commodities: products or goods which are produced to meet certain needs and which are for use or for exchange in markets (eg. fruit, cars, etc).

contractionary policies: These are policies which may contribute to a decline in economic activity, for example too high interest rates may be seen as contractionary, because business or entrepreneurs are hesitant to borrow money (because interest on credit is so high) for expanding their businesses (buying new machines, etc) or to start new businesses. Also see Expansionary Policies.

currency: Literally it means money (coins and banknotes) we use every day to buy things, but in a general sense it refer to all the money stock of a country. Our currency is the Rand, the US the Dollar and in Zambia it is the Kwacha, etc.

currency markets: Markets are generally any context where the selling and buying of goods and services take place. Currency markets are where the selling and buying of currencies, the money of any country, takes place.

deregulation: The removal of control of government laws and by-laws which regulate certain (economic) activities.

expansionary policies: Policies aimed at increasing economic activities, for example higher government spending on infrastructure development.

exports: Goods or services which are produced in one country and sold to and consumed in another country. Also see imports.

export-led growth: The growth of an economy, which is based on an increase in exports from that economy. The Asian tigers are example of such economies, they deliberately developed a manufacturing and industrial base in their countries for the production of goods (cars, computers, etc) which were then sold mainly in other countries.

free trade agreement (FIA): An agreement between two countries or amongst groups of countries aimed at a policy of non-intervention by the state in trade between their nations. Tariffs and non-tariff barrier! to trade are usually removed or lowered, whilst each country maintains its own commercial policy towards countries who are not part of the FTA. Examples are the North Atlantic Free Trade Agreement (NFTA) amongst the United States, Mexico and Canada.

Gross Domestic Product (GDP): This is the total money value of all the goods and services produced and sold by a country’s economy in one year. It does not include goods and services that are produced and not sold, and thus it problematically exclude housework and subsistence farming.

imports: Goods or services consumed (used/bought) in one country which has been bought from another country for example machinery, clothes, etc. Also see exports.

import substitution: This is a route for an economy towards industrialisation (establishing a local industrial/manufacturing base) by putting tariffs and/or quotas on the import of mainly manufacturing goods, thus making local produce less expensive than imported goods. The intention of this policy is usually to protect local industry (and jobs) from competition. The aim the longer term is to replace imports and to ensure internal economic growth. Also see export-led growth.

International Monetary Fund (IMF): The IMP was formed in 1945, following the ratification of the Articles of Agreement of the Fund at Brettonwoods in 1944. It became a specialized United Nations agency in 1947. Its is suppose to encourage international monetary cooperation, facilitated the expansion and balanced growth of international trade, assist member countries in correcting balance of payments deficits and promote foreign exchange stability.

Maastricth Agreement: This is a comprehensive agreement to take toward the integration of European economies and includes aspects such as process, conditions and timeframe towards a common currency (to be known as the Euro), trade relations, etc for all member countries.

newly industrialized countries (NIC's): Countries which over the last fifty years have leap-frogged from developing countries towards industrial country status mainly through export-led growth strategies. Most of these countries are in East and South Asia.

non-tariff barriers: These are other constraints on imports or international trade besides tariffs which gives advantage to local producers over foreign producers. Examples of non-tariff barriers include quotas - putting a limit on the amount of a specific good which can be imported and safety and technical standards - for example that certain products may not be imported because they are unhealthy, etc. Also see TARIFFS and Subsidies.

Organisation for Economic Co-operation and Development (OECD): An intergovernmental organization of mainly Western countries, whose stated aims are to (a) formulate, coordinate and promote policies designed to encourage economic growth and maintain fiscal stability in member countries; (b) to stimulate and harmonize its members' efforts regarding the provision of financial and technical aid for developing countries and (c) to contribute to the expansion of multilateral trade conducted on a non-discriminatory basis. It carries out its activities through specialized committees and agencies, such as the International Energy Agency, the OECD Nuclear Energy Agency and Development Centre.

protectionist policies: Policies aimed at protecting your markets for locally produced goods from products from other countries. Examples of such policies include tariffs, regulation, subsidies, etc.

Structural Adjustment Programs (SAP's): A set of policies by the World Bank or IMP imposed on mainly developing countries as a condition for receiving assistance from these bodies. The policies are aimed at assisting countries to manage their balance of payments and in support of adjustment and policy reform to promote future growth. It is aimed at re-organising the resource base of these economies, especially developing industrial and manufacturing export capacity. It differs from country to country, but typically include policies or programs such as currency devaluation, lifting restrictions on trade, cuts in social spending, privatization of government enterprises, wage suppression, business deregulation and higher interest rates.

subsidy: A payment made by government to producers to contribute towards the cost of production. The objectives of such subsidies are usually either (a) to keep the prices of goods low and/or stable, say of basic foodstuff; or (b) as a transfer from taxpayers to producers of a particular good, for example, in order to raise the incomes of farmers; or (c) to improve for the international competitiveness of your local goods.

tariffs: Tax imposed on a good imported into a country. This is done to protect local producers of a product, because it makes the imports more expensive than the local product. Tariff reduction is therefore the process of reducing this tax on imported goods and thus introduce more competition between imports and local products. Tariff structure is the overall pattern of tariffs which are not the same on all goods, eg the tariff on imported sugar may not be the same as on imported televisions.

trade: The exchange of goods (buying and selling) between individuals or groups in a specific country either through barter (exchanges in kind) or through money is known as internal trade. The exchange of goods between countries, generally refered to as imports and exports, is known as foreign trade. The difference between internal and foreign trade is that the latter involves the use of different currencies and is subject to additional regulations such as tariffs and/or quotas.

transnational/multinational: A large enterprise having a home base in one country and operating wholly or subsidiaries in other countries. For example British Petroleum (BP ) or Nike have their homebases in the United Kingdom and United States respectively, but a large part of their operations are in other countries. A transnational economy is a common world economy where products and services tend to be truely global and all countries' economies are linked.