Facilitating payment
A facilitating (or facilitation) payment is payment for "routine governmental action," such as providing normal services. It is, in fact, a bribe, but a small one that does not induce illegal or exceptional behavior. Making such a payment abroad is legal for U.S. firms under the
Foreign Corrupt Practices Act, but not for U.K. or German firms, and it is also illegal in many countries where payments are made.
Factor
1. Primary factor.
2. Sometimes refers to
any input to production.
3. Anything that helps to cause something, as a "contributing factor."
Factor abundance
The abundance or
scarcity of a
primary factor of production. Because, in the short run at least, the supplies of primary factors are more or less fixed, this can be taken as given for determining much about a country's trade and other economic variables. Fundamental to the
H-O Model.
Factor accumulation
An increase in the quantity of a factor, usually
capital or sometimes
human capital.
Factor augmenting
Said of a technological change or
technological difference if production functions differ by scaling of a factor input only:
F2(
V1,
V2)=
F1(λ
V1,
V2), where
F1(·) and
F2(·) are the production functions being compared,
V1 is the factor being augmented,
V2 is a vector of all other factor inputs, and λ is a constant.
Factor bias
See bias.
Factor content
The amounts of primary factors used in the production of a good or service, or in a vector of quantities of goods and services, such as the
factor content of trade or the
factor content of consumption. Can be either
direct or
direct-plus-indirect. With
F factors,
G goods, and
A={
afg} the
Fx
G matrix of factor
f per unit output of good
g, the factor content of a
G-vector
X of trade or consumption is
AX.
Factor content pattern of trade
The trade pattern of a country or the world, focusing on
factor content of the goods and services that are traded, as opposed to the
commodity pattern of trade.
Factor cost
The cost of the factors used in production. The term is used especially when the value of economic activity in a sector or an economy can be measured or valued either at "factor cost," adding up payments to factors, or at "
market value or
market price," adding up revenues from goods sold.
Factor cost advantage
A comparative advantage of a country, or a
competitive advantage of a firm or national industry, that derives from low
factor cost, as opposed, for example, to a superior technology.
Factor endowment
The quantity of a primary factor present in a country. See
endowment.
Factor income
The total earnings of a factor, thus its
factor price times the quantity of
factor service that it provides.
Factor intensity
The relative importance of one factor versus others in production in an industry, usually compared across industries. Most commonly defined by ratios of factor quantities employed at common
factor prices, but sometimes by
factor shares or by
marginal rates of substitution between factors.
Factor intensity reversal
A property of the technologies for two industries whose ordering of relative
factor intensities differs at different factor prices. One may be relatively capital intensive at high relative wages and labor intensive at low relative wages. Some propositions of the
Heckscher-Ohlin Model require the absence of FIRs.
Factor intensity uniformity
The absence of factor intensity reversals.
Factor market
The market for a factor of production, such as labor or capital, in which supply and demand interact to determine the equilibrium price of the factor.
Factor mobility
The degree to which a factor of production, such as labor or capital, is able to move, either among industries or among countries, in response to differences in its
factor price, thus tending to eliminate such differences.
Factor movement
Usually means international factor movement.
Factor of production
Factor (definition 1).
Factor payment
The amount paid to a factor for its service in production.
Factor price
The price paid for the services of a unit of a primary factor of production per unit time. Includes the
wage or salary of labor and the
rental prices of land and capital. Does
not normally refer to the price of acquiring ownership of the factor itself, which might be called the "purchase price."
Factor price equalization
The tendency for trade to cause factor prices in different countries to become identical.
Ohlin (1933) argued that trade would bring factor prices closer together.
Samuelson (1948, 1949) showed formally the circumstances under which they would actually become equal.
Factor Price Equalization Theorem
One of the major theoretical results of the Heckscher-Ohlin Model with at least as many goods as factors:
free and
frictionless trade will cause
FPE between two countries if they have identical,
linearly homogeneous technologies and their
factor endowments are in the same
diversification cone.
Factor price frontier
A curve in factor space showing the minimum combinations of
factor prices consistent with absence of profit in producing one or more goods, given their prices. Since, with
perfect competition, profit implies disequilibrium, this shows a lower bound on equilibrium factor prices.
Factor-price space
A graph with factor prices on the axes.
Factor productivity
1. The productivity of a single factor may refer to either its marginal or its
average product.
2. Total factor productivity.
Factor proportions
1. The ratios of factors employed in different industries. See factor intensities.
2. The ratios of factors with which different countries are endowed. See
factor endowments.
