- D -
D-in-D Dif-in-dif
DAC Development Assistance Committee
DAD Delivery against documents. The requirement by a shipper that the recipient provides certain documents in order to be given the shipment.
Dairy Agreement See International Dairy Agreement.
Dardanelles The narrow strip of water, or strait, that separates the portion of Turkey in Europe from that in Asia. It connects the Mediterranean Sea to the Black sea. It is therefore the only route for trade by water between 4 countries with water borders only on the Black Sea and the rest of the world.
Data Free Flow with Trust A concept proposed in 2019 by Japanese Prime Minister Abe Shinzo "to combine the privacy and security of personal and sensitive data with the enhancement of cross-border data flows." [Source]
Data localization requirement A policy requiring that electronic data used by a company that serves users in a country, and that originated in that country, be stored within that country. [Source]
Davos 1. A small town in Switzerland, that has been host to the annual meeting of the World Economic Forum since 1974.
2. Shorthand for that meeting, which includes leaders from the worlds of government, politics, business, civil society, and academia.
Dawes Plan The plan for managing reparations to be paid by Germany to the the victors in World War I, drafted by a committee chaired by financier Charles G. Dawes and accepted by the Allies and Germany on August 16, 1924.
DBCFT Destination-based cash flow tax
DDA Doha Development Agenda
DDN Index Deardorff-Dixit-Norman Index
DDP Delivered duty paid
DDU Delivered duty unpaid
De minimis A legal term for an amount that is small enough to be ignored, too small to be taken seriously. Used to restrict legal provisions, including laws regarding international trade, to amounts of activity or trade that are not trivially small.
De minimis rule A provision of most tariff systems that they "neither charge duties on nor collect full data on imports below a certain value." In the US, that value is US$800. It varies greatly across other countries. [Source]
Deadweight loss The net loss in economic welfare that is caused by a tariff or other source of distortion, defined as the total losses to those who lose, minus the total gains to those who gain. Usually identified in a supply-and-demand diagram in terms of change in consumer and producer surplus together with government revenue. The net of these appears as one or two welfare triangles. [Origin]
Deardorff-Dixit-Norman index The value of net imports at autarky prices. Used by Deardorff (1980) and Dixit and Norman (1980) to indicate comparative advantage, it was named by Bernhofen and Brown (2005) and used to quantify comparative advantage and the gains from trade.
Debase To reduce the value of. Classically, a currency is debased if its value in terms of gold or other precious metal is reduced.
Debenture 1. A debt that is not backed by collateral, but only by the credit and good faith of the borrower.
2. A certificate issued by customs authorities entitling an exporter of imported goods to be paid back duties that have been paid when they were imported. Such a refund is called a drawback.
Debit Recorded as negative (−) in the balance of payments, any transaction that gives rise to a payment out of the country, such as an import, the purchase of an asset (including official reserves), or lending to foreigners. Opposite of credit.
Debt The amount that is owed, as a result of previous borrowing. A country's debt may refer to the debt of its government or to that of the country as a whole.
Debt burden The debt of a country, when large enough that servicing it has become difficult.
Debt buyback The purchase by a country of its own outstanding debt at a discounted price due to a debt crisis.
Debt cancellation The most extreme form of debt relief, in which a country's debts are completely forgiven, so that no repayment of interest or principal is required.
Debt crisis 1. Any situation in which a country, usually a developing country, finds itself unable to service its debts.
2. The Latin American Debt Crisis.
Debt distress The IMF defines a country as being in debt distress when it "is unable to fulfill its financial obligations and debt restructuring is required." [Source]
Debt/equity swap An exchange of debt for equity, in which a lender is given a share of ownership to replace a loan. Used as a method of resolving debt crises.
Debt forgiveness Debt cancellation
Debt intolerance In the context of the financial problems experienced by developing countries and emerging economies, this refers to their inability to manage levels of external debt that would be manageable for advanced countries. That is, their credit ratings decline more rapidly with debt than would those of an advanced country.
