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Nabucco Pipeline A pipeline planned to carry natural gas from the Georgian/Turkish and/or Iranian/Turkish border across Turkey, Bulgaria, Romania, and Hungary to Austria. Construction was scheduled to begin 2011 and be completed 2015, but as of August 2012 construction had not begun.
NACE Nomenclature statistique des activités économiques dans la Communauté européennui, this is the Statistical Classification of Economic Activities in the European Community
NAFTA North American Free Trade Agreement
NAFTA TAA A program of NAFTA, NAFTA Transitional Adjustment Assistance is a version of trade adjustment assistance that applies to workers impacted by trade with or shift of production to Mexico or Canada.
NAICS North American Industry Classification System
NAIRU The level of the unemployment rate at which prices rise at the same rate that they are expected to rise, and thus at which (since expectations needn't change) the rate of inflation does not then rise or fall. Stands for Non-Accelerating Inflation Rate of Unemployment.
NAMA Non-Agricultural Market Access
Narrow money M1
Nash Used as an adjective applied to a strategy in a game, this means that it is part of a Nash equilibrium.
Nash equilibrium An equilibrium in game theory in which each player's action or strategy is optimal given the actions or strategies of the other players. E.g., in a tariff-and-retaliation game, with each country able to improve its terms of trade with a tariff, zero tariffs are not Nash, since each can do better by raising its tariff. A Nash equilibrium, with positive tariffs, is likely to be inferior to free trade for both.
Nation As used in international economics, a nation is almost invariably a country, or occasionally a similar entity (e.g., Hong Kong) with a single, usually independent government.
National 1. (adj.) Of, relating to, or belonging to a nation.
2. (n.) A person who is a citizen or long-term resident of a nation.
National Bureau of Economic Research A nonprofit, nonpartisan organization based in Cambridge, MA, that assembles economic data and sponsors economic research. Its Business Cycle Dating Committee also is traditionally responsible for identifying the beginnings and ends of recessions.
National champion A firm that achieves a dominant position in an industry due to government policies favoring it and encouraging it also to play a major role in world markets. Promotion (and protection) of national champions is one form of industrial policy.
National debt Although this term looks like it should mean the amount that a country owes to foreigners, in practice it is used instead to refer to the amount that a nation's government owes to anybody, including its own citizens. Thus it is the total of a national government's outstanding government bonds.
National defense argument for protection The argument that imports should be restricted in order to sustain a domestic industry so that it will be available in case of trade disruption due to war. This is a second best argument, since there are a variety of ways of providing for defense at lower economic cost, including production subsidies, mothballing, and stockpiling.
National exhaustion See exhaustion.
National Foreign Trade Council An organization of US companies, the NFTC describes itself as "the pre-eminent business association dedicated solely to international trade and investment issues."
National income The income generated by a country's production, and therefore the total income of its factors of production. Except for some adjustments that don't usually enter theoretical models, NI is the same as GDP.
National Income and Product Accounts The statistics collected by the Bureau of Economic Analysis on aggregate economic activity in the United States.
National sovereignty See sovereignty.
National Trade Estimate The National Trade Estimate Report on Foreign Trade Barriers is issued each year by USTR, reporting on the trade barriers faced by US exports in other countries.
National treatment The principle of providing foreign producers and sellers the same treatment provided to domestic firms.
Nationalize To transfer ownership of a private company or a privately owned asset to the national government. Nationalization is sometimes done on entire industries, and often includes firms that were owned by foreigners. Owners may or may not be compensated; if not, this is expropriation.
Natural enemy In the Heckscher-Ohlin Model, an industry is a natural enemy to a particular factor if a rise in the price of that industry alone causes a fall in the price of that factor, so that the real return to that factor is decreased. Used by Jones and Scheinkman (1977) to characterize the Ethier's (1974) generalization of the Stolper Samuelson Theorem.
Natural friend In the Heckscher-Ohlin Model, an industry is a natural friend to a particular factor if a rise in the price of that industry alone causes an even larger proportional increase in the price of that factor, so that the real return to that factor is increased. Used by Jones and Scheinkman (1977) to characterize the Ethier's (1974) generalization of the Stolper Samuelson Theorem.
Natural monopoly An industry with such increasing returns to scale that an economy can only support, at close to minimum cost, a single firm. To avoid the economic inefficiency of monopoly pricing, such industries are often regulated by government. Internationally, this regulation may prompt interference with trade.