Factor Proportions Model
The Heckscher-Ohlin Model of trade.
Factor reversal
See factor intensity reversal.
Factor-saving
Biased in favor of using less of a particular factor.
Factor scarcity
See factor abundance.
Factor service
The contribution that a factor provides to the productive process, such as man-hours of labor, acre-months of land, etc.
Factor share
The fraction of payments to value added in an industry that goes to a particular
primary factor.
Factor space
A graph in which the axes measure quantities of factors.
Factor-using
Biased in favor of using more of a particular factor.
Factoral terms of trade
Either single factoral terms of trade or
double factoral terms of trade. Both terms were introduced by
Viner (1937).
[Origin]
Factoring
See export factoring.
Factory Asia
The network of cross-border supply chains that began to emerge in Asia in the 1960s centered on Japan, then Taiwan and South Korea, but that expanded dramatically with the opening of China.
Factory gate price
Ex factory price.
Fair price
1. In the context of the Fair Trade Movement, a fair price is a price that, when paid to the individual producers of a product such as coffee or handicrafts, gives them access to a viable standard of living, including nutrition, health care, education, and cultural autonomy.
2. In
anti-dumping cases,
fair value.
Fair trade
1. In the context of the Fair Trade Movement, this is international trade in which producers are paid a
fair price.
2. In the context of
trade policy, this is trade that is not
unfair -- that is,
subsidized or
dumped.
Fair Trade Federation
An organization of businesses in North America that adhere to the principles of the
Fair Trade Movement.
Fair Trade Movement
A system overseen by several international
NGOs: products of developing countries are purchased at a
fair price from producers and sold with a fair trade label to consumers in developed countries. Other objectives include environmental sustainability, capacity building, and keeping prices to consumers low by bypassing more conventional intermediaries.
Fair value
In anti-dumping cases, the value to which the export price is compared, which is either the price charged in the exporter's own domestic market or some measure of their cost, both adjusted to include any transportation cost and tariff needed to enter the importing country's market. See
dumping.
Fairness argument for protection
The view that it is unfair to make domestic firms compete with foreign firms that have an advantage, due to either low wages or foreign government policies. This misinterprets economic activity as a game that one must win, rather than as a way to use limited resources to satisfy human needs. See level playing field.
Fairtrade International
An international
NGO promoting
fair trade.
Fama coefficient
See Fama regression.
Fama puzzle
The forward premium puzzle.
Fama regression
A regression of the future spot exchange rate minus the current spot rate on the
forward premium, the estimated
coefficient of which is sometimes called the
Fama coefficient. Due to
Fama (1984).
FAO
Food and Agriculture Organization of the United Nations
FAR
Federal Acquisition Regulation
Farm subsidy
Payments by governments to farmers. These may be in return for producing, as when government buys a crop at a higher-than-market price; for not producing, as when it pays to leave land fallow; or for neither, as when payments are for income maintenance or environmental purposes.
FAS
Same as FOB but without the cost of loading onto a ship. Stands for "free alongside ship."
FASB
Financial Accounting Standards Board
Fast track
A procedure sometimes adopted by the U.S. Congress, at the President's request, committing to simple majority vote on trade agreements without amendment. In turn, the President adheres to a specified timetable. Introduced in the Trade Act of 1974. Now called
trade promotion authority.
FATCA
Foreign Account Tax Compliance Act
FATF
Financial Action Task Force
Father of the WTO
1. Due to his writings in the years before the creation of the World Trade Organization, University of Michigan (and later Georgetown University) Professor John H. Jackson (1932-2015) is most often credited as the "Father of the WTO.""
[Source]
2. Others that have sometimes been mentioned as "father of the WTO" are: the
GATT; Cordell Hull; and Ronald Reagan.
[Source]
FATS
Foreign Affiliates Trade in Services
Favorable balance of trade
An excess of exports over
imports, so that the
balance of trade is positive. This view, that a positive trade balance is good for the country, harks back to
mercantilist views, and ignores that the country is currently deprived of consuming part of what it produces.
Favorable exchange rate
A special exchange rate, different from the
market or
official rate, provided by government on a transaction as an indirect way of providing a
subsidy.
Favored trading partner
A foreign country with which a country takes actions to expedite trade. Japan and South Korea, in particular, have such lists, as became news in 2019 when first Japan, then Korea, removed the other from their lists in response to trade frictions between them
FBX
Freightos Baltic Index
FCA
Free carrier
FCDO
The Foreign, Commonwealth & Development Office of the United Kingdom, which replaced
DfID in 2020.
