A2 Macro Growth and Development Economics Glossary


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A2 Macro Growth and Development Economics Glossary for Year 13 students

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A2 Macro Growth and Development Economics Glossary

  1. 1. A2 MACRO: GROWTH AND DEVELOPMENT ECONOMICS / MACROECONOMICS GLOSSARYTerm Glossary DescriptionAAA Credit Rating The best credit rating that can be given to a corporations or a government’s bonds(loans), effectively indicating that the risk of loan default is negligibleAbsolute advantage The ability to produce a product (good or service) at a lower unit costAbsolute poverty Those people who do not have adequate nutritional intake per day, or do not haveadequate shelter or clothing in order to survive. The World Bank reports the number ofpeople in countries below a $1.25 or $2 a dayAccelerator effect When planned investment is linked positively to past & expected growth of demandAccession Countries Countries in the process of joining the European UnionAccommodatory policy A neutral policy stance in the face of an economic shock. For fiscal policy, generallymeans keeping tax and government expenditure rates unchanged. For monetary policy,generally means keeping (real) interest rates unchanged.Adjusted net savings The true rate of savings in an economy after taking into account investments in humancapital, depletion of natural resources and damage caused by pollutionAdvanced economies According to the IMF, 35 economies are ‘advanced economies’. 24 in Europe + USA,Canada, Australia, New Zealand, Israel, Japan and South KoreaAge dependency ratio The ratio of the nonworking population- people under 15 or over 65-to the workingpopulation- people 15-64Ageing population A rising average age and a growing number of people living beyond the standard workingagesAggregate supply shock Either an inflation shock or a shock to potential national output; adverse aggregate supplyshocks of both types reduce output and increase inflationAid A voluntary transfer of money and/or resources from one country to anotherAid effectiveness Quality of aid delivery and impact on poverty reduction and developmentAppreciation An increase in the external value of a currency in a floating exchange rate systemAppropriate technology A technology that complements the factor endowments of the countryASEAN Association of Southeast Asian Nations – a regional trade blocAsymmetric bargaining power When the bargaining power in trade between one or more countries is imbalanced – thiscan lead to shifts in the measured terms of tradeAusterity Economic policy aimed at reducing a governments deficit (or borrowing)Bail out Financial rescue of a struggling borrowerBalanced growth Balanced growth occurs when output and the capital stock grow at the same rateBalassa-Samuelson Effect Where countries with higher per capita real incomes have a higher real exchange rate. Arise in productivity in the tradable goods sector will drive up wages in this sector and thenon-tradable sector and thereby lead to a rise in inflationBasic needs Access to safe water, sufficient living space, adequate health care, and educationBeggar my Neighbour A policy that seeks to promote a countrys economy at the expense of another country. Anobvious example is the use of tariff barriers.Birth rate The number of live births in a year as % of the population or per 1,000 people.Bond Debt issued by companies and government and traded in bond (capital) marketsBrain drain The movement of highly skilled or professional people from their own country to anothercountry where they can earn more moneyBRIC economies The BRIC grouping – Brazil, Russia, India and China – has become short hand for therise of emerging markets in the global economyBudget deficit Known as a fiscal deficit, the annual excess of state spending over tax revenue
  2. 2. Capacity building Growing the capacity of businesses, organizations and communities to produce, investand consume – includes a broader definition of capitalCapital accumulation Using investment to build capital assets such as roads, ports, buildingsCapital deepening Development process involving a transition from traditional agriculture, which is labour-intensive, to more capital-intensive modern manufacturing. Leads to an increase in thecapital stock per worker employedCapital flight The rapid movement of large sums of money out of a country. Reasons include a lack ofconfidence in a countrys economy and/or its currency and political turmoil. Capital flightoccurs when owners of liquid assets move them to other countries perceived as safehavens or as offering better returns. It can be legal or illegalCapital flows Movements of capital between countries – important part of balance of paymentsCapital output ratio The value of a nation’s capital stock relative to the size of GDP. Capital-output ratios areusually around 2 or 3. Poor countries have lower capital-output ratios because they haveless capital-intensive economies.Capital stock The total amount of physical capital available in the economyCarbon tax Tax on the consumption or production of products which cause carbon emissionsCarbon trading Pollution control that uses the market mechanism to change relative prices and theincentives of producers and consumersCarry trade A strategy in which an investor borrows money at a low interest rate in order to invest inan asset that is likely to provide a higher return.Cash