Natural person This term appears in the GATS where it deals with the international movement of employees of firms that are providing services in another country. Persons are called "natural" to distinguish them from "juridical persons," such as partnerships or corporations, which are given certain rights of persons under the law.
Natural resource Anything that is provided by nature, such as deposits of minerals, quality of land, old-growth forests, fish populations, etc. The availability of particular natural resources is an important determinant of comparative advantage and trade in products that depend on them. Natural resources are primary factors of production.
Natural trade Trade that is either free or restricted, but that is not artificially encouraged by subsidies or other stimulants.
Natural trading bloc A trading bloc consisting of natural trading partners.
Natural trading partner A country with whom another country's trade is likely to be large, because of low transport or other trade costs between them. Term introduced by Wonnacott and Lutz (1989) and used extensively by Frankel (1997).
Natural wastage Attrition.
NAV Net asset value.
Navigation Acts Laws passed by England in 1651 and 1660 that required goods shipped to, and later also from, England to and from the colonies to be carried in English ships. They also imposed other restrictions on trade. However, they were not very effectively enforced.
NBTT Net barter terms of trade
NBER National Bureau of Economic Research
NDF Nordic Development Fund
NDP Net domestic product
Near money A financial asset with many of the properties of money, but not all. Savings deposits and foreign currency deposits, for example, are very liquid but cannot be used directly for transactions.
Necessity test A procedure to determine whether a trade restriction intended to serve some purpose is necessary for that purpose.
Negative externality A harmful externality; that is, a harmful effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to curtail the action. Examples are pollution from factories (a production externality) and smoke from cigarettes (a consumption externality).
Negative growth A decline in size over time, said of an economy's GDP in recession or of the size of a declining firm or industry. Seems like a euphemism, except that no obvious alternative term suggests itself. Shrinkage?
Negative list 1. In an international agreement, a list of those items, entities, products, etc. to which the agreement will not apply, the commitment being to apply the agreement to everything else. Contrasts with positive list.
2. A list of products that cannot be imported into a country.
Negative returns An extreme form of diminishing returns, in which increasing one input holding other inputs constant causes output to fall. This may plausibly happen due to congestion.
Negative returns to scale An extreme form of decreasing returns to scale, in which increasing all inputs in proportion actually causes output to fall. Sometimes said to arise due to congestion, although it is doubtful in that case that all inputs are being increased.
Negotiation See trade negotiation.
Neighborhood In mathematical Euclidean space, a small set of points surrounding and including a particular point. Thus, for an economic variable, such as an allocation, the neighborhood of a particular allocation includes all those allocations that are sufficiently similar to it.
Neighborhood production structure A structure of technology for a general equilibrium model due to Jones and Kierzkowski (1986). With an arbitrary but equal number of goods and factors, each factor produces two (different) goods, each good uses two (different) factors, in a way that yields more unambiguous results than one normally finds in high-dimension trade models without specific factors.
Neoclassical A collection of assumptions customarily made by mainstream economists starting in the late 19th century, including profit maximization by firms, utility maximization by consumers, and market equilibrium, with corresponding implications for determination of factor prices and the distribution of income. Contrasts with classical, Keynesian, and Marxist.
Neoclassical ambiguity In the specific factors model, the fact that the effect of a change in relative prices on the real wage of the mobile factor cannot be known a priori, since the wage rises relative to one price and falls relative to the other.
Neoclassical economics Most of modern, mainstream economics based on neoclassical assumptions. Tends to ascribe inevitability, if not necessarily desirability, to market outcomes.
Neoclassical growth model A model of economic growth in which income arises from neoclassical production functions in one or more sectors, displaying diminishing returns to saving and capital accumulation. Due to Solow (1956) and Swan (1956).
Neoclassical paradigm The framework used by most modern economists for analysis of economic activity and policy, based on neoclassical assumptions.
Neoclassical production function A production function with the properties of constant returns to scale and smoothly diminishing returns to individual factors.
Neoliberalism A view of the world that favors social justice while also emphasizing economic growth, efficiency, and the benefits of free markets.
Neotechnology model Any model that focuses on evolving differences in technologies across countries over time to explain trade. Two such models have been most widely cited: the technology gap model and the product cycle model. The term "neotechnology" is said by Borkakoti (1975) to have been first applied to these models by Hufbauer (1970).