Debt overhang A situation in which the external debt of a country is larger than it will be able to repay. Often due to having borrowed in foreign currency and then had its own currency depreciate.
Debt relief Any arrangement intended to reduce the burden of debt on a country, usually including forgiveness of part or all of what is owed to creditors, who may include private banks and other entities, government, or international financial institutions.
Debt restructuring "Getting lenders to agree to reduce the interest rates on loans, extend the dates when the company's liabilities are due to be paid, or both." Also called debt rescheduling. [Source]
Debt service The payments made by a borrower on its debt, usually including both interest payments and partial repayment of principal.
Debt Service Suspension Initiative A program of the G-20 countries, urged by the World Bank and IMF, to temporarily suspend debt service by poor countries to official creditors and encourage the same by private creditors, to help these countries deal with the disruption of the Covid-19 Pandemic.
Debt suspension clause Also known as pause clauses and climate-resilient debt clauses, these are "mechanisms that allow a country to temporarily suspend debt repayments for a pre-agreed period (generally 1-2 years) if a natural disaster hits." [Source]
Debt sustainability The ability of a debtor country to service its debt on a continuing basis and not go into default. After a debt crisis, sustainability may be restored through debt rescheduling. [Source]
Debt trap diplomacy "A creditor nation or establishment extending loans to a borrowing nation in order to expand the lender's political leverage." By making the pay-back terms difficult, the creditor may force the debtor to later accept "economic or political concessions." Some view China's BRI as doing this. [Source]
Debtor A borrower.
Debtor nation A country whose assets owned abroad are worth less than the assets within the country that are owned by foreigners. Contrasts with creditor nation.
Decile One of the segments of a distribution that has been divided into equal tenths. For example, the second-from-the-bottom decile of an income distribution refers to those whose income exceeds that of 10% of the population but does not exceed that of 20%.
Declaration See customs declaration.
Declaration on the TRIPS agreement and Public Health The Doha Declaration on Public Health
DECOM Department of Trade Defence of the government of Brazil.
Decouple Refers to the provision of government support to an enterprise, usually a farm, in a manner that does not provide an incentive to increase production. Farm subsidies that are decoupled are included in the green box and are therefore permitted by the WTO.
Decoupling 1. While this word is just the present participle of decouple, in 2019 it also came to refer to the partial reversal of globalization that began with the Trump tariffs and responses to them, which caused producers to reduce their reliance on international supply chains, especially from China.
2. Even before 2019, the term was used by China itself for its effort to reduce its dependence on foreign technologies and capabilities. [Source]
Decreasing cost Average cost that declines as output increases. Implied by increasing returns to scale.
Decreasing cost argument for protection The case for protection made first by Graham (1923), that a country can benefit by using tariffs to permit an industry with decreasing costs to increase its size and become more efficient.
Decreasing returns to scale A property of a production function such that changing all inputs by the same proportion changes output less than in proportion. Example: a function homogeneous of degree less than one. Also called simply decreasing returns. Not to be confused with diminishing returns, which refers to increasing some inputs while holding other inputs fixed. Contrasts with increasing returns and constant returns.
Deductive value A method of customs valuation used when transaction value is not available: find the first price at which the good is sold inside the importing country and deduct costs incurred after importation.
Deemed export In the US, this is release of a controlled technology to a foreign person, and it requires an export license from the BIS. "Releases of controlled technology to foreign persons in the U.S. are 'deemed' to be an export to the person's country or countries of nationality." [Source]
Deep integration Refers to economic integration that goes well beyond removal of formal barriers to trade and includes various ways of reducing the international burden of differing national regulations, such as mutual recognition and harmonization. Contrasts with shallow integration.
Deepening Capital deepening
Default Failure to repay a loan. International loans, both by governments and by private agents, lack mechanisms to deal with default, unlike the legal mechanisms that exist within countries.