crops A crop produced for commercial revenue & profit rather than for use by the growerCatch-up effect Countries that start off poor tend to grow more rapidly. The result is some convergence inthe standard of living as measured by per capita GDPChild mortality rate The probability that a newborn baby will die before reaching age five. Expressed as anumber per 1,000 live birthsChronic hunger The chronically hungry are undernourished. Their undernourishment makes it hard tostudy, work or otherwise perform physical activitiesCIVETS Group of high growth emerging countries comprising - Columbia – Indonesia – Vietnam –Egypt – Turkey – South AfricaClean float Currency that floats according to market forces, free from government interventionCommon external tariff Import tariff on a product applied equally by all countries inside a customs unionComparative advantage Comparative advantage refers to the relative advantage that one country or producer hasover another. Countries can benefit from specializing in and exporting the product(s) forwhich it has the lowest opportunity cost of supplyCompetitive devaluation When a country tries to devalue its currency to increase its international competitiveness.However, this often encourages other countries to also devalue leading to only temporaryincreases in the competitiveness of exportsConcessional lending Loans given through the International Development Association. IDA provides long-termloans at zero interest to the poorest of the developing countries.Conditional cash transfers Attempts to cut poverty by giving cash transfers to households in need; and by tying thesetransfers to certain conditions, such as sending children to schoolConditionality When donors require their partners to do something in order to receive aid.Convergence A coming together of economic indicators i.e. a narrowing of the gap in per capitaincomes between the poorest and the richest nations of the worldCorruption The abuse of entrusted power for private gain, government failureCost benefit analysis Technique to determine the feasibility of a project by quantifying costs and benefitsCountervailing tariffs Tariffs imposed by a country to counteract subsidies provided to a foreign producerCreditor nations Those nations that have a balance of payments surplusCreeping protectionism Where import tariffs rise + quotas and barriers to the mobility of labour and capital
  3. 3. Currency union A group of countries (or regions) using a common currencyCurrency war Competitive devaluation of currencies, a scenario where various nations try to devaluetheir currencies in an attempt to gain an advantage over each otherCurrent account deficit The amount by which money relating to trade, investment income and transfers going outof a country is more than the amount coming inDebt burden Debt that a business or country has normally expressed as a share of GDPDebt deflation High levels of debt leading to falling asset pricesDebt forgiveness The cancelling by a creditor of a debt to a country or a companyDebt relief Cancellation, rescheduling, refinancing of a nation’s external debtsDebt rescheduling Increasing the length of time over which a loan has to be repaidDebt servicing The repayment of interest and principle to external creditorsDebt sustainability Debt sustainability is the ability to manage debts so they do not grow and impedeeconomic stability and growth.Debtor nations Those nations that have a balance of payments deficitDe-coupling Where output rises and environmental impacts fallDe-development When a range of development indicators start to worsen, linked to a depressionDe-industrialization A decline in the share of national income and jobs from manufacturing industriesDe-leveraging Reducing long-term debt as a % of shareholder equity, seen recently in banksDemographic dividend The demographic dividend happens when most of a country’s population is in the 15-to-64working-age range. This increases productivity if supported by policies that promotehealth, family, labour and financial and human capitalDemographic transition Changes in population growth rates due to changes in birth and death ratesDependency ratio Ratio of dependent population (young and the elderly) to working age populationDeprivation Deprivation takes into account whether people have access to things essential for a basicstandard of living. These include: clean drinking water, electricity, clean fuel for cooking,education, toilet facilities, basic transport with a bicycle, basic communication with a radioand basic income and wealthDevelopment Assistance Loans, grants, and technical assistance provided to developing countriesDevelopment Banks Development Banks which serve particular regions e.g. the African Development Bank orEuropean Bank for Reconstruction and DevelopmentDevelopment diamonds Development diamonds show four key indicators in a country compared with its income-group average i.e. gross primary enrolment, access to safe water, GNP per capita andaverage life expectancyDevelopment Goals Targets which aim to reduce poverty, hunger, maternal and child deaths, disease,inadequate shelter, gender inequality and environmental degradation by 2015Disguised unemployment Hidden unemployment, where part of the labour force is either left without work or isworking in a redundant manner where worker productivity is essentially zeroDomestic remittances Money received from family or friends living in a different city of their own countryDomestic savings Savings accumulated by domestic households, businesses and governmentDual exchange rate A system where there is a fixed official exchange rate and an illegal market-determinedparallel exchange rateDumping When a producer in one country exports a product to another at a price which is belowthe price it charges in its home market or is below its costs of productionEco-innovation Products and processes that contribute to sustainable developmentEcological deficit Depleting natural assets faster than these can be replenishedEconomic Freedom Index 1 Size of Government: Expenditures, Taxes, and Enterprises2 Legal Structure and Security of Property Rights
