for the proper administration of sovereign wealth funds agreed to by the International Working Group of Sovereign Wealth Funds.
São Paulo Consensus An "action plan" adopted by the 2004 meeting of UNCTAD, UNCTAD XI, insisting "on the need to focus on the plight of the least developed countries and the ability of global trade to contribute to poverty alleviation." [Source]
SAP Structural adjustment program.
Satang Subunit of a baht.
Satisficing Seeking or achieving a satisfactory outcome, rather than the best possible. Contrasts with the optimizing behavior usually assumed in economics and trade theory. Alternative models based on satisficing are spreading within economics, but not yet much in international economics.
Sato-Vartia index The price index introduced in Sato (1976) and Vartia (1976). It is a weighted geometric mean of price relatives: lnPSV = Σi ωi (lnpi1−lnpi0), where ωi are the Sato-Vartia weights. It has the property of being exact for the CES preferences that are commonly used in models of international trade.
Sato-Vartia weights The weights on prices in the Sato-Vartia index: ωi = μiμ-1, μi = (si1−si0)/(lnsi1−lnsi0), μ = Σiμi, and si are the budget shares in the two periods.
Saving The excess of income or revenue over expenditure for current use, such as consumption (as opposed to investment, which is expenditure for future use).
Saving glut See global saving glut.
Savings The stock of wealth accumulated as a result of saving.
Say's Law The proposition "supply creates its own demand." It is clearest in a barter economy, where the act of supplying a thing is, intrinsically, the act of demanding something else. Named for Jean-Baptiste Say, although he never stated it in this form. Sometimes contrasted with Keynes' Law.
SBTC Skill-biased technical change.
Scalability Capacity to be expanded to larger size and still function the same. This is a desirable feature of policies to assist economic development, without which they are limited in the good that they can do.
Scale economies Increasing returns to scale.
Scale effect One [Source] of gains from trade: the potential for firms and industries to become larger with trade than without, thus causing costs and prices to fall due to increasing returns to scale.
Scandinavia Strictly includes only Denmark, Norway, and Sweden. Term is sometimes used for the larger group of Nordic countries.
Scarce Available in small supply; opposite of abundant. Usually meaningful only in relative terms, compared to demand and/or to supply at another place or time. See factor abundance, factor scarcity.
Scarce currency clause "A provision in the original rules of the IMF" to avert it running out of a currency. A currency could be declared "scarce," triggering members to discriminate against that country's exports. The clause was never invoked. [Source]
Scarce factor The factor in a country's endowment with which it is least well endowed, relative to other factors, compared to other countries. May be defined by quantity or by price.
Scarcity rent An economic rent that is due to something being scarce.
Schedule 1. A list. See tariff schedule.
2. A graph of a list of data; thus also a curve. See demand schedule.
Schengen Agreement An agreement (later, convention) signed in 1985 to remove all frontier controls and permit free movement of persons between the participating countries of the Schengen Area. In 1999 it was incorporated into the European Union. As of February 2025, there were 29 full or associate members.
Scientific justification Needed for a regulation not to regarded as a barrier to trade, the WTO defines it as requiring "an examination and evaluation of available scientific information, a determination based on scientific inquiry as to the use of the regulatory barrier." [Source]
Scientific tariff 1. A tariff set so as to equalize either the price of imports to the price of its domestic competitor, or the cost of imports to the cost of the domestic good.
2. A made-to-measure tariff.
Scitovszky indifference curve An indifference curve for a group of persons showing the minimum that will keep all of them at given levels of utility. A well-behaved family of such indifference curves holds utilities of all but one person constant. These are useful in discussing the gains from trade. Due to Scitovszky (1942).
SCM Agreement The Agreement on Subsidies and Countervailing Measures.
SCO Shanghai Cooperation Organization
Screwdriver plant A factory that only assembles a product, from parts that were produced elsewhere. When FDI consists only of screwdriver plants, the host country often objects that it employs only low-skilled workers and/or that it provides no technology transfer. [Source]
SDG Sustainable Development Goals
SDR Special Drawing Right
SDRM Sovereign Debt Restructuring Mechanism
SDT Special and differential treatment
SE Societas Europaea
Sea turtle A Chinese citizen who studies abroad and then returns to China after graduation. "Sea turtle" is "a play on the Chinese homonym haigui, meaning 'to return from abroad'." [Source]
Seasonal quota A restriction on the quantity of imports of a good for a specified period of the year.
Seasonal tariff A tariff that is levied at different rates at different times of the year, usually on agricultural products, being highest at the time of the domestic harvest.
Seattle Ministerial The ministerial meeting of the WTO that was held in Seattle, November 30 - December 3, 1999. It attracted a large group of protesters and ended without agreement among the participating countries.
SEC United States Securities and Exchange Commission
Second best Refers to choice of optimal policy when the true optimum (the first best) is unavailable due to constraints on policy choice. The Theory of Second Best says that an optimal policy without such constraints (e.g., zero tariff in a small country) may not be second-best optimal if other policies are constrained. See Lipsey and Lancaster (1956).
Second best argument for protection 1. Any argument for protection that can be countered by pointing to a different and less distortionary policy that would achieve the same desired result at lower economic cost. Term coined by Meade (1955b). [Origin]
2. An argument for protection to partially offset an existing distortion when the first-best policy for that purpose is unavailable. For example, if domestic production generates a positive externality and a production subsidy to internalize it is not available, then a tariff may be second-best optimal.
Second generation currency crisis A model of a currency crisis in which "the government maximizes an explicit objective function" giving rise to multiple equilibria. "Speculative attacks can [then] occur because of self-fulfilling expectations." Due to Obstfeld (1994). [Source]
Second order compliance See first order compliance.
Second theorem of welfare economics The proposition of welfare economics that any Pareto optimal allocation can be attained by a competitive general equilibrium.
Second unbundling See 2nd unbundling.
Second world See third world.
Secondary boycott See boycott.
Secondary income In the current account of the balance of payments, secondary income consists of payments across borders that are not given for anything provided in return. These include especially remittances, foreign aid, and government payments to international organizations. Contrasts with primary income.
Secondary sanction A sanction in which a government prohibits people and firms of third countries from doing business with a target country. Also called extraterritorial sanction and secondary boycott. Contrasts with primary sanction
Secondary sector The portion of an economy producing manufactured products, in contrast to the primary sector and the tertiary sector.
Secondary tariffs Any charges imposed on imports in addition to the statutory tariff, such as an import surcharge.
Secretary General Title given to the persons who head certain international organizations, including the UN, OECD, and UNCTAD. Some other organizations use Director General.
Section 201 The escape clause of the U.S. Trade Act of 1974.
Section 232 This section of the US Trade Expansion Act of 1962 authorizes the Department of Commerce to investigate the effect of imports on national security. It must report to the President within 270 days of initiation and may recommend action to limit imports.
Section 301 Part of U.S. Trade Act of 1974, it gives private parties redress if commercial interests suffer from illegal or unfair actions of foreign governments. Intended to provide negotiating leverage, it was used as a threat in negotiations with Japan in the 1980s, but also as the basis for Trump tariffs on China in 2018. [Source]
Section 307 Section 307 of the US Tariff Act of 1930 prohibits the import of goods produced using forced labor, convict labor, or indentured labor. It is enforced by CBP issuing a withhold release order.
Section 337 Section 337 of the US Tariff Act of 1930 prohibits unfair imports, with unfairness usually related to intellectual property. Investigations are conducted by the USITC and usually involve "allegations of patent infringement and trademark infringement by imported goods."
Section 421 The China-specific special safeguard provision of US law that was agreed to by China as part of its accession to the WTO. It is similar to Section 201, except that its injury requirement is weaker, it permits safeguard tariffs against China alone, and it is available for only 12 years from China's accession.
Section 806.30 One of two provisions under the US tariff schedule through which tariffs on imports are levied only on the value added in the producing country, in this case if production of the good used metal imported from the US. [Source]
Section 807.00 One of two provisions under the US tariff schedule through which tariffs on imports are levied only on the value added in the producing country, in this case if production of the good used US-made components. [Source]
Sector A portion of the economy producing a particular category of goods or services, such as the agricultural sector, the banking sector, etc.
Sectoral composition The relative sizes of the various sectors of an economy. Trade tends to change the sectoral composition, as export sectors expand and import competing sectors contract.