Defense Production Act US legislation from 1950 that originally gave the President broad powers to set wages and prices and impose rationing. Most recently reauthorized in 2019, it now lets the president "allocate materials, services, and facilities." These powers may include directives affecting exports and imports. [Source]
Deficiency Payment Payment to a producer of an amount equal to the difference between a guaranteed price and the market price, with the latter often determined on the world market. Thus a form of subsidy to production.
Deficit 1. In the balance of payments, or in any category of international transactions within it, the deficit is the sum of debits minus the sum of credits, thus the negative of the surplus.
2. In the government budget, the deficit is the excess of government expenditures over receipts from taxes.
Deficit financing 1. The method used by a government to finance its budget deficit, that is, to cover the difference between its tax receipts and its expenditures. The main choices are to issue bonds or to print money.
2. The assumption that a change in government spending or taxes will be financed by a change in the government budget deficit, rather than by an accommodating additional change in spending or taxes to keep the budget balanced. Example: a "deficit-financed increase in government purchases."
Definitive With reference to a tariff or other trade barrier applied as a result of administered protection, this refers to the barrier imposed at the completion of the administrative process, as opposed to the preliminary barrier that may have been imposed at an earlier stage. Also called final.
Deflation A fall in the general level of prices. Unlikely unless the rate of inflation is already low, it may then be due either to a surge in productivity or, less favorably, to a recession.
Deflator The ratio of a nominal magnitude to its real counterpart. Usually applies, as with the GDP deflator, when the real magnitude has been constructed from underlying data and not by simply deflating the nominal magnitude by a corresponding price index. A deflator itself may be used as though it were a price index.
Deflection See trade deflection, production deflection, and investment deflection, .
Deglobalization The reversing of globalization, thus a movement toward a less connected world, with less internnational trade, less FDI, and smaller role for international institutions. Some see signs of this starting with the global financial crisis of 2008, Brexit, and the Trump tariffs. [Source]
Degree of openness See openness index.
Degressive 1. Declining with income. A degressive income tax takes a smaller fraction of higher incomes.
2. Declining over time. A degressive trade policy might be a tariff the ad valoren size of which is scheduled to decline over time, or a quota that is scheduled to expand faster than demand for imports.
Deindustrialization A decline over time in the share of manufacturing in an economy, usually accompanied by growth in the share of services. Typically accompanied by an increase in manufactured imports, it may raise concern that the country is losing valuable economic activity to others.
Delivered duty paid Specified in a trade contract, this means that the seller is obliged to pay any import duty and to do whatever else is necessary to bring the goods through customs. Contrasts with delivered duty unpaid.
Delivered duty unpaid Specified in a trade contract, this means that the seller is not obliged to pay any import duty or to do whatever else is necessary to bring the goods through customs. Contrasts with delivered duty paid.
Delocalization A for fragmentation. Used by Leamer (1996).
Delocation 1. The movement of firms and their resulting employment from one country to another as a result of a change in trade policy.
2. More specifically, the effect of an import tariff or export subsidy in causing firm entry at home and exit abroad, so that domestic consumers gain from increased competition and/or reduced transport costs, while foreign consumers similarly lose. Effect identified by Venables (1985,1987).
Deloitte Touche Tohmatsu Limited A multinational professional services network incorporated in the United Kingdom. It produces the Global Manufacturing Competitiveness Index.
Delors Report The report of a committee formed by the European Commission in 1988 and issued in 1989 describing what should be the transition to monetary union. Unlike that of the Werner Committee, it did not advocate political integration and did insist on a mandate for price stability. [Source]
Demand 1. The act of offering to buy a product.
2. The quantity offered to buy.
3. The quantities offered to buy at various prices; the demand curve.
Demand curve The graph of quantity demanded as a function of price, normally downward sloping, straight or curved, and drawn with quantity on the horizontal axis and price on the vertical. Demand curves for imports and for foreign exchange usually have the same qualitative properties as demand curves for goods, but for somewhat different reasons.