  4. 4. 3 Access to Sound Money4 Freedom to Trade Internationally5 Regulations of Credit, Labour, and Business.Economic growth An increase in real GDP or increase in the productive potential of an economyEconomic nationalism Protection for industries from competition e.g. through tariffs or capital controlsEconomic shocks Unpredictable outside events such as volatile prices for commoditiesEconomic structure The balance of output, incomes and employment drawn from different sectors – rangingfrom primary (farming, fishing, mining) to secondary (manufacturing and construction) totertiary and quaternary (tourism, banking, software industries)Embargo An import ban, an import quota of zeroEmerging markets Financial markets of developing countriesEnvironmental tax An environmental tax is a tax on a good or service or a factor input, which is judged to bedetrimental to the environment.Euro Area Member nations of the single European currency blocExpenditure-reducing Measures to curb the demand for imports by cutting real income / spending powerExpenditure-switching Attempts to improve trade balance through a depreciation of the exchange rate or througha fall in the relative prices of a country’s products against other nationsExport quota A restriction on the volume of exports that can be sold overseas – this acts as a supplyconstraint in international marketsExport revenue Sales from selling goods and services overseasExternal debt External debt is money owed by a government to international creditorsExternal demand Net change in demand for goods and services from international trade. Net trade ispositive when a country runs a trade surplus and negative with a trade deficit.Externalities Action of one agent affects the action of another agent. Too little or too much of the goodis produced or consumed than would be socially optimalFair trade Movement dedicated to raising prices and incomes for producers in lower-incomecountries, also focused on linking premium prices to environmental standardsFDI Foreign direct investment - long term participation by country A into country B. such asparticipation in management, joint-venture, transfers of technologyFertility Rate The average number of children a woman will have during her lifetimeFinancial inclusion The ability of a household to access credit, insurance and savings facilitiesFiscal austerity Measures designed to cut the size of a nation’s annual fiscal deficitFiscal stimulus Changes in tax and government spending aimed at boosting demand and outputFixed exchange rate An exchange rate that is fixed against other major currencies through action bygovernments or central banksForeign direct investment Acquisition of a controlling interest in productive operations abroad by companies residentin the home economy. May involve creation of new productive capacityForeign exchange gap When a countrys balance of payments on current account deficit is greater than the valueof capital inflows, a shortfall of money from engaging in overseas tradeForeign exchange reserves The reserves of gold or foreign currencies (e.g. US dollars or Euros) typically held bycentral banks on behalf of their national governmentForeign savings Foreign savings can flow into countries and provide a supplement to domestic savings.They include overseas aid, private FDI and capital flowsFragile states Those states where the government cannot or will not deliver core functions to themajority of its people, including the poorFree trade When trade is allowed to occur without any form of import restriction
  5. 5. GDP per capita: National income per head of populationGenuine progress indicator GPI is an attempt to measure whether a countrys growth, increased production of goods,and expanding services have actually resulted in improved well-being. GPI advocatesclaim that it can more reliably measure economic progress, as it distinguishes betweenworthwhile growth and uneconomic growthGlobalisation Deepening of relationships between countries of the world reflected in an increasing levelof overseas trade and investment.Government debt Government debt is also known as public debt, national debt, sovereign debt is money (orcredit) owed by a central government to creditors within the country (domestic, or internaldebt) as well as to international creditorsGreen development A pattern of development that decouples growth from heavy dependence on resourceuse, carbon emissions and environmental damage, and promotes growth through thecreation of new green product markets, technologies, investments, and changes inconsumption and conservation behaviourGross Domestic Product: The total value of an economys domestic output of goods and servicesGross National Income This is broadly the same as GDP except that it adds what a country earns from overseasinvestments