Secured Overnight Financing Rate An overnight, interbank interest rate based on actual loans secured by US Treasury securities and published starting 2018 by the New York Fed. It has now replaced LIBOR as the main benchmark for other transactions. [Source]
Securities Stocks, bonds, and other tradable financial assets.
Securities and Exchange Commission The United States SEC is the unit of the US government that regulates markets for investment, most importantly the various stock markets located in the US.
SEDA Sustainable Economic Development Assessment
SEDAC Socioeconomic Data and Applications Center
Seesaw principle The seesaw principle in international tax policy states, for a country that both exports and imports capital and can alter its tax on only one, that the optimal tax on income from one is inversely related to the tax rate on the other. Due to Slemrod et al. (1997).
Segmented markets The situation in which two or more markets for the same product are separated such that buyers in one market cannot buy in the other, thus permitting each market to sustain a different price. Models of international oligopoly often assume this.
Seigniorage The difference between what money can buy and its cost of production. Thus, seigniorage is the benefit that a government or other monetary authority gets from creating money. Internationally, if one country's money is willingly held by another, the first gets seigniorage. This is the case of a reserve currency. [Origin]
Selective Applied to a trade policy, this means one that affects only some countries, not all, in contrast to MFN policy. Selectivity is an important concern in the use of safeguards, which countries often would prefer to make selective but are required by GATT Article XIX to be nondiscriminatory.
Selective safeguard A safeguard action, such as a tariff or quota, that is levied unequally on imports from different countries. Not normally permitted under the WTO, but see Section 421.
Self-correcting A problem that cures itself if allowed to do so. Thus, for example, a payments imbalance can cause its own elimination through the specie flow mechanism. Likewise, a recession will, eventually, be eliminated by the deflation that it causes.
Self-fulfilling prophecy A prediction that comes true entirely because people believe it and act on that basis. Thus for example, a prediction that a pegged exchange rate will devalue can cause that to happen, if enough people hear it, believe it, and act on that basis by selling the currency.
Self-notification The expectation of participants of an organization or agreement that they will inform the others of any actions they take that may be contrary to its rules. "The WTO, and the GATT before it, encourages member states to "self-notify" new regulatory measures that may frustrate trade." [Source]
Self-sanctioning Voluntary termination of transacting with, or operating within, a country or other entity that is the subject to international criticism. It is voluntary in the sense that the action is not called for by, or goes beyond, any official sanctions required by government.
Self-sufficiency Provision by one's self of all of one's own needs. In international trade this means either not trading at all (autarky), or importing only non-necessities.
Self-sufficiency argument for protection The argument for protection that a country is better off providing for its own needs than depending on imports, perhaps out of fear that war or foreign governments will interrupt imports. It is a second-best argument, as many policies could provide for that contingency without sacrificing all the gains from trade.
Self-Sufficiency Index A measure of US self sufficiency compiled by the firm Kearney: "manufacturing output (minus exports)" divided by "imports (minus re-exports)." [Source]
Sell short See short
Semiconductor Agreement The US-Japan Semiconductor Agreement of 1986 was a VER requiring Japan to limit its exports of semiconductors, mainly "dynamic random access memory" (DRAM) chips, to the United States. [Source]
Sen Subunit of the Malaysian ringgit, the Indonesian rupiah, and the Japanese yen.
Sensitive 1. In trade negotiations and agreements, countries often identify lists of particular sensitive products or sensitive sectors that they regard as especially vulnerable to import competition and that they wish to exempt from trade liberalization.
2. A sensitive technology is one that a country does not want others to get access to, either in order to retain dominance over a market or because of its use by the military or terrorists.
Sensitive technology Sensitive technologies include "advanced chips, quantum computing and artificial intelligence." A US executive order in August 2023 directed the Treasury Department to vet investment in these in "countries of concern" (meaning China). [Source]
Sequential game A game with multiple stages, played one after the other.
Serious injury The injury requirement of the escape clause, understood to be more stringent than material injury but otherwise apparently not rigorously defined.
Service 1. A product that is not embodied in a physical good and that typically effects some change in another product, person, or institution. Contrasts with good. Trade in services is the subject of the GATS.
2. To make the scheduled payments on a debt, usually including both interest and any required amounts toward repayment of the principal. See debt service.
Service barrier Barrier to trade in a service, such as a limit on the functions of a foreign-owned service provider.
Service mark Like a trademark, but for a service. But "trademark" is often used for both goods and services. [Source]
Services Council The Council for Trade in Services
Services Trade Restrictiveness Index A "diagnostic tool" provided by the OECD that provides information about trade barriers in services. It covers "22 sectors across 44 countries, representing over 80% of global services trade."
Set-aside A set-aside in government procurement is a stated preference for a specific supplier or category of suppliers, such as small businesses. It may be a price preference or an exclusive right to supply a good or service. Set-asides are sometimes included as exceptions in government procurement agreements. [Source]
Seven Sisters Name given disparagingly by Italian businessman Enrico Mattei to seven American and British oil companies that dominated the world industry in the 1940s through the early 1970s: Anglo Persian, Gulf, Standard of California, Texaco, Royal Dutch Shell, Standard of New Jersey, and Standard of New York.
SEZ Special economic zone.
SFTT Single factoral terms of trade
SGP Stability and Growth Pact
Shadow currency 1. Something that is used as an alternative to a national money, either for transactions or as a store of value. Gold has been called a shadow currency because its value is negatively correlated with the real value of the US dollar.
2. The currency of a country with strong trade ties to another whose currency is considered unsafe to hold. The shadow currency provides a hedge against weakness in the other's currency. Examples are the Canadian dollar for the US, the Swiss franc for the eurozone, and the Australian dollar for China.
3. The financial assets that central banks use to settle accounts among themselves.
Shadow exchange rate 1. The shadow price of foreign exchange.
2. What the market exchange rate would be in the absence of various market imperfections.
Shadow price The implicit value or cost associated with a constraint. That is, the increased value that will be achieved by relaxing the constraint by one unit. When foreign exchange is rationed, the shadow price of foreign exchange becomes the relevant exchange rate for making decisions.
Shall endeavor provision A portion of an international agreement that espouses an action or commitment but does not require it, and is therefore not a hard obligation. [Source]
Shallow integration Reduction or elimination of tariffs, quotas, and other barriers to trade in goods at the border, such as trade-limiting customs procedures. Contrasts with deep integration.
Shanghai Cooperation Organization An intergovernmental organization including six countries of Eurasia, promoting political, economic, and security cooperation. It was founded 2001, and is headquartered in Beijing, China.
Shanzhai culture Also called shanzhaism, shanzhai culture, and shanzhai spirit, these were originally Chinese copies of branded electronic products. The term now includes copying of cultural activities, such as songs, movies, and celebrities. Originally, shanghai products clearly violated IPRs. [Source]
Shekel The main currency unit of Israel. It is divided into 100 agorot.
Shelf life The length of time that a good can be stored while still remaining useful enough to sell. Important for both perishable goods and goods that may become obsolete as technology or fashion changes. Relevant for international trade when, for example, customs procedures cause delays.
Shephard's lemma The result that the derivative of an expenditure or cost function with respect to a price is the (expenditure- or cost-minimizing) quantity of a good or factor demanded. Derived by and named for Shephard (1953). In international trade theory, the lemma is applied to the trade expenditure function to get quantities net traded.
Shift and share analysis A tool for decomposing changes over time in economic magnitudes into those that hold various shares constant versus shifts in those shares. Applied to international trade, it is constant market share analysis.
Shift parameter A parameter that determines only the position of a function, not its slope or shape, usually just by increasing the function's value. For example, in the consumption function C=C0+cY, C0 and c are both parameters, but C0 is a shift parameter that can be useful for analyzing a change in the desire to consume.
Shipper The firm or other entity that purchases shipping services. In the context of international trade, it may be either the exporter or the importer.
Shipping the good apples out See Alchian-Allen Theorem.
Shipping service The act of transporting a good from one location to another on behalf of a client. Shipping service need not be by sea, but could be by air, land, water, or a combination of these.
SHIPS for America Act Proposed US legislation intended to revitalize the US Merchant Marine with oversight and funding for shipyards and their workers.
Shock 1. An unexpected change.
2. Any change in an exogenous variable (although strictly speaking, models often fail to deal adequately with the complications of an exogenous change being expected).
3. See China shock.
Shock therapy One strategy for moving from a centrally controlled economy to a market economy, consisting of a sudden removal of all government controls and rapid privatization.