FDA
Food and Drug Administration
FDI
Foreign Direct Investment
FDI inflow
Property located within the domestic country acquired by a foreign owner.
FDI outflow
Property acquired abroad by a domestic owner.
FDI Regulatory Restrictiveness Index
A measure of statutory restrictions on
FDI constructed by the
OECD for 18 countries (as of February 2025).
FDI spillover
See spillover.
FDII
Foreign-derived intangible income.
FDPR
Foreign direct product rule
Fear of floating
The resistance by many countries that have officially floating exchange rates to allowing their currencies to move as much as the market would require. Term used by
Calvo and Reinhart (2002).
Fed
The Federal Reserve System of the United States.
Federal Acquisition Regulation
FAR "is the primary regulation for use by all executive agencies [of the US federal government] in their acquisition of supplies and services with appropriated funds." When the US agrees in a
GPA to allow certain non-US suppliers to be eligible for federal procurement, it adds that information to the FAR.
[Source]
Federal budget deficit
The budget deficit of the federal (i.e., national, in a country composed of states) government.
Federal funds rate
The interest rate on very short-term loans from one commercial bank to another in the United States. This rate is used as a target for monetary policy by the
Fed.
Federal Register
The official journal of the federal government of the United States.
Federal Reserve Economic Data
A large online database of US and international time series data maintained by the St. Louis branch of the
Federal Reserve System.
Federal Reserve System
The
central bank of the United States.
Feenstra ratio
The adjustment derived by Feenstra (1994) to augment the standard import price index to capture the benefits of greater variety. It was named by
Arkolakis et al. (2008) and defined by them as
F = { [ (Σ
Ω'vi'/Σ
Ω'∩Ωvi') / (Σ
Ωvi/Σ
Ω'∩Ωvi) ] }
−1/(σ−1), where
vi are imports of product
i, Ω is the set of products imported, both with primes for the given year, and σ is the
elasticity of substitution among products in the
CES utility function.
FEER
Fundamental equilibrium exchange rate
Feldstein-Horioka puzzle
The finding by Feldstein and Horioka (1980) that levels of savings and investment are highly correlated across countries, suggesting that international
capital mobility is less than many had previously thought.
Fen
Subunit of the renminbi or
yuan.
FGV
Fundação Getulio Vargas
Fiat money
A money whose usefulness results, not from any intrinsic value or guarantee that it can be converted into gold or another currency, but only from a government's order (fiat) that it must be accepted as a means of payment.
Fifty Years Is Enough
50 Years Is Enough.
FII
1. Foreign institutional investor.
2. Foreign institutional investment.
Fill rate
See quota fill rate.
Final good
A good that requires no further processing or transformation to be ready for use by consumers, investors, or government. Contrasts with intermediate good.
Final trade barrier
See definitive.
Finance Committee
The committee of the U.S. Senate that deals with taxation, including tariffs and other international trade policies.
Financial
Relating to financial assets or
financial markets.
Financial account
This is the term used in the balance of payments statistics, since sometime in the 1990s, for what used to be called the "capital account." See
capital account, the "common" definition 2.
Financial Accounting Standards Board
The private-sector organization that sets accounting standards for the United States, the
Generally Accepted Accounting Principles.
Financial Action Task Force
An intergovernmental organization established in 1989 to combat
money laundering, terrorist financing, and related threats. It had
39 member countries as of April 2022. It maintains both a
black list and a
grey list of countries of concern.
Financial asset
An asset whose value arises not from its physical embodiment (as would a building or a piece of land or capital equipment) but from a contractual relationship: stocks, bonds, bank deposits, currency, etc.
Financial capital
The value of financial assets, as opposed to real assets such as buildings and capital equipment.
Financial crisis
1.
A loss of confidence in a country's currency or other financial assets causing international investors to withdraw their funds from the country.
2.
A loss of confidence in banks and other financial institutions leading to failures of those instituions and drying up of credit.
Financial flow
Any and all of the transactions in the financial account of the
balance of payments, most importantly international borrowing and lending and acquisition across borders of financial and real assets.
Financial instrument
A document, real or virtual, having legal force and embodying or conveying monetary value.
Financial integration
Financial market integration
Financial intermediary
An institution that provides indirect means for funds from those who wish to save or lend to be channeled to those who wish to invest or borrow. Examples include banks and other depository institutions, mutual funds, and some government programs.