Demand deposit A bank deposit that can be withdrawn "on demand." The term usually refers only to checking accounts, even though depositors in many other kinds of accounts may be able to write checks and thus regard their deposits as readily available.
Demand elasticity Normally the price elasticity of demand. References to other elasticities of demand, such as the income elasticity are normally explicit. See import demand elasticity.
Demand function 1. The mathematical function expressing the quantity demanded in terms of its various determinants, including income and price; thus the algebraic representation of the Marshallian demand curve.
2. The Hicksian demand function with the level of utility instead of income.
Demand price The price at which a given quantity is demanded; thus the demand curve viewed from the perspective of price as a function of quantity.
Demand pull As a cause of international migration, demand-pull factors are conditions in the receiving country that attract migrants. As opposed to supply push.
Demand reversal The (unlikely) possibility, accounting for the Leontief Paradox, that country demands differ so much that countries demand more of their abundant-factor-intensive goods than they produce, thus invalidating the Heckscher-Ohlin Theorem under the quantity definition of factor abundance but not under the price definition.
Demand schedule A list of prices and corresponding quantities demanded, or the graph of that information. Thus a demand curve.
Demand shock A shock on the demand side of a market. Thus an unexpected shift, up or down, in the demand curve.
Demander surplus Same as consumer surplus, but recognizing that demanders in some markets are not, or not all, consumers, even though the concept remains valid as measuring benefit to demanders.
Democracy index An index produced by the Economist Intelligence Unit that "provides a snapshot of the state of world democracy for 165 independent states and two territories." Based on scores on 60 indicators of democracy, countries are then ranked and classified as from full democracy to authoritarian regime.
Demographic dividend The result of a fall in a country's birth rate, whereby the ratio of the number of children to those of working age declines, releasing resources for investment and/or increased per capita consumption. The benefit ceases, and may be reversed, when that working-age generation reaches retirement.
Demographic transition The change that typically takes place, as a country develops, in the birth and death rates of its population, both of which tend eventually to fall as per capita income rises.
Demurrage A cost associated with delay. It takes different forms in different contexts, such as when a ship is delayed in loading or unloading, or when currency or gold are held over time.
Density Probability density
DEPA Digital Economy Partnership Agreement
Department for International Development The international aid agency of the United Kingdom government, responsible for promoting economic development and alleviating poverty in developing countries. It was replaced by FCDO in 2020.
Department of Commerce The cabinet department of the US government that is responsible for may business related issues, including portions of US trade law such as Sections 232 and 301.
Department of Trade Defence The unit of the government of Brazil that handles all investigations for import relief. [Source]
Dependency theory The theory that less developed countries are poor because they are exploited by the developed countries through international trade and investment.
Dependent economy model A model of a small economy that takes the prices of traded goods as given, but that also has a nontraded good sector. Due to Salter (1959).
Dependent variable The variable on the left-hand-side of a regression, and thus the variable that the regression attempts to explain.
Deposit An amount of money placed with a bank for safekeeping, convenience, and/or to earn interest.
Depreciate See depreciation.
Depreciation 1. A fall in the value of a country's currency on the exchange market, relative either to a particular other currency or to a weighted average of other currencies. The currency is said to depreciate. Opposite of "appreciation."
2. The decline in value or usefulness of a piece of capital over time, and/or with use. Aggregate depreciation for an economy is entered in the National Income and Product Accounts as capital consumption allowance.
Depression A severe recession that lasts several years and/or involves a loss of real GDP of more than 10%. (There is no standard definition.) [Origin]
Deregulation The lessening or complete removal of government regulations on an industry, especially concerning the price that firms are allowed to charge, thus leaving price to be determined by market forces.
Derisking 1. Actions taken by financial institutions to terminate relationships with clients that are considered to be high risk, taken in response to government actions intended to reduce money laundering and support for terrorism. [Source]
2. Policies intended to reduce the risk of economic interactions with a country that is perceived to be an economic or political enemy. It may include screening or curbing investments in and from the country and subsidies to domestic competing industries. [Source]
Derivative 1. In mathematics, the ratio of the change in a variable to the infinitessimal change in another variable upon which it depends, denoted dy/dx. Often used in economics to specify both assumptions and results of models.