Short 1. Used with "sell" or "sale," this means that the seller does not currently have the thing being sold, but intends to acquire it on the market prior to making delivery.
2. Used by itself as a verb, it means to sell short, as "to short a currency," meaning to sell it forward in anticipation that its value on the spot market will fall.
Short position The situation of having sold short prior to the short contract's maturing. Opposite of a long position.
Short run Referring to a short time horizon, usually one in which some aspects of behavior that would vary over a longer time do not have time to do so. In trade models, it usually means that the employment of some factors of production is fixed. Contrasts with long run.
Short run aggregate supply In the aggregate supply and demand model, the aggregate supply curve that applies in the short run, which is upward sloping.
Short-term 1. Happening within the short run, or within a matter of months.
2. In the case of bonds or capital flows, this refers to financial assets with a maturity of less than one year.
Short-Term Arrangement The first predecessor of the Multifiber Arrangement, this 1-year agreement under GATT auspices in July 1961 sought to control the level of trade in cotton textiles and apparel. It was followed by the Long-Term Arrangement. [Source]
Short-term capital flow A capital flow that is short-term; of interest because such capital flows are likely to be very liquid and therefore easily reversed. This makes them souces of instability in exchange markets.
Short-term interest rate 1. The interest rate on any financial instrument of short maturity.
2. Denoted STIR, a particular financial instrument that is a futures contract on a short-term interest rate, often a 3-month interest rate in any of a variety of currencies.
Shrimp-turtle Case A case filed in the WTO against the United States for restricting imports of shrimp from countries whose shrimp were caught by means that endangered sea turtles. The WTO ruled against the U.S., enraging many environmentalists.
Shuttle trade The trade accomplished by individuals and groups traveling to other countries, buying goods, and bringing them home, often in their luggage, to resell. An important source of imports for Russia in the 1990s, with some people traveling abroad several times a month for this purpose. [Source]
SI The International System of Units of measurement, abbreviated SI in all languages.
SIC Standard Industrial Classification
Sick man of ... The terms "Sick man of Europe," "Sick man of Asia," and so forth have been applied over the years to many countries during periods in which their economies were especially weak compared to their neighbors.
Siegel's paradox The observation by Siegel (1972) that if the forward rate is an unbiased predictor of the spot rate from the perspective of one currency, then it must be a biased predictor from the perspective of the other currency. It follows that profitable speculation will always be possible for risk-neutral speculators somewhere.
SIFT Systematic Integrated Framework for Trade Analysis
Sight Letter of Credit A letter of credit that is payable at sight, that is, as soon as required documents are submitted and verified. [Source]
Signatory One who has signed an agreement.
Silk Road The network of trade routes between Asia and Europe that functioned in ancient times, from 130 BC, when opened by China's Han Dynasty, to 1453 AD, when closed by the Ottoman Empire. The name was given to it by Ferdinand von Richthofen in 1877.
Silk Road Economic Belt The land portion of the Belt and Road Initiative
Silver Purchase Act US legislation in 1934 that prompted the US government to make large purchases of silver. As China was on a silver standard at the time, this pushed up both the world price of silver and the value of the Chinese currency. [Source]
Silver standard A monetary system in which the value of a currency is defined in terms of silver. If two currencies are both on a silver standard, then the exchange rate between them is approximately determined by their two prices in terms of silver.
SIMA Steel Import Monitoring and Analysis System.
Similars See law of similars.
Simple average The arithmetic mean of a set of numbers, weighting each of them equally. For example, the simple average of n tariffs, ti, is Σiti/n and does not weight the tariffs by the amount of imports.
Singapore-Australia Free Trade Agreement A free trade agreement covering goods and services in force since 2003.
Singapore Convention The Singapore Convention on Mediation, adopted by the United Nations December 20, 2018, is "an instrument to facilitate international trade and to promote mediation as an alternative method of resolving disputes."
Singapore Issues The issues on which it was agreed to form working groups at the Singapore Ministerial: trade and investment, competition policy, transparency in government procurement, and trade facilitation.
Singapore Ministerial The first ministerial meeting of the WTO, held in Singapore in December 9-13, 1996. It did not attempt to launch a round of trade negotiations, but it agreed to form working groups on several Singapore Issues.
Single column tariff A tariff schedule that specifies only a single tariff rate for each product. Contrasts with schedules that have separate general tariffs and MFN tariffs.
Single European Act Treaty, signed in Luxembourg and The Hague and entering into force 1 July 1987, completing the Single Market. See Europe 1992.
Single factoral terms of trade The purchasing power, in terms of the price of imports, Pm, of a country's factors, thus accounting for both the net barter terms of trade and its own factor productivity, Ax, in production of exports: SFTT = NBTT×Ax = (Px/Pm)×Ax. Contrasts with DFTT. Term due to Viner (1937). [Origin]
Single global currency A proposal that the world should share a single currency, managed by a single international central bank.
Single Market Removal of the remaining barriers among the countries of the European Union, permitting the free movement of goods, persons, services, and capital; also known as Europe 1992.
Single Supervisory Mechanism The system of banking supervision in Europe, made up of the European Central Bank and supervisory authorities of the individual countries.
Single undertaking In trade negotiations, term for requiring participants to accept or reject the outcome of multiple negotiations in a single package, rather than selecting among them.
SITC Standard International Trade Classification
Skill The abilities acquired by workers through education, training, and experience that permit them to be more productive. Essentially the same as human capital.
Skill-biased A technological change or technological difference that is biased in favor of using more skilled labor, compared to some definition of neutrality.
Skill intensive Describing an industry or sector of the economy that relies relatively heavily on inputs of skilled labor, usually relative to unskilled labor, compared to other industries or sectors. See factor intensity.
Skill premium The difference between the wages of skilled and unskilled labor, usually measured, in developed countries, comparing college- and high-school-educated workers. In the US and other countries, the skill premium rose beginning about 1980, due mostly to technological change and, somewhat less, to globalization.
Skilled labor Labor with a high level of skill or human capital. Identified empirically as labor earning a high wage, with a high level of education, or in an occupational category associated with these; sometimes crudely proxied as nonproduction workers.
Slave trade 1. The exchange of human beings, regarded as property of other human beings, in exchange for money or other things of value.
2. The transport of slaves that took place between Africa and other parts of the world, especially the Americas, especially in the 17th and 18th centuries.
Slave Trade Act The the British Parliament's Act for the Abolition of the Slave Trade signed by King George III March 25, 1807. After nearly a century and a half of Britain as one of the world's largest slave traders, this banned "trading in enslaved people in the British Empire" but did not ban slave ownership. [Source]
Slicing up the value chain Term for fragmentation used by Krugman (1996).
Slowbalisation Decline over time in international trade and capital flows relative to GDP, in contrast to their expansion during globalization. The Economist took credit for the term January 24, 2019, apparently unaware of its use by Bakas (2016) with a different meaning and its American spelling, slowbalization. [Source]
Slowbalization The reaction against globalization. Term was coined by Bakas (2016).
Slump A decline in performance, either of a firm as a slump in sales or profits, or of a country as a slump in output or employment.
SMAC function An acronym for the CES function based on the names of the four authors who introduced it in Arrow et al. (1961). Term used by Mukerji (1963).
Small and medium-sized enterprises There is no uniform definition of how large, and by what measure, a firm has to be in order not to be an SME.
Small country assumption The assumption in an economic model that a country is too small to affect world prices, incomes, or interest rates.
Small open economy An economy that is small enough compared to world markets that (as a good approximation) its policies do not alter world prices or incomes. The country is thus a price taker in world markets. The term is normally applied to a country as a whole, although it is sometimes used in the context of a single product.
SME Small and medium-sized enterprises. Also used in the singular, in which case it presumably means small or medium-sized enterprise.
Smiling curve Also called the smile curve, this is the observation in 1992 by Stan Shih, founder of Taiwan computer company Acer, of how value added varies across stages of processing in the computer industry. It starts high, falls in the middle, then rises again to form a graph shaped like a smile. [Source]
Smithsonian Agreement An agreement reached at a December, 1971, meeting of monetary authorities from the world's leading developed countries at the Smithsonian Institution in Washington, DC. The intent was to rescue the Bretton Woods exchange rate system, but the effort failed. [Source]
Smoot-Hawley Tariff The Tariff Act of 1930, which raised average U.S. tariffs on dutiable imports to 53% and provoked retaliation by other countries. Also called the Hawley-Smoot Tariff.