NES Not Elsewhere Specified. This abbreviation, "nes," appears frequently in classifications, of goods and of industries for example, to encompass all other items in a category that have not been included explicitly.
Net After deduction. Contrasts with gross. Exactly what is deducted to get from gross to net depends on the context.
Net asset value Value of assets minus liabilities.
Net barter terms of trade The price of a country's exports, Px, relative to the price of its imports, Pm: NBTT = Px/Pm. Given this name by Taussig (1927).
Net capital inflow Net acquisition of domestic assets by foreigners, minus net acquisition of foreign assets by domestic residents. If negative, it is a net capital outflow.
Net domestic assets This usually refers to a country's commercial banks' and/or its central bank's lending to entities (private or public) within the country minus borrowing from those entities.
Net domestic product Gross domestic product minus capital consumption allowance. This is the most complete measure of productive activity within the borders of a country, though its accuracy suffers from the difficulty of measuring depreciation.
Net economic welfare Same as MEW
Net exports 1. The aggregate value of exports minus imports; same as the balance of trade.
2. The vector of exports minus imports of each good.
Net financial inflow Same as net capital inflow.
Net foreign asset position The value of the assets that a country owns abroad, minus the value of the domestic assets owned by foreigners. Equals balance of indebtedness.
Net foreign factor income The income of a country's factors earned abroad minus the income paid to foreign-owned factors domestically.
Net imports Imports minus exports. The the negative of net exports, and like it, may be either a scalar or a vector.
Net income 1. Of a firm, total revenue minus total cost.
2. Of a country, national income minus capital consumption allowance.
Net international reserves International reserves minus reserves that have been borrowed from the IMF and other governments.
Net national product Gross national product minus depreciation. This is the most complete measure of productive activity by a country's nationals, though its accuracy suffers from the difficulty of measuring depreciation.
Net output The output of a product that is available for final users, after deducting amounts of it used up as an intermediate input in producing itself and other products. Contrasts with gross output.
Net present value Same as present value, being sure to include (negative) payments as well as (positive) receipts.
Net resource transfer The amount of purchasing power that foreigners are providing a country in a period of time. It is measured by the country's current account deficit minus its net payments to foreigners of interest.
Net substitutes Two goods are net substitutes if a rise in the price of one causes an increase in the compensated demand for the other, thus net of the negative income effect of the price increase. Contrasts with gross substitutes.
Net taxes Taxes minus transfers. That is, in an economy the net taxes are the total taxes paid by persons and business to government, minus the total transfer payments paid by government to persons and business.
Network A set of connections among a multiplicity of separate entities sharing a common characteristic. Networks of firms or individuals in different countries are thought to facilitate trade.
Neutral 1. Said of a technological change or technological difference if it is not biased in favor of using more or less of one factor than another. This can be defined in several different ways that are not normally equivalent: Hicks-neutral, Harrod-neutral, and Solow-neutral.
2. Said of economic growth if it expands actual or potential output of all goods at the same rate, not being biased in favor of one over another. In the Heckscher-Ohlin Model neutral growth will occur if all factor endowments grow at the same rate or if there is Hicks Neutral technological progress at the same rate in all industries.
3. Said of a trade regime if the structure of protection favors neither exportables nor importables. See bias.
NEW Net economic welfare
New bancor A proposed non-national world currency to be used for payment and reserve purposes, to be issued by the IMF and intended to maintain a fixed purchasing power in the dollar and euro countries.
New Economic Geography The study of the location of economic activity across space, particularly a strand of literature begun by Krugman (1991a) using agglomeration economies to help explain why industries cluster within particular countries and regions.
New Economy This term was used in the late 1990's to suggest that globalization and/or innovations in information technology had changed the way that the world economy works. Conjectures included changes in productivity, the inflation-unemployment tradeoff, the business cycle, and the valuation of enterprises.
New good A good that has been newly invented. Plays a special role in the theory of the product cycle.
New International Economic Order A set of proposals put forward during the 1970s by developing countries through UNCTAD to promote their interests by improving their terms of trade, increasing development assistance, developed-country tariff reductions, and other means.
New product See product cycle.
New protectionism The most recent wave of protectionism.
New Trade Theory Models of trade that, especially in the 1980s, incorporated aspects of imperfect competition, increasing returns, and product differentiation into both general equilibrium and partial equilibrium models of trade and trade policy. Many contributed to this literature, but the most prominent was Krugman, starting with Krugman (1979).