Financial market
A market for a financial instrument, in which buyers and sellers find each other and create or exchange financial assets. Sometimes these are organized in a particular place and/or institution, but often they exist more broadly through communication among dispersed buyers and sellers, including banks, over long distances.
Financial market integration
Freedom of participants in the financial markets of two countries to transact on markets in both countries, thereby causing returns on comparable assets in the two countries to be equalized through
arbitrage.
Financial panic
A sudden loss of confidence in a financial system, causing widespread attempts to sell stocks and bonds and withdraw funds from banks, often stimulated by a large financial entity (speculator, bank, etc.) making a large loss and defaulting on commitments.
Financial recession
A recession that is accompanied by a
financial crisis. There is evidence that financial recessions tend to be deeper and longer than recessions without a financial crisis.
[Source]
Financial Secrecy Index
A
measure of secrecy within national financial systems, produced by the
Tax Justice Network.
Financial stability
The avoidance of financial crisis.
Financial Stability Board
"An international body that monitors and makes recommendations about the global financial system." Its members include
central banks, ministries of finance, and financial agencies of many countries, plus several international institutions. In 2009 it succeeded the
Financial Stability Forum.
Financial system
The complex of institutions, including especially banks and their government and international regulators, that facilitate payments and link lenders with borrowers and investors with assets. Increasingly, separate national financial systems have become integrated to form a global financial system.
Financial transaction
Most transactions -- e.g., purchases and sales of goods or property -- have a financial component: payment. However, this term usually means a transaction that is only financial, such as the act of borrowing, depositing funds in a bank account, purchasing a contract on a forward market, etc.
Financial transparency
This, according to the SEC, means "timely, meaningful and reliable disclosures about a company's financial performance." It is a crucial requirement for informed investment in companies. It is also necessary for exposing, and therefore preventing,
bribery and other forms of
corruption.
Finger-Kreinin index
A measure of export similarity between two countries, introduced by Finger and Kreinin (1979). With
Xi(
c,
m) = the share of commodity
i in country (or region)
c's exports to market
m, similarity between exports of countries
a and
b to market
m is
S(
ab,
m) = {Σ
i min [
Xi(
a,
m),
Xi(
b,
m)]}100 = 100{1−[Σ
i|
Xi(
a,
m)−
Xi(
b,
m)|]/2}.
FIR
Factor intensity reversal.
Firewall
See Great Firewall.
Firm
An organization, possibly as small as a single person or as large as many thousands, that produces a good and/or provides a service that it sells to the public, the government, or other firms, using the proceeds to cover its costs. Also a business, a company, or an enterprise.
FIRRMA
Foreign Investment Risk Review Modernization Act
First best
See second best.
First degree homogeneous
Homogeneous of degree 1.
First generation currency crisis
A currency crisis under a
pegged exchange rate that results from unsustainable
fiscal policy, as modelled by
Krugman (1979b).
[Source]
First globalization
An early period of globalization that occurred in the late 19th century, after innovations in land and sea transportation, and that ended with the start of World War I in 1914.
First mover advantage
The advantage that a firm or country may derive from being the first to enter a market, or from being the first to use a new technology, advertising technique, etc.
First order compliance
1. Compliance with "standing, substantive rules [as] embodied in treaty arrangements." In contrast with
second order compliance which is in response to an "authoritative decision of a third party."
[Source]
2. In the context of a
WTO dispute, acting in accordance with what a
panel or
Appellate Body decision implies for cases other than the one just decided. In contrast with
second order compliance that responds only to the currently decided case and awaits further litigation to decide similar cases.
[Source]
First order condition
One of the mathematical necessary conditions for maximization, used routinely in solving economic models. Typically, it consists of setting equal to zero the derivative of the function being maximized (or its Lagrangian) with respect to a variable that can be controlled.
First sale customs valuation
The valuation of an imported good, for levying an ad valorem tariff, based on the first sale of the product as it left the country of origin rather than any transactions subsequent to that.
[Source]
First theorem of welfare economics
The proposition of welfare economics that a
perfectly competitive general equilibrium is
Pareto optimal. A corollary is that
free trade is Pareto optimal among countries.
First world
1. See third world for use of the term during the Cold War.
2. Today this refers of high-income countries, as in
first world problems that are the minor problems that can afflict only those of high incomes.
Fiscal aggregate
Fiscal aggregates are the total revenues, and total expenditures, of a government.
Fiscal controversy
See fiscal question.
Fiscal crisis
This occurs when a unit of government runs a fiscal deficit and is unable to borrow to finance it. For a national government this is most likely due to a large accumulated
debt together with doubts about its ability or willingness to service that debt.