Smuggle To take a good across a national border illegally. If the good itself is legal, the purpose is usually to avoid paying a tariff or to circumvent some other trade barrier.
Snake An arrangement in which European currencies, prior to the creation of the euro, were pegged to each other but left free to float as a group against the U.S. dollar. Named for the graph that the limits of variation of a currency would follow over time: Snake in the Lake after the collapse of Snake in the Tunnel. [Source]
Snake in the Tunnel After the collapse of the Bretton Woods System, this was an arrangement used briefly in Europe in which currencies were permitted to vary ±1% against each other (thus the snake), but ±2.25% against the dollar (the tunnel).
Snakes See spiders and snakes
Snapback A provision in a trade agreement permitting a country temporarily to rescind a tariff concession in the event of an import surge.
Sneaky protectionism Common features of preferential trade agreements that actually increase rather than reduce protection. These could include traditional trade diversion and restrictive rules of origin, but increasingly also rules and regulations that more subtilely and less obviously favor domestic products and industries. [Source]
Social Accountability International A U.S.-based nonprofit organization that develops and implements the SA8000 international workplace standards.
Social benefit The benefit to society as a whole from an event, action, or policy change. Includes externalities and deducts any benefits that are transfers from others, in contrast to private benefit.
Social capital The networks of relationships among persons, firms, and institutions in a society, together with associated norms of behavior, trust, cooperation, etc., that enable a society to function effectively.
Social clause A provision in an international trade agreement that would link trade liberalization and labor standards. A social clause has been discussed but not adopted in the WTO. The implementation of GSP by both the EU and the US does include a social clause.
Social cost The cost to society as a whole from an event, action, or policy change. Includes negative externalities and does not count costs that are transfers to others, in contrast to private cost.
Social democracy The term used in much of Europe for a market economy with a strong presence of government to provide protections for individuals from economic, health, and other hardships and some limitations on the actions of for-profit enterprises.
Social dumping 1. Export of a good from a country with weak or poorly enforced labor standards, reflecting the idea that the exporter has costs that are artificially lower than its competitors in higher-standards countries, constituting an unfair advantage in international trade. [Origin]
2. In recent year, the term has often been used without regard to labor standards, meaning simply exports that benefit from low wages. That, of course, could simply reflect comparative advantage.
Social indifference curve A curve showing the combinations of goods that, when available to a country, yield the same value of the social welfare function.
Social policy Any of many policies that help the economically disadvantaged, including those of a welfare state.
Social Progress Index "An aggregate index of social and environmental indicators that capture three dimensions of social progress: Basic Human Needs, Foundations of Wellbeing, and Opportunity" produced by the NGO Social Progress Imperative.
Social welfare function A function mapping allocations of goods (to the individuals in an economy) to a level of welfare for the economy as a whole. If it depends only on the levels of utility of the individuals rather than separately on the allocations, then it is a Bergsonian social welfare function.
Socialism 1. An economic system with some of people's individual needs provided by government. As this is true of most societies, some define as socialist only countries where this government provision exceeds a threshold, and many disagree on what that threshold is.
2. The "classic definition," from Krugman (2021, p. 313) is "government ownership of the means of production."
Societas Europaea Denoted "SE" after a company name, this is "a business structure for public limited companies within the European Economic Area." Created by the EU in 2004 for companies active throughout the EEA, it lets them "do away with the bulk of the paperwork when they expand or restructure within Europe." [Source]
Socioeconomic Data and Applications Center "A Data Center in NASA's Earth Observing System Data and Information System -- Hosted at Columbia University." It serves as an "Information Gateway" between earth sciences and social sciences.
SOE 1. State-owned enterprise.
2. Small open economy.
SOFR Secured Overnight Financing Rate.
Soft Brexit A somewhat ambiguous term for a version of Brexit, that would preserve much or most of the terms of membership in the European Union, perhaps including membership in the customs union and avoidance of border controls between Northern Ireland and Ireland.
Soft budget constraint This means an economic entity, usually a firm, is likely to get government support if in financial trouble. Common in current and former state-owned enterprises in transition economies, this undermines their incentive to perform productively and efficiently. Due to Kornai (1979).
Soft commerce Doux commerce [Source]
Soft currency 1. A currency that is not widely accepted in exchange for other currencies, in contrast to a hard currency.
2. A currency that is not convertible.
3. A currency that is expected to fluctuate a lot and/or is expected to depreciate.
Soft landing Avoidance of economic hardship, in the form of inflation and/or especially recession, as a period of rapid economic growth comes to an end.
Soft loan A loan made at a below-market interest rate, typically to a developing country as a form of aid.
Soft peg A pegged exchange rate without a strong commitment by the central bank to allow the money supply to vary as necessary to maintain it. A soft peg is particularly subject to speculative attack, and therefore is unlikely to be sustainable.
Soft Power 30 An index and ranking of countries by their "soft power": "the ability to achieve objectives through attraction, and persuasion." Produced by Portland.
Soft protectionism Murky protectionism
Softwood lumber dispute A US-Canada trade dispute that has lasted many years. Canada's forests are mostly owned by provincial governments, which charge lumber companies a "stumpage fee" to harvest trees. The U.S. claims that this fee is too low and constitutes an illegal subsidy. [Source]
Sogo shosha General trading company. A particular type of company that seems to be unique to Japan. [Source]
Sole importing agency An entity, either private or government, that has been granted by government the exclusive right to import certain goods.
Solow Model The neoclassical growth model. Also called the Solow-Swan Model.
Solow neutral A particular specification of technological change or technological difference that is capital augmenting.
Solow residual A measure of technological progress: the difference between the growth rate of output and the weighted average of growth rates of capital and labor, with factor incomes as weights. Due to Solow (1957). Also called growth of TFP. Used to compare sources of growth across countries.
Solvency A borrower's ability to service debt. For a person or firm, lack of solvency, or insolvency, usually leads to bankruptcy. As no facility for government bankruptcy exists, insolvency leads to default and loss of the ability to borrow, or to bailout by another government or IFI.
Soros, George George Soros is a business magnate who made his mark in international economics by selling short US10ドル billion worth of British pounds and profiting US1ドル billion when the pound devalued in 1992. His action, along with other speculators, is widely regarded as having forced the Bank of England to exit the ERM.
Sound money A currency that is responsibly managed so as to avoid excessive inflation.
Source country 1. The country from which a foreign direct investment is made. This meaning, opposite to #2, contrasts with host country.
2. The country in which the income on foreign direct investment earned. This meaning, opposite to #1, contrasts with residence country.
Sources of gains from trade The several economic mechanisms through which countries gain from trade.
South Asian Free Trade Area A regional, preferential free trade agreement including eight countries of South and East Asia.
South Centre "An intergovernmental policy research think-tank composed of and accountable to developing country Member States. It conducts policy-oriented research on key policy development issues, and supports developing countries [in] negotiating processes that are relevant to the achievement of SDGs.""
South Sea Bubble This started with the creation of the South Sea Trading Company in 1711, which "invested in the slave trade and in plantations." Investors bid up it stock price until 1720, when the bubble burst and the stock lost 80% of its highest value. [Source]
South Pacific Regional Trade and Economic Cooperation Agreement A non-reciprocal free trade agreement in which Australia and New Zealand provide duty-free access to the exports from countries of the South Pacific region.
South-South Cooperation An effort begun at the Bandung Conference of 1955 to encourage broad cooperation among developing countries on a range of economic, cultural, and technical issues. [Source]
South-South migration Migration between developing countries.
South-South trade Trade between developing countries. Contrasts with North-South trade.
Southern African Development Community A group of countries in southern Africa, including DR Congo, Tanzania and all countries south of these, which cooperate on economic and social issues. Notified to the WTO as a free trade area, its objectives include further trade and monetary integration.
Sovereign compulsion The principle of exemption from anti-trust liability for actions taken at the direction of a government agency. Example: price undertaking.
Sovereign debt The debt of a national government that is denominated in a currency other than its own.
Sovereign Debt Restructuring Mechanism A framework proposed (but not yet adopted) by the IMF for permitting countries facing financial crises to restructure their debts in an orderly and minimally disruptive manner, analogous to bankruptcy for a private debtor.
Sovereign default The failure or refusal of a government of a sovereign state to service or pay off its debt in full.
Sovereign immunity The legal doctrine that property of a foreign government is not in the jurisdiction of domestic courts. Unless this immunity is waived (as is now common), it makes it hard for a holder of foreign government debt to collect payment, and thus interferes with international lending.