and subtracts what foreigners earn in a country and send back home. GNI isaffected for example by profits from businesses owned overseas and also remittancessent home by migrant workers.Gross saving rate Gross saving = GDP minus consumption by government and the private sector,expressed as a percentage of GDP. A high gross domestic saving rate usually indicates acountrys high potential to invest in capitalHard commodities Commodities which can be mined, such as metals, minerals and oilHard infrastructure Examples include power, transport, and telecommunications systemsHarrod-Domar Model An idea that aggregate output (GDP) is proportional to the stock of physical capital.Heavily Indebted PoorCountries InitiativeAn initiative to provide debt relief to heavily indebted low income countriesHIPC Abbreviation for a highly indebted poor countryHot Money Money that flows freely and quickly around the world looking to earn the best rate ofreturn. It might be invested in any asset whose value is expected to rise or simply beplaced in an account offering the best real rate of interest.Human Assets Index (HAI) HAI includes data on (i) nutrition (percentage of the population that is undernourished); (ii)health (child mortality rate); (iii) school enrolment (gross secondary school enrolmentrate); and (iv) literacy (adult literacy rate)Human capital flight When a country suffers net outward migration of skilled / younger workers which causestheir labour force to contract and may cause lower labour productivityHuman Development Index HDI captures not only the level of income but also incorporates measures of health (lifeexpectancy) and education (school enrolment and literacy rate).Humanitarian Aid Emergency disaster relief, food aid, refugee relief and disaster preparednessImport substitution Replacing imports with domestic production, perhaps using import tariffsInclusive growth Growth where the benefits are spread across all sections of society - broad based growth,shared growth, and pro-poor growthInclusive Wealth Index Assesses changes in a country’s productive base, including produced, human, andnatural capital. By taking a more holistic approach, the IWI shows governments the truestate of their nation’s wealth and the sustainability of its growth.Income convergence Income convergence happens when a nation’s per capita income moves closer to that ofanother i.e. the gap in relative income per head decreasesIncome distribution Income distribution is how income is divided up among all the citizens in a country. Themost common measure of income distribution is the Gini Coefficient.
  6. 6. Inequality-adjusted HDI IHDI takes into account achievements of a country on health, education and income, andhow those achievements are distributed among citizens by “discounting” eachdimension’s average value according to its level of inequality.Infant (fledgling) industry Fledgling industry that requires government protection from overseas competition (forinstance through import tariffs) in order to developInformal sector The sector of the economy, normally comprising of small businesses, which isunregistered with the tax authoritiesInfrastructure Transport links, communications networks, sewage systems, energy plants and otherfacilities essential for the efficient functioning of a country and its economyIntellectual Property (IP) Private property rights over ideas and inventions including copyrights, patents, trademarksand industrial designs.International Monetary Fund Oversees the global financial system by following the macro policies of member countriesincluding those with impact on exchange rates and balance of paymentsInterventionist policies Government intervention in markets to affect the allocation of scarce resourcesInward oriented development Government policy that attempts to achieve development by stimulating domestic industryand import substitution behind trade barriersJ Curve Effect When a trade deficit can worsen after depreciation, but get better in medium term.Knowledge capital The scientific and technological know-how that raises productivity in business output andthe promotion of physical and natural capitalLand grab Investments in agricultural land by foreign investorsLeast Developed Countries A group of countries that have been classified by the United Nations as least developed interms of their low gross domestic product (GDP) per capita, weak human assets and highdegree of economic vulnerabilityLewis Turning Point Occurs when a country’s surplus labour evaporates, pushing up wages, consumption andinflation rates. Within a country the supply of migrants from the countryside might dry upcausing urban wages to surgeLiberalisation Opening up markets and industries to greater trade and competitionManaged floating currency A floating exchange rate but subject to intervention by the monetary authorities, in order toresist fluctuations that they consider to be undesirableMarket liberalization Removing state controls, for example, lifting price and wage controls and import quotas orlowering taxes and import tariffs.Marshall-Lerner Condition Predicts the circumstances in which a fall in the exchange rate improves the BoP. Adevaluation of a currency improves the BoP only if the combined (or sum of) priceelasticities of demand for imports & exports are greater than one.Mercantilism The notion that the wealth of a nation was based on how much it could export. Applied inthe modern context to countries accumulating