Fiscal deficit
A deficit in the government budget of a country. Thus the
budget deficit.
Fiscal discipline
Management of the government budget so as to avoid excessive fiscal deficits. Thus restraint of government spending and/or willingness to tax.
Fiscal drag
The dampening effect on aggregate demand that occurs when an expanding economy creates additional tax revenues, especially under a
progressive income tax. Thus an example of an
automatic stabilizer.
Fiscal policy
Any macroeconomic policy involving the levels of government purchases, transfers, or taxes, usually implicitly focused on domestic goods, residents, or firms.
Fiscal question
Also called the fiscal controversy, the debate in Britain in 1903-4 as to whether it should depart from its practice of free trade in order to be able to provide tariff preferences to members of the British
Commonwealth.
Fiscal restraint
Fiscal discipline.
Fiscal stimulus
A tax cut and/or an increase in government spending. So called because it tends to increase aggregate demand and therefore the level of economic activity in the short run.
Fiscal union
A form of integration among countries in which they share and coordinate
fiscal policies to some degree. They share tax revenues to some extent, so that some countries need not finance all of their own spending themselves. They may also borrow jointly, issuing
bonds as a group rather than individually.
Fisher effect
The theory that a change in the expected rate of inflation will lead to an equal change in the
nominal interest rate, thus keeping the
real interest rate unchanged. Due to
Fisher (1930).
Fisher Equation
The equation relating the nominal interest rate,
n, to the
real interest rate,
r, and the
rate of inflation,
i, in effect defining
r: (1+
n)=(1+
r)(1+
i). It is the nominal return needed to yield an
inflation-adjusted real return of
r. If
r and
i are small fractions,
n≈
r+
i. Due to
Fisher (1930).
Fisher price index
In order to avoid the opposite biases of the Laspeyre and
Paache price indices, Irving Fisher suggested using their geometric average:
I Fisher = 100[(Σ
pgqb / Σ
pbqb)(Σ
pgqg / Σ
pbqg)]
1/2, where
pb,
pg are prices in the
base and
given years respectively. This is sometimes, not uniquely, called the
ideal price index.
Five Eyes
An alliance for sharing intelligence among five English-speaking countries: Australia, Canada, New Zealand, the United Kingdom and the United States.
Fixed cost
The cost that a firm bears if it produces at all and that is independent of its output. The presence of a fixed cost tends to imply increasing returns to scale. Contrasts with
variable cost.
Fixed exchange rate
Usually synonymous with a pegged exchange rate. Although "fixed" seems to imply less likelihood of change, in practice countries seldom if ever achieve a truly fixed rate.
Fixed factor
A factor of production the quantity of which cannot be changed. This is usually the case only in the
short run.
Fixed trade cost
A trade cost that is incurred for any quantity of trade at all, and that does not rise with that quantity. May exist for
exports or for
imports, and for any trade regardless of origin/destination or separately for each origin/destination. Contrasts with
variable trade cost.
Flag of convenience
Registration of a ship in a country different from that of the ship's owners, and indicating that by flying the flag of that country, making it subject to the taxation, laws, and regulations of that country.
[Source]
FLAR
Fondo Latinoamericano de Reservas.
Flexible exchange rate
Same as floating exchange rate.
Flexible price model
Most microeconomic models and models of international trade assume that prices adjust flexibly so as to achieve equilibrium in all markets. In contrast, some macroeconomic models assume that some prices are
sticky.
Flexible tariff
Authority sometimes granted to the US president in a tariff legislation to vary the size of tariffs. The
Fordney McCumber Tariff and the
Smoot Hawley Tariff both permitted such changes, up or down by up to 50%, as needed to equalize foreign and domestic costs.
[Source]
Flight to safety
The tendency of holders of financial assets to respond to uncertainty and disruption in the international economy by shifting their holdings to assets that they view as safe. These tend to be assets in the United States and denominated in U.S. dollars, even when the disruption has originated in the United States.
Floater
A ship -- most commonly an oil tanker -- parked at sea waiting for the price of the product being shipped to go up.
[Source]
Floating exchange rate
A regime in which a country's exchange rate is allowed to fluctuate freely and be determined without intervention in the exchange market by the government or central bank.
Floor
See price floor.
Flow
A flow, or flow variable, is an economic magnitude describing behavior that occurs over time and is therefore meaningful only relative to the unit of time. Examples are the value of exports (dollars per year),
demand for
foreign exchange (euros per day), and
migration (persons per month). Contrasts with a
stock.