Sovereign risk The possibility that a government will default on a contract (such as a debt to a foreigner) or interfere with a private-sector contract with a foreigner (such as ownership of property or a commitment to pay for or deliver goods).
Sovereign spread The spread on the debt of a government, and thus a measure of the riskiness of lending to it and the cost to it of borrowing.
Sovereign wealth fund Assets held by a government denominated in foreign currencies and in excess of those needed as international reserves. Normally these have been accumulated as a result of a sustained current account surplus.
Sovereign Wealth Fund Institute A think tank that does research on sovereign wealth funds
Sovereignty A country or region's power and ability to rule itself and manage its own affairs. Some feel that memberships in international organizations such as the WTO are a threat to their sovereignty.
Spaghetti bowl Term frequently used by Bhagwati for the tangle of relationships created by multiple overlapping preferential trading arrangements. First use seems to have been Bhagwati (1995).
SPARTECA South Pacific Regional Trade and Economic Cooperation Agreement
Spatial arbitrage Arbitrage on price differences in different locations.
Spatial Impossibility Theorem Starrett's Impossibility Theorem
Special 301 A provision of US trade law that provides for annual review of other countries' intellectual property protection and market access practices and uses trade policies to pressure countries to conform to US expectations. The report identifies countries of concern on both a Watch List and a Priority Watch List.
Special Agricultural Safeguards Safeguards, introduced in the Uruguay Round, "that are not dependent upon a showing of injury and are based on imports entering in quantities above or prices below stipulated levels." [Source]
Special and differential treatment The GATT principle introduced in the Enabling Clause of special privileges for developing countries, exempting them from some requirements of developed countries. It also permits tariff preferences among developing countries and by developed countries for developing countries, such as GSP. [Source]
Special Drawing Right Originally intended within the IMF as an international money for use among central banks pegging their exchange rates, the SDR is a transferable right to acquire another country's currency. Now defined as a currency basket, it also plays a role as an international unit of account. [Origin]
Special economic zone Typically a region designated for economic development oriented toward inward FDI and exports, both fostered by special policy incentives that may include being an EPZ. These exist in several countries, including and especially China, and their characteristics vary.
Special entry procedure An administrative procedure that is required as a condition of entry for an imported good, such as transport by the importing country's national fleet, or entry through a specific port or customs station.
Special product Same as sensitive product.
Special safeguard 1. As part of the Agriculture Agreement of the WTO, a special provision for providing safeguard protection to specified agricultural products that had been subject to tariffication.
2. See Section 421.
Special Safeguard Mechanism "At the Nairobi Ministerial, it was agreed that a special safeguard mechanism (SSM) for developing countries would be negotiated," permitting a temporary additional duty on imports subject to tariff whose volume of imports increased or price of imports decrease by specified amounts. [Source]
Special Trade Representative An ambassador-ranked position in the Executive Office of the President that conducted trade negotiations. It was created in the 1962 Trade Expansion Act, which removed that authority from the State Department. In the Trade Act of 1974 it became the United States Trade Representative. [Source]
Specialization 1. Producing more than needed of some things, and less of others, hence "specializing" in the first. In international trade, this is just the opposite of self-sufficiency.
2. Doing less than everything, as when a country produces fewer different goods than it consumes. In a 2-good trade model, this means a country produces just one good. With many goods and countries, it means a country has some goods that it does not (and cannot competitively) produce. Also may be called complete specialization.
Specialization index See Krugman specialization index.
Specie Coins, normally including only those made of precious metal.
Specie flow mechanism Same as price-specie flow mechanism.
Specific commitment Under the GATS, the identification of a category of services in which a country will apply national treatment and assure market access for foreign service providers.
Specific duty Specific tariff.
Specific factor A factor of production that is unable to move into or out of an industry. Describes factors that would be of no use in other industries and also factors that could be used elsewhere but are not able to move in the short run. The term seems to come from Haberler (1937).
Specific factors model A model in which some or all factors are specific factors. Most commonly, the Ricardo-Viner Model, has one specific factor (capital or land) in each industry plus another factor (labor) mobile between them. More extreme, the Cairnes-Haberler Model, has all factors specific.
Specific tariff A tariff specified as an amount of currency per unit of the good.
Specific trade concern In the WTO, a trade concern by a member that alleges that "laws, regulations, or practices by their trading partners" are harmful. [Source]
Specificity The property that a policy measure applies to one or a group of enterprises or industries, as opposed to all industries.
Specificity rule The principle that the optimal policy for correcting a distortion is one that deals most directly, or specifically, with that distortion.
Speculation The purchase or sale of an asset (or acquisition otherwise of an open position) in hopes that its price will rise or fall respectively, in order to make a profit. See destabilizing speculation and stabilizing speculation.
Speculative attack In any asset market, the surge in sales of the asset that occurs when investors expect its price to fall, especially if including short sales. A common phenomenon in the exchange market, especially under an adjustable pegged exchange rate.
Speculator Anyone who engages in speculation. May include those who transfer their assets into different forms (or currencies) in order to avoid a prospective capital loss.
Spence-Dixit-Stiglitz Probably the more accurate identifier for what is often called the Dixit-Stiglitz function, since Spence (1976) preceded Dixit and Stiglitz (1977).
Spending effect A major mechanism of the Dutch disease, whereby the increased income from a surge in exports is spent in part on nontradables, causing nontradable industry to expand at the expense of tradables, especially manufacturing.
SPFS Russia's System for Transfer of Financial Messages, its alternative to the SWIFT network. [Source]
Spice Routes "The network of sea routes that link the East with the West," extending from Japan, around India, through the Mediterranean, to Europe. "Also known as the Maritime Silk Roads," though that term now also applies to the corresponding parts of China's Belt and Road Initiative [Source]
Spiders and snakes A characterization of two forms of global production sharing by Baldwin and Venables (2013). Snakes have multiple tasks or inputs that must be performed or added sequentially, while spiders have them done in any order and therefore potentially simultaneously.
Spillover 1. A positive externality.
2. The transmission of an advanced technology from a foreign-owned firm (thus FDI) to domestic firms.
Splintering Another term for fragmentation. Used by Bhagwati (1984).
Splinternet The division of the internet into separate networks within countries as they wall themselves off from foreign connections. [Origin]
Spoke See hub and spoke integration.
Sporadic dumping Intermittent dumping.
Spot On the spot market.
Spot market A market for exchange (of currencies, in the case of the exchange market) in the present (as opposed to a forward or futures market in which the exchange takes place in the future).
Spot rate The exchange rate on the spot market. Also called the spot exchange rate.
Spread 1. The difference between the price one must pay to buy something, such as a currency, and the price one receives for selling it.
2. The difference between the interest rate on a bond and the risk free rate; thus the risk premium on the bond.
3. The interest rate spread, i.e., the difference between the interest rate on a bond issued by one borrower and that on a bond issued by another, safer, borrower. Spreads between Greek and German bonds, for example, have been seen as an indicator of the likelihood of Greek default.
SPS Sanitary and phytosanitary
SPS Agreement The Agreement on Sanitary and Phytosanitary Measures reached as part of the Uruguay Round.
SPS Committee "The forum where WTO members discuss issues related to the implementation of the SPS Agreement and potential trade concerns."
SRAS Short run aggregate supply
SSG Special Agricultural Safeguards
SSM 1. Single Supervisory Mechanism
2. Special Safeguard Mechanism
SST Stolper-Samuelson Theorem
STA Short-Term Arrangement
Stability and Growth Pact The 1997 agreement among the countries participating in the EMU to coordinate their fiscal policies in a way that would limit budget deficits and debt.
Stabilization fund 1. Exchange stabilization fund
2. In the White Plan, a pool of national currencies deposited by governments to be made available to others in need. [Source]
Stabilization policy The use of monetary and fiscal policies to stabilize GDP, aggregate employment, and prices.
Stabilize To reduce the size of fluctuations in an economic variable over time. Examples include stabilizing exchange rates by exchange market intervention; stabilizing the price of a commodity by operation of a buffer stock; and stabilizing GDP by macroeconomic stabilization policy.
Stabilizing speculation Speculation that decreases the movements of the price in the market where the speculation occurs. See destabilizing speculation. Friedman (1953) provided a classic argument that profitable speculation on a floating exchange rate would be stabilizing.
