What's it? Dollarization means adopting the U.S. dollar as a currency and unit of account by countries other than the United States. The term also has a broader meaning: the adoption of foreign currency by a country other than its issuing country.
International economics
Free Trade Area: Expanding Markets, Raising Concerns + Examples, Pros, Cons
A free trade area (FTA) is a pact between several countries in a specific region aimed at boosting trade and economic ties. Within an FTA, member countries agree to eliminate barriers to trade in goods amongst themselves. This can involve removing
Economic Union: Deep Cooperation, Shared Prosperity (Trade, Money, Policy) – Features, Goals, Examples, Pros, Cons
What's it: An economic union is a form of regional economic integration in which goods, services, and factors flow freely between member countries. Plus, members also integrate economic policy. It is a more advanced form of the common
Infant Industry Argument: Nurturing Domestic Industries (Reasons, Criticisms, Examples)
What's it? The infant industry argument is an economic rationale used in international trade to justify trade protectionism. The idea behind this argument is that a new domestic industry is vulnerable to competition from established players in the
Import Tariffs: Taxes, Types, Impact (Pros & Cons)
What's it: An import tariff is a tax imposed on the price of imported goods. The government usually charges tariffs as a percentage of the price of imported goods. Alternatively, the tariff is levied as a fixed cost for each unit of goods imported,
Customs Union: Trade Boost & Cooperation (Free Trade, Tariffs, Pros, Cons)
What's a customs union? Imagine a group of neighboring countries taking economic integration to the next level. This involves ditching trade barriers amongst themselves, allowing goods and services to flow freely without the burden of customs duties
Trade Protection: Shield Domestic Economy (Reasons, Pros, Cons & Types)
What's it: Trade protection is a government policy used in international trade to limit the flow of exports and imports of goods and services. Protection takes various forms, such as import tariffs, subsidies, quotas, labeling, product safety, and
Pure Floating Exchange Rate: Flexibility & Volatility (Pros, Cons)
What's it? A pure floating exchange rate, or free-floating exchange rate, is a system of exchange rates in which the value of a domestic currency against a foreign currency moves according to a market mechanism. The market mechanism is the
Balance of Payments: Understanding a Country’s Economic Footprint
Balance of payments acts as a comprehensive snapshot of a country's economic activity on the world stage. It's essentially a double-entry bookkeeping system that tracks all financial transactions between a country and the rest of the world over a
Currency Crisis Explained: Causes, Impacts & Solutions
What's it: A currency crisis is a situation in which the exchange rate of a currency falls, causing a sharp decline in foreign reserves. The fall was possible due to a brief bout of speculation on the foreign exchange market. Simultaneously, the
Import Quota: Protection vs. Price Hikes – Types, Pros and Cons
What's it? An import quota is an import policy that limits the quantity of product imports over a certain period. The government implemented it to protect domestic industries that were vulnerable to pressure from imported products. It is also
Trade Restriction: Impact on Consumers & Businesses (Reasons, Types)
What's is: Trade restriction refers to the various barriers that make the flow of goods and services between countries immobile. If the barriers come from government policies, we call it trade protection.Trade restrictions affect the demand