2. In financial markets, a financial instrument whose value depends on some other financial variables. Old examples include forward and futures contracts.
3. A product the production of which uses another product. President Trump's attempt to protect the steel industry with a tariff on steel was extended to apply the tariff to "derivatives" of steel.
Derived demand Demand that arises or is defined indirectly from some other demand or underlying behavior; e.g., demand for foreign currency is derived from demand for foreign goods, bonds, etc., while demand for import of a homogeneous good is derived from domestic demand and supply.
Derogation As used in the trade literature, this seems to mean a departure from the established rules, as when a country's policies are said to constitute a derogation from the GATT.
Derwent World Patents Index Calling itself the "premier source of global patent data," this combines "knowledge of subject matter experts with a big data approach" to allow users to find patents in several dozen national patent offices.
DESTA Design of Trade Agreements Database
Destination-based cash flow tax A proposed reform of international taxation of multinational corporations, a DBCFT would tax based on the location of sales rather than the location of reported profits.
Design of Trade Agreements Database DESTA is a collaborative research project that collects "systematic data on the design of preferential trade agreements that have been signed since 1945."
Destabilizing speculation Speculation that increases the movements of the price in the market where the speculation occurs. Movement may be defined by amplitude, frequency, or some other measure. See stabilizing speculation.
Destination principle The principle in international taxation that value added taxes be kept only by the country where the taxed product is being sold. Under the destination principle, value added taxes are collected on imports and rebated on exports. Contrasts with the origin principle. [Source]
Detention order A withhold release order.
Deterministic Not random. Contrasts with stochastic. Most models of international trade, prior to about 2003 and the introduction of EK and MelitzModel models, have been deterministic.
Devaluation 1. Depreciation.
2. A fall in the value of a currency that has been pegged, either because of an announced reduction in the par value of the currency with the peg continuing, or because the pegged rate is abandoned and the resulting floating rate declines.
3. A fall in the value of a currency in terms of gold or silver, meaningful only under some form of gold standard or silver standard.
Develop To experience a sustained and substantial increase in per capita income; thus to undergo economic development.
Developed country A country whose per capita income is high by world standards.
Developing country 1. A country whose per capita income is low by world standards. Same as less developed country. As usually used, it does not necessarily connote that the country's income is rising.
2. A country that designates itself as "developing" for the purpose to getting certain benefits within the WTO, such as longer transition periods before implementing agreements, and receiving technical assistance. [Source]
Development Economic development
Development Agenda The WIPO Development Agenda
Development Assistance Committee The group of OECD members that form the "principal body through which the OECD deals with issues related to co-operation with developing countries." It has 32 members including the EU (as of February 2024), generally those OECD members with the highest per capita incomes.
Development bank A multilateral institution that provides financing for development needs of a regional group of countries. Examples include the African, Asian, and Inter-American Development Banks.
Development decade The United Nations General Assembly designated as "development decades" 1960-70, 1971-80, 1981-90, and 1991-2000. After the 4th of these, additional decades were designated for other and narrower purposes.
Development finance Provision of credit to a developing country to permit it to undertake development projects that it could not otherwise afford.
Development finance institution A governmental or inter-governmental body that provides development finance.
Development project A project intended to increase a developing country's ability to produce in the future. Such projects are most commonly additions to the country's capital stock, especially involving improvements of infrastructure, educational facilities, discovery or development of natural resources, etc.
Deviation See standard deviation.
DFC International Development Finance Corporation
DFFT Data Free Flow with Trust
DFI 1. Development Finance Institution
2. Direct Foreign Investment
DfID Department for International Development
DFQF Duty-free, quota-free
DFS model One of the continuum-of-goods models of Dornbusch, Fischer, and Samuelson (1977, 1980).