Stable 1. Of an equilibrium, that the dynamic adjustment away from equilibrium converges to the equilibrium.
2. Of an economic variable, not subject to large or erratic fluctuations.
Stackelberg equilibrium A game theoretic equilibrium in which one player acts as a leader and another as a follower, the leader setting strategy taking account of the follower's optimal response. Contrasts with Nash equilibrium in which both players take the other's strategy as given. Due to Stackelberg (1934).
Stage One US-Japan Agreement The agreement signed between Japan and the US on October 7, 2019. It included two parts, the first providing limited expansion of market access and the second covering rules on digital commerce. The intent was to follow this with further negotiations on a broader trade agreement.
Stagflation The combination of high or increasing inflation with high or increasing unemployment (stagnation). Said to be due to Iain Macleod, who later would become Britain's Chancellor of the Exchequer, in a speech to Parliament in 1965. [Source]
Stamp Act A tax levied in 1765 by the British Parliament on all paper documents in the American colonies. Colonists objected and there was mob violence to intimidate tax collectors. Parliament repealed the tax in 1766, but also reaffirmed its authority to tax the colonies. [Source]
Stamp fee See para-tariff.
Stand-by agreement A lending facility in the IMF established in 1952 for financing short-term balance-of-payments difficulties.
Standard Rule and/or procedure specifying characteristics that must be met for a product to be sold in a country's domestic market, typically to protect health and safety. When a standard puts foreign producers at a disadvantage, it may constitute an NTB.
Standard deviation A common measure of the dispersion of a random variable or of a sample of data. Defined as the square root of the variance.
Standard error A common measure of the uncertainty associated with a numerical estimate, equal to the standard deviation of the associated error. In a regression analysis, standard errors are reported with (or below) the coefficient estimates. As a rough guide, one can be 95% confident that the true value is within ±2 standard errors of the estimate.
Standard Industrial Classification The system for classifying industries used by the United States Commerce Department until 1997 for reporting data on industry output, employment, etc. Replaced in 1997 by the North American Industrial Classification System.
Standard International Trade Classification A classification system for traded goods that is used as the basis for recording and reporting data on exports and imports, and that is maintained by the United Nations Statistics Division.
Standard of living Usually refers to a country's per capita income, but sometimes also takes account of additional conditions that matter for a person's or household's well-being, such as leisure or the quality of the environment.
Standard trade model There is probably no agreement as to what should be considered the "standard" trade model. But Krugman and Obstfeld (1991), which has been widely used through many editions, gives this name to a model with perfect competition, a curved PPF, and consumer preferences that can be represented by community indifference curves. It therefore includes the H-O Model and specific factors model as special cases.
Standardization 1. Conformity to a common set of specifications, so that all units of a product, from a given producer or from multiple producers, are compatible and can serve the same purpose.
2. Conformity to an exacting set of specifications with regard to quality, such as the ISO 9000 standards established maintained by the International Organization for Standardization.
Standards and Trade Development Facility "A global partnership [of WTO, FAO, World Bank, and WHO] to facilitate safe trade, contributing to sustainable economic growth, poverty reduction and food security. It promotes improved food safety, animal and plant health capacity in developing countries." [Source]
Standards Code The common name for the Tokyo Round Code on technical barriers to trade.
Standing Having the required characteristics to bring a legal action. Under US anti-dumping law, for example, petitioners must account for 50% or more of domestic production.
Standstill 1. A commitment to refrain from introducing new measures that are not consistent with an agreement, including raising tariffs.
2. In the Uruguay Round, the agreement not to introduce new GATT-inconsistent trade-restricting and trade-distorting measures during the negotiations. See rollback.
Staple theory of economic growth A theory of growth based on production and export of "staples" -- which seems, in this context, to mean raw materials. The theory was designed for understanding the early history of Canada, and is said to be most relevant for economies with abundant open land. See Watkins (1963).
Starrett's Impossibility Theorem The Spatial Impossibility Theorem of Starrett (1978) that an economy with a finite number of locations and positive, resource-using transport costs cannot possess a competitive equilibrium. This may account, implicitly, for the neglect of transport costs in competitive trade theory.
State Administration of Foreign Exchange China's SAFE has multiple functions, among them to "be responsible for the supervision and management of the foreign exchange market" and to "undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state."
State bank A bank owned by a government, other than the central bank, and performing the same functions as a commercial bank. Thus a bank that is an SOE. State banks are often directed by their governments to provide credit to activities or persons favored by the government.
State capitalism A system in which the government plays a large and active role in the economy, owning large enterprises and using their influence in markets for political rather than purely economic ends.
State-owned enterprise A firm owned by government. Relations between SOEs and private firms on international markets raise special problems for GATT, since SOEs may not respond normally to market forces and their actions may reflect government policies. See also TVEs.
State trading enterprise An entity of government that is responsible for exporting and/or importing specified products. See marketing board.
Static comparative advantage The normal concept of comparative advantage, as opposed to dynamic comparative advantage.
Static gains from trade The economic benefits from trade in static models: efficiency gains from exploiting comparative advantage; scale economies; reduction in distortion due to imperfect competition; increased product variety; and the productivity effect. Contrasts with dynamic gains from trade.
Static model An economic model with no explicit time dimension. A static model abstracts from the adjustment to an equilibrium or optimum over time, as well as from dependence of variables in the model on a changing past or future. Contrasts with dynamic model.
Statistical Classification of Economic Activities in the European Community Called NACE, this is the uniform classification system used in all member states of the European Union.
Statistical Classification of Products by Activity See Classification of Products by Activity.
Statistical discrepancy The difference between measurements of two things that should, if accurately measured, be the same. It is therefore a measure of net errors and omissions. In the balance of payments, it is thought to primarily reflect short-term capital flows, which most often escape notice.
Statistical tax See para-tariff.
Statistically significant 1. Said of an estimated parameter if it is sufficiently different from zero, relative to an estimate of its probability distribution, that the probability of the actual parameter being zero is below some small threshold, such as 5%.
2. An estimate that is more than twice, in absolute value, its standard error, and therefore unlikely to be zero.
Status quo The current situation. A preference for the status quo means a reluctance to change.
STC Specific trade concern
STDF Standards and Trade Development Facility
Steady state A type of equilibrium, especially in a neoclassical growth model, in which those variables that are not constant grow over time at a constant and common rate so that their ratios remain constant.
Steel Import Monitoring and Analysis System The US importing monitoring system for the steel industry.
Stepping stone See stumbling bloc.
Sterilize To use offsetting open market operations to prevent an act of exchange market intervention from changing the monetary base. With sterilization, any purchase of foreign exchange is accompanied by an equal-value sale of domestic bonds, and vice versa.
Sterilized intervention Exchange market intervention that is sterilized.
Sterling British money, particularly the British pound, a formal name for which is the pound sterling.
Sterling Area The group of countries that either used the British pound as their currency or pegged their currencies to the British pound. Most were current or former colonies of the United Kingdom. The sterling area ceased to be meaningful in the 1970s when countries largely switched to floating exchange rates.
Sticky price model A model in which one or more prices are assumed not to change when the markets in which they apply move out of equilibrium. Internationally, this can result in a violation of the law of one price.
Stimulus Any exogenous increase in aggregate demand, such as a fiscal or monetary expansion.
STIR Short-term interest rate
Stochastic Random; arising from a process that generates different values each with some probability. Contrasts with deterministic.
Stock 1. A share in the ownership of a corporation.
2. A stock, or stock variable, is an economic magnitude that describes a quantity that exists at a point in time. Examples include a country's international reserves, a consumer's wealth, and a country's labor force. Contrasts with a flow.
Stock market value The total value of outstanding shares of stock of a firm at the price currently prevailing in the stock market.
Stockholm China Forum A initiative of the German Marshall Fund and Sweden's Ministry of Foreign Affairs brings together twice a year senior strategic thinkers from Europe, America and China to discuss issues of economics, foreign policy, and security.
Stockholm Statement A statement of ten principles for development policy produced by thirteen economists at a meeting 16-17 September, 2016, in Saltsjöbaden, Sweden. Sometimes also called the Stockholm Consensus, it is an alternative to the Washington Consensus.
Stockpiling The storage of something in order to have it available in the future if the need for it increases. In international economics, stockpiling may occur for speculative purposes; by governments to provide for national security; and by central banks managing international reserves.
Stolper-Samuelson derivative In general equilibrium, the effect of a small change in the price of a single good on the price of a factor of production.