New New Trade Theory This unfortunate name has been given to theoretical models of trade that incorporate heterogeneous firms and typically build on the monopolistic competition models of the New Trade Theory.
Newly Industrializing Country Refers to a group of countries previously regarded as developing that then achieved high rates and levels of economic growth.
Newly Industrializing Economy Newly Industrializing Country but also including Taiwan and Hong Kong, which are not unambiguously countries.
News Unexpected information. In an efficient market, as the exchange market is supposed to be, price reflects all available information. It can change, therefore, only in response to news.
NFTC National Foreign Trade Council
NGO Non-governmental organization
NIC Newly Industrializing Country
NIB Nordic Investment Bank
NIE Newly Industrializing Economy
NIEO New International Economic Order
NIPA National Income and Product Accounts
NME Non-market Economy
NNP Net national product
Nomenclature See Brussels Tariff Nomenclature
Nominal 1. In the form most directly observed or named, in contrast to a form that has been adjusted or modified in some fashion.
2. As measured in terms of money, usually in contrast to real.
Nominal anchor The technique of fixing a nominal variable in an economy as a means of reducing inflation. For example, by firmly pegging the nominal exchange rate, a central bank or government reduces its own ability to expand the money supply.
Nominal exchange rate The actual exchange rate at which currencies are exchanged on an exchange market. Contrasts with real exchange rate.
Nominal GDP GDP as actually measured, thus in current dollars. Contrasts with real GDP.
Nominal interest rate The interest rate actually observed in the market, in contrast to the real interest rate.
Nominal price The the price as it would actually be observed, in current dollars. Contrasts with the real price, which is adjusted for inflation.
Nominal rate of protection The protection afforded an industry directly by the tariff and/or NTB on its output, ignoring effects of other trade barriers on the industry's inputs. Contrasts with the ERP.
Nominal return The earnings on an asset or other investment, comparable to a nominal interest rate, thus not adjusted for inflation.
Nominal rigidity The inability of a nominal variable, such as a price or a wage expressed in money (as opposed to real) terms, to change quickly so as to achieve equilibrium. Nominal rigidities tend to be needed in Keynesian macroeconomic models.
Nominal tariff The nominal protection provided by a tariff; that is, the tariff itself. Contrasts with effective tariff.
Nominal wage The wage of labor in units of currency, not adjusted for inflation, and thus not in terms of the goods that it will buy. Contrasts with real wage.
Non-actionable subsidy A subsidy that is not subject to countervailing duties under the rules of the WTO. These include non-specific subsidies, subsidies for industrial research, regional aids, and some environmental subsidies.
Non-Agricultural Market Access Reduction of tariffs and NTBs in industries other than agriculture. Because of the particular difficulties of negotiations in agriculture, they were separated from others, and the NAMA Negotiations in the Doha Round encompassed all other trade liberalization in goods: manufactures, fuels, mining, fish, and forestry products.
Non-automatic licensing Import licensing that is discretionary, based on an import quota, or performance related.
Non-dumping certificate A document stating that there is no difference between the price of an exported good and the price of the same good on the exporter's home market. Required by some countries for goods they import.
Non-governmental organization A not-for-profit organization that pursues an issue or issues of interest to its members by lobbying, persuasion, and/or direct action. In the arena of international economics, NGOs play an increasing role defending human rights and the environment, and fighting poverty.
Non-market-clearing A situation or economic model in which a market or markets do not clear, perhaps because something prevents prices from adjusting to discrepancies between supply and demand.
Non-market economy 1. A country in which most major economic decisions are imposed by government and by central planning rather than by free use of markets. Contrasts with a market economy.
2. An economy that has been designated as a non-market economy for the purposes of anti-dumping implementation, thus allowing the use of 3rd-country prices in calculating the dumping margin.
Non-performing loan A loan on which the borrower has ceased to make payments.
Non-reciprocal Not reciprocal. Thus a trade agreement is non-reciprocal if one party makes concessions while another does not.
Non-price competition Competition among sellers based on something other than price, such as quality or other product characteristics.
Non-specific subsidy A subsidy that is available to more than a single specific industry and is therefore non-actionable under WTO rules.
Nonbinding Refers to a restriction that currently has no effect because the behavior that it would prevent would not happen even without the restriction. For example, if a quota limits imports to no more than 1,000, but actual imports are only 900, then the quota is nonbinding.