Flow of funds
1. "Flow of funds (FOF) are financial accounts that are used to track the net inflows and outflows of money to and from various sectors of a national economy."
[Source]
2. International flow of funds may refers to a country's
balance of payments.
Fluctuate
To move up and down.
Fluctuating exchange rate
Same as flexible or
floating exchange rate.
Fly America Act
US legislation from 2011 requiring "all air travel and cargo transportation services funded by the federal government ... to use a 'U.S. flag' air carrier service." There are several exceptions, including if "there is an applicable
Open Skies Agreement in effect that meets the requirements of the Act."
Flying Geese
The Flying Geese model (or paradigm) of economic development depicts changing patterns of comparative advantage and trade over time, as developing countries follow more advanced countries from which they acquire technologies through trade and investment. [Origin]
FMG
Friends of Multilateralism Group
FMI
Fondo Monetario Internacional (Spanish for International Monetary Fund)
FOB
The price of a traded good excluding transport cost. Standing for "free on board," it is used only as (lower case) initials, f.o.b. It is the price after loading on a ship but before shipping, thus
not including transportation, insurance, and other costs to get from one country to another. Contrasts with
CIF and
FAS.
FOC
First order condition.
FOCAC
Forum on China-Africa Cooperation
FOF
Flow of funds.
FOGS Negotiations
In the Uruguay Round, this portion of the negotiations dealt with the
Functioning of the GATT System and resulted ultimately in the formation of the
WTO and its
dispute settlement mechanism.
FOIP
Free and Open Indo-Pacific
FOMO
Fear of Missing Out, usually in lower case "fomo". Said to be a motivation behind countries seeking to negotiate new trade agreements, for fear that their exporters will lose out to those from other countries that achieve such agreements first.
Fondo Latinoamericano de Reservas
A cooperative arrangement among
eight countries of Latin America in which they share
international reserves and coordinate
exchange market intervention. Similar to the
Chiang Mai Initiative.
Food aid
Foreign aid provided in kind, as shipments of agricultural products from the donor country to the recipient country. Such aid may be motivated more by the needs of donor-country farmers than by needs of recipient-country consumers, and may actually be harmful to recipient-country farmers.
Food and Agriculture Organization of the United Nations
A
UN body whose purpose is to "defeat hunger" throughout the world mostly by sharing information and expertise.
[Source]
Food and Drug Administration
The US government agency that "is responsible for protecting the public health" by ensuring the safety of food, drugs, medical devices and cosmetics. It "regulates 80 to 90 percent of the 1ドル trillion of imported and domestic food purchased each year."
[Source]
Food Safety and Inspection Service
In the US Agriculture Department, this "is responsible for assuring that U.S. imported meat, poultry and egg products are safe, wholesome, unadulterated, and properly labeled and packaged." It also provides guidance to US exporters of meat and poultry, and it maintains the Import and Export Library.
[Source]
Food Safety and Modernization Act
Signed by the US President in 2011, this was "the first substantial change in food safety regulation in the US since 1938." It "requires the registration of all food manufacturers and farmers that serve the American market, including those located abroad."
[Source]
Food security
1. The reliable availability of a sufficient quantity and quality of nutritious food for a population.
2. As used by some NGOs, the term also requires that localities or regions be
self sufficient, in apparent ignorance of the impossibility of combining this with the first definition.
Footloose factor
A factor that can move easily across national borders, in contrast to one that, due to inclination or constraints, cannot. Footloose factors are sometimes thought to have an advantage in a
globalized economy.
Footloose industry
An industry that is not tied to any particular location or country, and can relocate across national borders in response to changing economic conditions and incentives. Many manufacturing industries seem to have this characteristic.
Force Bill
An act of the US Congress passed in 1833 authorizing the President to use military force to protect the customs authority and collect
tariffs. It was a response to the
Nullification Crisis.
[Source]
Force majeure
An event such as war, extreme weather, or other disruption that cannot reasonably be anticipated. Contracts, including trade contracts, often include provisions that cancel them if they cannot be fulfilled due to a force majeure.
Forced labor
Labor that is compelled to work, subject to physical punishment if it does not.
Fordney-McCumber Tariff
The Tariff Act of 1922, which raised tariffs on a number to raw materials and agricultural products, was signed into law on September 21, 1922 by President Harding.
[Source]
Foreign Account Tax Compliance Act
A US 2010 law meant to deter U.S. taxpayers with foreign accounts from avoiding US tax. It requires foreign financial institutions to report information to the US government.