huge trade surpluses in goods or servicesand focusing on export-led growthMicro-credit Credit services offered to low-income individuals not traditionally serviced by the formalbanking sectorMiddle income trap Occurs when a countrys growth stagnates after reaching middle income levelsMoney illusion When people confuse nominal and real values when making economic decisionsMoral hazard When asymmetric rewards to losses encourages risk-taking e.g. riskier behaviourbecause of having insurance or the belief that losses will be bailed outMulti-dimensional Poverty An international measure of acute poverty covering 109 developing countriesN-11 Countries with fast-growth potential - Bangladesh, Egypt, Iran, Nigeria, Pakistan,Philippines, Vietnam, Mexico, Korea, Turkey, IndonesiaNAFTA North American Free Trade Agreement - a free trade area agreement signed by the US,Canada and MexicoNAIRU Non-accelerating inflation rate of unemployment, the rate of unemployment consistentwith a country experiencing a stable rate of cost & price inflation
  7. 7. National debt Total amount of debt owed by a government usually measured as % of GDPNational savings Total public and private sector saving measured as a share of GDP. Saving is thedifference between income and consumption. In countries such as China, the nationalsavings rate is high in contrast to developed economies. Gross national saving measuredas a percentage of GDP in 2008 for China was 54%Natural assets Assets of the natural environment - biological assets (produced or wild), land and waterareas with their ecosystems, subsoil assets and air, see also natural capitalNatural capital The stock of natural ecosystems that yields a flow of valuable ecosystem goods orservices into the future. Natural capital may also provide services like recycling wastes orwater catchment and erosion controlNet inward migration When number of migrants coming into a country than those who leave each yearNGOs Private non-profit making bodies which are active in development workNominal exchange rate The price of the domestic currency in another foreign currency e.g. £1 buys $1.60Nominal interest rate The price of borrowing money unadjusted for the effects of inflationOECD Organisation of Economic Co-operation and DevelopmentOff-shore banking Banks based abroad in a country where you pay less taxOutput Gap Difference between actual and (estimated) potential GDPOutward-oriented development Government policy that attempts to achieve development by encouraging free trade andthe unrestricted movement of labour and capitalOverseas assets Assets such as businesses, shares, property which are owned in overseas countries andwhich might generate a flow of investment income which is a credit item on the currentaccount of the balance of payments.Paradox of thrift Higher saving in a recession may cause lower consumption, incomes and savingPotential output The economys maximum productive capacity in a physical sense. The largest output thatcould be produced, given the prevailing state of technologyPotential productivity Estimates of the productivity of the labour force. Improvements in productivity have animportant effect on long run aggregate supply and trend growthPoverty line The income level below which a person or household is deemed poor. Can also be usedto measure the % of a population living in extreme povertyPPP Exchange Rate The rate at which the currency of one country is converted into that of another to purchasethe same amount of goods and services in each countryPrebisch-Singer Hypothesis States that the terms of trade between primary and manufactured products deteriorateover time threatening slower economic growth for poorer countriesPrimary sector An industry involved in the production of raw materials including agricultureProperty rights These are the rights to ownership of an asset such as land or ideas (intellectual propertyrights)Protectionism The use of tariff and non-tariff restrictions on importsPublic Goods Goods that are non-rival (consumption by one person does not reduce the supplyavailable for others) and non-excludablePublic sector Central government, local government and state-owned/nationalized industriesPurchasing Power Parity The current exchange rate is adjusted so that a basket of goods and services can bebought for the same amount of dollarsQuantitative easing (QE) Central banks injecting extra cash into banking system through buying bondsQuota A quota imposes a physical limit on the quantity of a good that can be imported into acountry in a given period of time.Randomized controlled trial Studies that use one randomly selected test group and one randomly selected controlgroup to create a fair comparison – these can be used to evaluate the effectiveness of a