Nonconvexity The property of an economic model or system that the sets representing technology, preferences, or constraints are not mathematically convex. Because convexity is needed for proof that competitive equilibrium is efficient and well-behaved, nonconvexities may imply market failures.
Nondiscrimination The treatment of all others equally, or at least subject to the same rules and procedures. In trade this often refers to levying the same tariffs against the imports from all other countries and the absence of nontariff barriers that put some imports at a disadvantage compared to others.
Nondistorted Without distortions. Many propositions in trade theory are strictly valid, often only implicitly, only in nondistorted economies.
Nondistorting lump sum Redundant appellation for a lump sum tax or subsidy.
Nondistorting transfer A transfer payment that does not introduce inefficiencies. This means mainly that it does not provide an incentive to change production or consumption choices.
Noneconomic objectives argument for protection The view that a restriction on imports may serve a purpose outside of conventional economic models. Unless that purpose is itself the restriction of trade, then this is a second-best argument, since changes in output, consumption, etc. can be achieved at lower economic cost in other ways.
Nonhomothetic Any function that is not homothetic, but usually applied to consumer preferences that include goods whose shares of expenditure rise (and others that fall) with income.
Nonproduction worker A worker not directly engaged in production. In empirical studies of skilled and unskilled labor, data on nonproduction workers are often taken to represent skilled labor.
Nonprohibitive tariff A tariff that is not prohibitive.
Nonsterilization Refers to exchange market intervention that is done without sterilizing its effects on the domestic money supply.
Nontariff barrier Any policy that interferes with exports or imports other than a simple tariff, prominently including quotas and VERs.
Nontariff measure Any policy or official practice that alters the conditions of international trade, including ones that act to increase trade as well as those that restrict it. The term is therefore broader than nontariff barrier, although the two are usually used interchangeably.
Nontradable 1. Not capable of being traded among countries.
2. A good or service that is nontradable, with nontradables referring to an aggregate of such goods and services.
Nontradable good A good that, by its nature, is nontradable.
Nontraded good A good that is not traded, either because it cannot be or because trade barriers are too high. Except when services are being distinguished from goods, they are often mentioned as examples of nontraded goods, or at least they were until it became common to speak of trade in services.
Nonviolation In WTO terminology, this is shorthand for a complaint that a country's action, though not a violation of WTO rules, has nullified or impaired a member's expected benefits from the agreement.
Nordic countries Denmark, Finland, Iceland, Norway, and Sweden.
Nordic Development Fund A grant financing fund for "climate-change interventions in low-income developing countries," with funds contributed by the Nordic countries.
Nordic Investment Bank An international financial institution, owned by a group of the five Nordic countries plus the three Baltic countries, that funds clients in the private and public sectors of the member countries as well as in emerging markets around the world.
Normal good A good the demand for which rises with income if relative prices do not change. Contrasts with inferior good.
Normal profit The level of profit that neither attracts entry into an industry nor causes exit. It typically means that firms are earning just enough to provide a competitive return on their capital.
Normal trade relations The term in the United States for designating a country as qualifying for the MFN tariffs that have been negotiated in the GATT.
Normal value Price charged for a product on the domestic market of the producer. Used to compare with export price in determining dumping.
Normative Refers to value judgments as to "what ought to be," in contrast to positive which is about "what is."
North American Free Trade Agreement The agreement to form a free trade area among the United States, Canada, and Mexico that went into effect January 1, 1994.
North American Industry Classification System The system for classifying business establishments developed jointly by government agencies of the United States, Canada, and Mexico. In 1997, it replaced the Standard Industrial Classification in the United States.
North-South model An economic model in which two countries, North and South, represent developed and less developed countries respectively.
North-South trade Trade between the developed countries (North) and developing countries (South). This term is used less and less, as the division between these two groups of countries has become blurred by the economic growth of many formerly developing countries.
Notify Members of the WTO are expected to notify the WTO of changes in their trade policies. Thus, for example, the WTO is able to keep track of regional trade agreements that have been notified to the WTO.
NRP Nominal rate of protection
NTB Nontariff barrier
NTE National Trade Estimate
NTM Nontariff measure
NTR Normal trade relations
Nullification See nonviolation
Numeraire The unit in which prices are measured. This may be a currency, but in real models, such as most trade models, the numeraire is usually one of the goods, whose price is then set at one. The numeraire can also be defined implicitly by, for example, the requirement that prices sum to some constant.