Foreign Adversary Law
Protecting Americans from Foreign Adversary Controlled Applications Act
Foreign Affiliates Trade in Services
Exports and imports of services by domestically located affiliates of foreign firms.
Foreign aid
Aid provided by one country to another.
Foreign asset position
The amount of assets that residents of a country own abroad. Also used to mean the net foreign asset position.
Foreign, Commonwealth & Development Office
The unit of the United Kingdom government that replaced DfID in 2020.
Foreign Corrupt Practices Act
U.S. law, enacted 1977, that prohibits U.S. firms from bribing foreign officials to obtain or retain business. The law permits, however, facilitating payments.
Foreign debt
The amount a country owes to foreigners. More precisely, the negative of the net foreign asset position.
Foreign-derived intangible income
As its name suggests, FDII is the portion of a corporation's intangible income that is derived from foreign markets. It is determined by a formula in the
TCJA.
Foreign direct investment
Acquisition or construction of physical capital by a firm from one (source) country in another (host) country. The term sometimes refers to the flow per unit time, sometimes to the accumulated
stock.
Foreign direct product rule
A US rule since 1959, FDPR regulates "the reexport and transfer of foreign-made items if their production involves" aspects deemed to be from the US. Before 2013, this was limited to a few items sold to Cold War adversaries. Since then the number and coverage of these rules has been greatly expanded.
[Source]
Foreign exchange
Foreign currency; any currency other than a country's own.
Foreign exchange market
The exchange market.
Foreign exchange market intervention
Exchange market intervention.
Foreign exchange rate
The exchange rate.
Foreign exchange reserves
International reserves
Foreign exchange risk
Exchange risk.
Foreign exchange shortage
The difficulty that faces firms and individuals when an over-valued currency limits the
supply of
foreign exchange below
demand.
Foreign institutional investor
An institutional investor based in another country. Some countries place upper limits on the share of a domestic company that an FII can own.
Foreign institutional investment
1. Investment by a foreign institutional investor.
2. International
portfolio investment, in contrast to
foreign direct investment.
Foreign investment argument for protection
The use of protection to attract
FDI from abroad. It does work, since much FDI has been motivated by firms trying to get behind a
tariff wall to sell their products. In an otherwise
nondistorted economy, however, the cost in terms of more expensive goods is higher than the benefit from additional capital.
Foreign Investment Risk Review Modernization Act
Signed into US law August 13, 2018, this "modernizes" the review process of the Committee on Foreign Investment in the United States. It expands the transactions that may be reviewed and allows the president to take action for national security concerns.
Foreign policy for the middle class
What President Biden said should be the basis for US foreign policy, including trade policy. It departs from the implicit view that policy that benefits the US as a whole must necessarily benefit the average person, because of distributional effects that policies often have.
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Foreign portfolio investment
Portfolio investment across national borders and/or across currencies.
Foreign repercussion
The feedback effect on a domestic economy when its macroeconomic changes cause large enough changes abroad for those in turn to cause further changes at home. Most commonly, a rise in income stimulates imports, causing an expansion abroad that in turn raises demand for the home country's exports.
Foreign reserves
International reserves
Foreign reserves crisis
The financial crisis that results from (or causes) a central bank coming close to running out of
international reserves.
Foreign Sales Corporation
Refers to a provision of the U.S. tax code that grants income-tax rebates to American exporters if they form what may be a largely artificial foreign subsidiary called an FSC. This has been the subject of a trade dispute with the
EU, which complained to the
WTO that this constitutes an illegal
export subsidy.
Foreign sector
This term is used in many ways, including the following:
1. The portion of an economy or an economic model that includes exports and
imports, and perhaps other international transactions.
2. The portion of an economy that is owned by foreigners.
3. The rest of the world, outside of the country being considered.
4. In the accounts of a country, those portions involving international transactions.
Foreign Subsidies Regulation
A set of European Union rules that came into force January 12, 2023, to address "
distortions caused by foreign
subsidies." It "will allow the EU to remain open to trade and investment, while ensuring a
level playing field for all companies operating in the
Single Market."
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Foreign trade
Trade (definition #3)
Foreign trade deficit
Trade deficit
Foreign trade zone
An area within a country where imported goods can be stored or processed without being subject to import duty. Also called a free zone, free port, or bonded warehouse. Usually smaller than a free trade zone.
Forex
A common short-hand or abbreviation for foreign exchange, often used to refers to foreign exchange markets.