  8. 8. specific government intervention or projectReal exchange rate The product of the nominal exchange rate (the dollar cost of a euro, for example) and theratio of prices between the two countriesReal interest rate Real rate of interest = nominal rate of interest – rate of inflation E.g. if the inflation rate is2% and nominal interest rate is 6% then real interest rate is 4%Rebalancing Changing the nature of economic growth and development. For example a country mighttry to increase reliance on domestic demand, achieve a more equal income distributionand introduce incentives for environmental sustainabilityRecovery The term typically refers to a phase of above average growth after a downturnRegrettables Output which might be necessary but does not add to (and might detract from) the qualityof life, e.g. expenditure on armaments and commutingRelative poverty The relative position of some economic unit (e.g. individual, household, racial group)compared to another economic unit. A person can be relatively poor but not absolutelypoor – is really to do with distribution of income in a countryRemittances When migrants send home part of their earnings in the form of either cash or goods tosupport their families.Rent-seeking behaviour Behaviour by producers in a market that improves the welfare of one but at the expenseof another. A feature of monopoly and oligopolyReserve currency A foreign currency that is held in countries official reserves because of its globalimportance as a medium of exchange and its inherent stabilityResource efficiency Producing more goods and services but with a lower environmental footprintResource rent A measure of the financial return from operating in a natural resource industry – forexample in the fishing sector, it is what remains after fishing costs and subsidies arededucted from revenueRevealed comparativeadvantageCalculated (for example) as the share of footwear in the economy’s exports divided by theshare of footwear in global exports. The comparative advantage of a particular economyis ‘revealed’ when this ratio is greater than 1Rural urban migration Migration of people from rural areas to urban areasSavings surplus Excess of aggregate savings over domestic investment, where investment is in fixedcapital and inventories by both the public and the private sectors.SEZ Abbreviation for special economic zones used extensively in ChinaSocial cohesion How united, trustful, cooperative and tolerant of cultural diversity society isSocial enterprises Businesses run on commercial lines but where profits are reinvested for the social good /community benefitSocial exclusion When people are denied access to opportunities considered ‘normal’ in a societySoft commodities Commodities which can be grown, such as coffee, sugar, tea or maizeSoft infrastructure The financial system and regulation, education system, the legal framework, socialnetworks, values and other intangible structures in an economySoft loan A loan made to a country on a concessionary basis with a lower rate of interestSovereign debt crisis Widespread problem of high fiscal deficits and rising national debts in many developedcountriesSovereign wealth fund A government or state run fund usually created by profits from natural resourcesSpecial drawing rights A unit of money created by the IMF. Each member country can borrow SDRs atfavourable interest rates from the IMFs reserves when they are neededSpecialisation When individuals, regions or countries concentrate on making one or just a few productsto create a surplus to trade, linked to comparative advantageStability and Growth Pact EU’s fiscal rules intended to control government borrowingStagflation A combination of slowing economic growth and rising cost and price inflationSubsistence farming Farming where output is for consumption of the farmer/family, not for cash sale
  9. 9. Sustainable development To leave future generations the option or capacity to be as well off as we areSustainable growth Growth which meets the needs of the present without compromising the ability of futuregenerations to meet changing needs and wants. Each generation should bequeath aslarge a productive base as it inherited from its predecessorTechnology spillover Transfer of production technologies, ideas arising from trade and FDITerms of Trade The terms of trade (also known as the real exchange rate) is the real value of countriesexports in terms of their imports. Thus it is a function of the price levels in the domesticand foreign country and the nominal exchange rateTrading bloc A group of countries co-operating to liberalize trade between each otherTransition economies Former countries of the Eastern Bloc that have been engaged in a transition from beinglargely command economies to market systems with a greater role for private enterpriseand resource allocation via the price mechanismTrend growth Long term non-inflationary increase in GDP caused by an increase in LRASTrickle down The process whereby the economic gains from economic growth pass down throughoutthe entire society eventually giving rise to developmentUnbalanced economy A common feature of most modern economies. E.g. imbalances between: (i) savings &investment (ii) domestic & external demand (iii) public & private sectors (iv) formal &informal economic activity (v) BoP deficits and surplusesUnder-employment When people want to work full time but find that they can only get part-time work – theresult is a loss of hours that the economy can useUnder-nourishment When food intake is chronically insufficient to meet minimum energy requirements.Unit wage costs Wage costs per unit of output – determined by wage and productivity levelsUrbanization Economic and demographic processes involved in the growth of towns and citiesWorld Bank Promotes the institutional, structural and social development, providing low interest loansfor domestic investment projects and technical assistanceWorld Trade Organisation Polices free trade agreements, and decides on trade disputes between countries. Itarranges trade negotiations to liberalize trade by mutually agreed reductions in tariffs &quotas and opening domestic markets up to foreign competition