Stolper-Samuelson Theorem 1. The proposition of the H-O Model that a rise in the relative price of a good raises the real wage of the factor used intensively in that industry and lowers the real wage of the other factor.
2. The further proposition (requiring additional assumptions) that protection raises the real wage of a country's scarce factor and lowers the real wage of its abundant factor. Due to Stolper and Samuelson (1941).
Stone-Geary Function The function introduced by Stone (1954) and Geary (1950) to represent a particular form of nonhomothetic utility. U = Πi(qi,−μi)αi, where qi is quantity of good i consumed, μi is a minimum consumption of good i, and αi>0 are parameters.
Stop-go cycle Alternating periods of macroeconomic contraction and expansion, common especially in developing countries. Financial crises cause reduced aggregate demand, exchange depreciation, recovery, and ultimately exchange rate over-valuation that repeats the process. [Source]
Store of value One of three basic properties of money: the ability to retain value over time, and therefore to be useful for those who wish to sell something now and not spend the proceeds until later.
Stormont brake Part of the agreement creating the Windsor Framework, this enables the British government to stop application of new EU laws on goods in Northern Ireland if requested by a third of Northern Ireland's regional assembly, Stormont. It is to be used only "in the most exceptional circumstances." [Source]
Straight-line PPF The PPF that arises always in the Ricardian Model, or as a special case in the H-O Model if the two sectors have the same factor intensity. It is a downward sloping straight line with, therefore, a constant marginal rate of transformation.
Strategic autonomy "Strategic autonomy is about setting objectives, making decisions and mobilising resources in ways that do not primarily depend on the decisions and assets of others." It does not mean isolation, but instead is to be achieved through "cooperation and partnership."" [Source]
Strategic and Economic Dialogue The US-China Strategic and Economic Dialogue, S&ED.
Strategic industry argument for a tariff The view that an industry serves a special "strategic" purpose in an economy and needs to be protected by a tariff to prevent it from disappearing. Views of what constitutes a strategic purpose are often vague and contradictory. The use of a tariff for this purpose is second best.
Strategic partnership An alliance between organizations to achieve some objective. For example, two corporations, often from different countries, may work together on a product that combines their separate areas of expertise.
Strategic Petroleum Reserve The strategic stockpile of oil held by the United States government.
Strategic stockpile An accumulation of a commodity by a government to be used in case of a disruption of supply due to war or other emergency.
Strategic trade policy The use of trade policies, including tariffs, subsidies, and even export subsidies, in a context of imperfect competition and/or increasing returns to scale to alter the outcome of international competition in a country's favor, usually by allowing its firms a larger share of industry profits. The seminal contribution was Brander and Spencer (1981).
Strategic trade policy argument for a tariff In an example of strategic trade policy, the use of a tariff to extract monopoly profits from a foreign monopolist, or to shift profit from foreign to domestic competitors in an international oligopoly. The monopoly case seems to have originated with Katrak (1977), but the classic treatment of the larger issue is Brander and Spencer (1984).
Strategic variable An economic variable that is chosen with regard to, and sometimes with a view to influencing, economic behavior by someone else. Most frequently refers to the choice of firms in an oligopoly.
Strategy In game theory, a set of actions and contingent actions for the several stages of a sequential game. That is, a plan of action for each stage contingent on the outcome of preceeding stages.
STRI Services Trade Restrictiveness Index
Structural adjustment 1. The reallocation of resources (labor and capital) among sectors of the economy in response to changing economic circumstances, including trading conditions, or changes in policy.
2. The changes required by a structural adjustment program.
Structural adjustment program The list of budgetary and policy changes required by the IMF and/or World Bank in order for a developing country to qualify for a loan. This "conditionality" typically includes reducing barriers to trade and capital flows, tax increases, and cuts in government spending. [Source]
Structural change 1. A permanent change in the structure of an economy, such as a shift in preferences or technology, that causes a permanent change in relative sizes of various industries and a consequent re-allocation of labor among them.
2. In econometric time series, a change at some time in the parameters that generate the series.
Structural Impediments Initiative A 1990 agreement between the United States and Japan to reduce their bilateral trade imbalance. Among other commitments, the U.S. promised to reduce its budget deficit and encourage saving, while Japan promised to increase spending and facilitate entry of new businesses. [Source]
Structural unemployment Unemployment that results from a mismatch between supply and demand for workers. That is, workers who cannot find jobs, not because there are no jobs, but because they are not qualified for the jobs that are available.
Structure of protection The pattern of protection across sectors of an economy: which sectors are highly protected and which are not, perhaps in terms of effective protection, or - even better - in terms of their expansion or contraction that would occur if all protection were to be removed.
Structuring 1. In international trade US CBP uses this term for senders splitting a "a high-value order from a single customer into multiple parcels that qualify as duty-free" under the de minimis rule of US tariff law. [Source]
2. In a financial context, structuring is "when a person deliberately splits a large financial transaction into a series of smaller transactions -- with the specific aim of avoiding scrutiny from regulators and law enforcement officials." [Source]
Stuck at the Bottom In contrast to the race to the bottom, this suggests that it is not the countries with most stringent environmental standards that weaken them due to international competition, but those with the least stringent standards who fail to raise them due to such concerns. Due to Porter (1999).
Stumbling bloc The term that Bhagwati (1991) used, together with building bloc(k) or stepping stone , to address whether PTAs help move the world toward or away from multilateral free trade. Also written as "stumbling block".
Stumpage See softwood lumber dispute.
Stylized fact Something that has been observed to be true, or close to true, sufficiently often and in enough different contexts that an economic theory should be consistent with it. Those who present a set of stylized facts typically do not support them with data, but simply list them to motivate their theoretical analysis. [Origin]
Subcontracting Delegation by one firm of a portion of its production process, under contract, to another firm, perhaps in another country. A form of fragmentation.
Subgame A portion of a game that is itself a game.
Subgame perfect Said of a Nash equilibrium if the portions of the strategies of that equilibrium that pertain to each subgame are also Nash for their subgame. This is a useful refinement of Nash equilibrium in that it rules out strategies that are not credible for subgames.
Subheading See HS subheading.
Subsidiarity The principle that political, economic, and social functions should be carried out locally, or close to the affected people, except where they are explicitly assigned to a central government.
Subsidiary A firm that is owned and ultimately controlled by another firm. Thus a multinational corporation has a parent in one country and one or more subsidiaries in others.
Subsidies Code The Tokyo Round Code spelling out the treatment of subsidies for those countries that signed it, including how subsidies could be responded to with countervailing duties. It was replaced by the Agreement on Subsidies and Countervailing Measures of the WTO.
Subsidies and Countervailing Measures Code The Agreement on Subsidies and Countervailing Measures.
Subsidy A payment by government, perhaps implicit, to the private sector in return for some activity that it wants to reward, encourage, or assist. Under WTO rules, subsidies may be prohibited, actionable, or non-actionable.
Subsidy equivalent The size of the direct cash subsidy that would have the same effect on behavior -- usually production but sometimes consumption -- as some other policy. See producer subsidy equivalent.
Subsistence economy An economy composed mostly of subsistence farmers.
Subsistence farmer 1. Literally, a farmer who produces mostly only for the consumption of the farmer's own household.
2. The term also seems to be used for farmers who grow a crop to sell, but whose income from doing so barely allows them to survive. When trade or trade policy is said to hurt subsistence farmers, it must be under this definition.
Substantial transformation In an FTA, rules of origin often require that inputs from outside the FTA undergo substantial transformation in order for the outputs to qualify for preferential treatment. That is most commonly defined by a change in tariff heading.
Substitute 1. Two goods are substitues if they serve largely the same purposes, so that one can be used or consumed in place of the other.
2. Formally, one good is a substitute for another if an increase in demand for one (or a fall in its price) causes a decrease in demand for the other. Opposite of complement.
Substitute in production One good is a substitute for another in production if an increase in output of one (or a rise in its price) causes a decrease in output of the other.
Substitution account Proposal, never enacted, for the IMF to create means for countries' central banks to exchange their US dollar reserves for SDRs. "The idea foundered on the question of who would take the losses if the dollar depreciated." [Source]
Substitution effect That portion of the effect of price on quantity demanded that reflects the changed tradeoff between the cost of the good and the costs of other alternatives. Contrasts with income effect.
Sudden stop A large negative swing in capital inflows, such as emerging markets especially may experience if they have financed current account deficits with short-term borrowing. Term is due to Calvo (1998).