Forfaiting
The purchase of an exporter's receivables -- the amounts owed by importers to whom goods have already been delivered -- at a discount by a specialized financing firm or a department of a bank. Similar to export factoring. Both are methods of
trade finance.
Former Yugoslav Republic of Macedonia
The name used for the Macedonia portion of Yugoslavia until the dispute with Greece over the name was resolved by the Prespa Agreement of June 12, 2018. As ratified by both countries on January 25, 2019 and in force as of February 12, 2019, it is now called the Republic of North Macedonia.
Formula approach
A procedure for organizing multilateral trade negotiations using a formula for tariff reductions (such as the
Swiss Formula) as a starting point. Contrasts with the
request/offer approach.
Forum on China-Africa Cooperation
A meeting of leaders from China and over 50 countries of Africa that seems to occur annually. China views it as part of its
Belt and Road Initiative
Forum on Trade, Environment & the SDGs
"The Forum on Trade, Environment & the SDGs (TESS) supports dialogue and action on trade policy to address urgent global environmental crises and advance implementation of the UN
Sustainable Development Goals."
Forum for Research in Empirical International Trade
"FREIT is an international organization dedicated to furthering research in the field of empirical international economics." It organizes several series of conferences posts working papers.
Forum shopping
Taking advantage of differences among international agreements to pursue a trade complaint under the agreement that is most favorable to one's case. For example, members of NAFTA may choose whether to file a complaint within NAFTA or within the
WTO.
Forward
On the forward market.
Forward contract
A binding commitment to buy or sell currency on a forward market.
Forward curve
In a forward market, the pattern of
forward rates, or
forward premia, over various time horizons.
Forward discount
Opposite of forward premium.
Forward exchange premium
Forward premium
Forward exchange rate
Forward rate
Forward freight agreement
A contract used by shippers and ship owners to hedge against the volatility of ocean freight rates, as reported on the Baltic Exchange. I am unsure whether it is more like a
forward contract or more like an
option.
Forward integration
Acquisition by a firm of a larger part of its distribution chain, moving it closer to selling directly to its ultimate customers.
Forward linkage
The provision by one firm or industry of produced inputs to another firm or industry.
Forward market
A market for exchange of currencies in the future. Participants in a forward market enter into a contract to exchange currencies, not today, but at a specified date in the future, typically 30, 60, or 90 days from now, and at a price (forward exchange rate) that is agreed upon today. Contrasts with
futures markets, which remain in place for several specific calendar dates.
Forward premium
The difference between a forward exchange rate and the
spot exchange rate, expressed as an annualized percentage return on buying foreign currency spot and selling it forward.
Forward premium puzzle
The Fama Puzzle, based on the Fama regression, that the
forward premium systematically under-predicts the change in the
spot rate, and sometimes is actually negatively correlated with it. This is a
puzzle, since it suggests an unexploited profitable
arbitrage opportunity.
Forward price
In any forward market, the price of the item being traded for delivery at a future date; in
exchange markets, the
forward rate.
Forward rate
Also called the forward exchange rate, this is the exchange rate on a
forward market transaction.
Forwarder
Freight forwarder
Four-firm concentration ratio
See concentration ratio.
Four Freedoms
The four freedoms aspired to by the European Union to complete its internal market: the freedom of movement of goods, services, capital, and labor.
Four Motors for Europe
A network of four strong regions -- Auvergne-Rhône-Alpes (France), Baden-Wurttemberg (Germany), Catalonia (Spain) and Lombardy (Italy) -- that signed a cooperation agreement September 9, 1988. Its purpose is to "further develop their top position as dynamic regions in Europe."
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Four Tigers
The four Asian economies that were the first to show rapid economic development after the success of Japan: Hong Kong, South Korea, Singapore, and Taiwan. Also Four Dragons.
Fourteen Points
Included in a speech January 8, 1918, these are President Wilson's guidelines for rebuilding the world after World War I. Points 2 and 3 called for free and equal international trade, and point 12, mainly about Turkey, called for free passage of ships and commerce in the Dardanelles.
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FPE
Factor price equalization.
Fragile Five
Term coined in 2013 by an analyst of Morgan Stanley for a group (since revised) of emerging market economies of greatest concern to
international investors: Brazil, Indonesia, India, South Africa and Turkey. Heavily reliant on foreign investment, they shared weak
economic growth,
current account deficits, and
weakening currencies.
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Fragile States Index
An index provided by
Fund for Peace of countries' vulnerability to disruptive change based on twelve indicators, both qualitative and quantitative, in four categories: cohesion, economic, political, and social.