Suez Canal Officially opened in 1869, this canal allows ships to move between the North Atlantic and the Indian Ocean via the Mediterranean and Red Seas. This drastically reduced the time and cost of transporting goods between South Asia and Europe.
Suez Crisis In 1956, Israel invaded Egypt, followed by the UK and France, with the aim of regaining control of the Suez canal. The crisis was resolved in part by economic means, including the threat of sanctions, when the US threatened of sell UK bonds and block IMF financial assistance. [Source]
Sugar Act of 1764 Enacted by the British Parliament as the American Revenue Act of 1764, this included a duty on sugar imported into the American colonies from other than the British West Indies. [Source]
Summit A meeting of the heads of government of two or more countries.
Sunk cost A cost that has already been incurred and cannot be reversed, which therefore cannot be avoided by current or future action. Sunk costs should therefore be irrelevant to current decisions.
Sunrise industry An industry that is new and expected to grow rapidly, often through high technology. Contrasts with sunset industry. Differs also from infant industry, which is presumed to be weak and need assistance. [Source]
Sunset clause A provision within a piece of legislation providing for its expiration on a specified date unless it is deliberately renewed.
Sunset industry argument The argument, in contrast to the infant industry argument, that a mature industry should be provided protection, either to help it restore its competitiveness, or to cushion its exit from the economy.
Super 301 A U.S. law authorizing USTR to identify the most significant unfair trade practices confronting U.S. exports and to seek to eliminate them. In contrast to Section 301, this does not require a private party to initiate the action. [Source]
Superior good A good the demand for which is income elastic, so that consumers spend a larger fraction of income on it as income rises.
Supermajority A specified fraction significantly greater than 50%. Often required in votes to make major changes in an agreement among multiple parties.
Supernatural trading bloc A trading bloc among countries that are natural trading partners but that, because its tariff preferences are too extreme or transport costs with the outside world are too low, reduces world welfare. Due to Frankel (1997).
Superstar See export superstar
Supplier surplus Same as producer surplus, but recognizing that suppliers in some markets are not producers, even though the concept remains valid as measuring benefit to suppliers.
Supply 1. The act of offering a product for sale.
2. The quantity offered for sale.
3. The quantities offered for sale at various prices; the supply curve.
Supply chain The sequence of steps, often done in different firms and/or locations, needed to produce a final good from primary factors, starting with processing of raw materials, continuing with production of perhaps a series of intermediate inputs, and ending with final assembly and distribution.
Supply curve The graph of quantity supplied as a function of price, normally upward sloping, straight or curved, and drawn with quantity on the horizontal axis and price on the vertical axis. Supply curves for exports and for foreign exchange usually have the same qualitative properties as supply curves for labor, being potentially backward bending.
Supply elasticity The elasticity of a supply function, usually with respect to price.
Supply function The mathematical function explaining the quantity supplied in terms of its various determinants, including price; thus the algebraic representation of the supply curve.
Supply price The price at which a given quantity is supplied; thus the supply curve viewed from the perspective of price as a function of quantity. This is not well defined if the supply curve is backward bending.
Supply push As a cause of international migration, supply-push factors are conditions in the sending country that migrants seek to escape. As opposed to demand pull.
Supply shock A shock on the supply side of a market. Thus an unexpected shift, up or down, in the supply curve.
Supply side Anything that contributes to supply, as opposed to demand, in a market or, especially, in the aggregate economy; aggregate supply.
Supply side constraint This typically refers to any of a list of reasons why a developing country may find it hard to exploit its comparative advantage if it were to liberalize trade. The list includes inadequate infrastructure, low productivity, and lack of information about markets. Some reflect legitimate needs for trade facilitation; others are just excuses for protectionism.
Support price The price guaranteed by a government price support program. Typically it requires that the government buy the product at that price. If the market clearing price is lower, this raises the price to that level and causes the government to acquire the resulting excess supply.
Supranational Transcending nations, especially through organizations that encompass more than one nation, such as the European Union
Surcharge See import surcharge.
Surety company Usually a subsidiary or division of an insurance company, this agrees to be liable for the debt, default, or failure of the issuer of a surety -- such as a customs bond -- against losses due to this failure. [Source]
Surtax See import surtax.
Surplus 1. In the balance of payments, or in any category of international transactions within it, the surplus is the sum of credits minus the sum of debits. Also called the "balance" for that category. Thus the balance of trade is the same as the trade surplus, and similarly for merchandise trade, current account, and financial account.
2. The benefit derived by market participants when they buy or sell all they want at a given price, rather than transacting each unit at a price equal to their marginal benefit: consumer surplus and producer surplus.
Surrender requirement An obligation imposed by a government or central bank to sell foreign exchange, when acquired, to the central bank, usually as a means of managing the exchange rate or international reserves. [Source]
Surrogate country A country whose data are used in place of data from a country of interest, when the latter are unavailable or not trusted. Most notably, sources of price and cost data for anti-dumping cases against what are considered nonmarket economies.
Survey of Adult Skills "An international computer-based household survey of adults aged 16-65 years," ... done in "10-yearly cycles" by OECD's PIAAC. "It measures adults' proficiency in key information-processing skills -- literacy, numeracy and problem solving" and ranks countries by the results.
Suspension See duty suspension.
Suspension agreement An agreement between an importing government and a foreign exporting firm to limit its exports and thus forestall the levying of anti-dumping duties or countervailing duties.
Sustainable development Economic development that is achieved without undermining the incomes, resources, or environment of future generations.
Sustainable Development Goals Formally called the 2030 Agenda for Sustainable Development, this is a set of 17 goals and corresponding 169 targets agreed upon by the UN on September 25, 2015, replacing the Millenium Development Goals.
Sustainable Economic Development Assessment A measure of well-being based on 40 indicators in 143 countries produced most recently in 2019 by the Boston Consulting Group.
Swadeshi Movement Officially proclaimed August 7, 1905, at a Calcutta, India, townhall, this called for using goods produced in India instead of imports, especially from Britain. It was the forerunner of today's Make in India movement. [Source]
Swan diagram A diagram illustrating the conflict between internal balance and external balance as they respond to a country's fiscal deficit and its costs relative to the world (and thus its exchange rate.) Due to Swan (1955).
Swap 1. In exchange markets, this is a simultaneous sale of a currency on the spot market together with a purchase of the same amount on the forward market. By combining these two transactions into a single one, transaction costs may be reduced.
2. An arrangement between two central banks whereby they each agree to lend their currency to the other. A swap line.
Swap line An arrangement between central banks for exchange of their currencies. At the end of a maturity period, the transaction is reversed at the initial exchange rate, though it may be extended if the line remains open. Swap lines were introduced by the Fed in 1962.
Swap rate The difference between the spot and forward exchange rates. Thus the price of a swap.
Swap scheme A form of countertrade in which goods are exchanged for goods, but at different locations so as to reduce transport costs.
Sweatshop A manufacturing workplace that treats its workers inhumanely, paying low wages, imposing harsh and unsafe working conditions, and demanding levels of performance that are harmful to the workers.
SWF Sovereign wealth fund
SWFI Sovereign Wealth Fund Institute
SWIFT Originally the Society for Worldwide International Financial Telecommunication, now SWIFT, this Belgium-based cooperative of financial institutions is a platform for exchanging financial information. SWIFT Codes are used to transmit funds among banks internationally. Alternatives include CIPS and SPFS.
Swiss formula A formula devised during the Tokyo Round for reducing tariffs in a manner that would harmonize them. The formula is tnew=(toldM)/(told+M), where the t's are the new and old tariffs, in percent, and M is the maximum possible new tariff. Somebody, presumably Swiss, was very clever! Contrasts with a linear cut.
Swiss franc See franc.
Switch trading A form of countertrade in which a buyer in one country of exports from a second pays for it with an obligation due from a third party. [Source]
System See Continental system and American system.
System for Transfer of Financial Messages SPFS
Systematic Integrated Framework for Trade Analysis Trade SIFT is a tool for trade policy analysis, incorporating data on trade and trade barriers together with facilities to calculate and display various standard indicators from those data, such as revealed comparative advantage and the Grubel-Lloyd index of intra-industry trade.
Systemic 5 The group of five economies -- China, Euro Area, Japan, United Kingdom, and the United States -- identified by the IMF as crucial for the stability of the world economy due to macroeconomic spillovers to other countries. [Source]

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