DFTT Double factoral terms of trade
Diagonal 1. In a square matrix, the elements on a straight line from the top left to the bottom right, or occasionally from the bottom left to the top right.
2. Of a square matrix, having non-zero elements only on the downward sloping diagonal.
3. In an Edgeworth box, the straight line from the bottom left corner to the top right. Along the diagonal, the ratios of allocations of the two agents (industries or consumers) are constant and equal.
4. In an integrated world economy diagram, the straight line from the bottom left corner to the top right. Along the diagonal, the ratios of factor endowments of the two coutries are constant and equal.
Diagonal cumulation In an FTA, diagonal cumulation allows imports from a specified non-member to qualify under the rules of origin.
Diaspora bond A bond issued by the government of a country and marketed to migrants from its country who are working in other countries.
Dif-in-dif Short for difference-in-differences, this is an econometric technique that estimates the extent to which a treatment and a control group differ in their responses to a common change.
Differential treatment See special and differential treatment.
Differentiated product 1. A firm's product that is not identical to products of other firms in the same industry. Contrasts with homogeneous product.
2. Sometimes applied to products produced by a country, even though there are many firms within the country whose products are the same, if buyers distinguish products based on country of origin. This is called the Armington assumption.
Digit Used in indicating the extent of disaggregation of data within a classification system. For example, 3-digit trade data, categorized by 3-digit numbers, are more aggregated than 6-digit data: many more and hence smaller groups of goods can be categorized with 6-digit numbers.
Digital Economy Partnership Agreement DEPA was signed June 12, 2020 by Chile, New Zealand, and Singapore and is open to new members. The aim is to "complement WTO negotiations on e-commerce" by generating "new ideas and approaches that can be used by members in the WTO negotiations."
Digital Markets Act From November 1, 2022, this EU legislation regulates large technology platforms, including many based outside the EU. It has "rules defining and prohibiting perceived unfair business practices by large online platforms designated as important gatekeepers between European businesses and consumers." [Source]
Digital trade Trade in goods and services that is either digitally enabled -- using computers and the internet for marketing, ordering, or payment -- or in which the traded products themselves have digital form -- such as steaming music and cloud storage.
Dillon Round The fifth trade round under GATT auspices, 1960-1961. Unlike the prior rounds, which were named simply after the city where the negotiations took place, this was given a name, after C. Douglas Dillon, U.S. Undersecretary of State under Eisenhower and Treasury Secretary under Kennedy.
Dim sum bond A bond, issued in Hong Kong and denominated in the Chinese currency, the renminbi.
Diminishing marginal utility The property that marginal utility falls as the quantity consumed of a single good or service rises. This is neither necessary nor sufficient for most common results in economic theory, but it is a property of most utility functions that are well behaved.
Diminishing returns The fall in the marginal product of a factor or factors that eventually occurs as input of that factor rises, if input of at least one other factor is fixed, according to the Law of Diminishing Returns.
Diminishing returns to scale See decreasing returns to scale, which is the preferred term in order to distinguish it from diminishing returns to a single factor when at least one other is held fixed.
Dinar Subunit of a rial.
Dingley Tariff The Dingley Act of 1897 raised tariffs to the highest they have ever been, averaging over 50% initially. It stayed in effect for the longest, 12 years, of any US tariff law.
Direct devaluation Devaluation of the nominal exchange rate. Can be viewed as an alternative to devaluing the real exchange rate by internal devaluation or using other policies that change prices or expenditure.
Direct factor content A measure of factor content that includes only the factors used in the last stage of production, ignoring factors used in producing intermediate inputs. Contrasts with direct-plus-indirect factor content.
Direct foreign investment Foreign direct investment
Direct tax 1. A tax on any form of income. Contrasts with indirect tax. The distinction matters for trade policy, because a rebate of direct tax on an exported product is an illegal subsidy in the WTO, while a rebate of an indirect tax, such as a value added tax, is not.
2. Prior to the availability of income taxes, common direct taxes were poll taxes and taxes on land.
Direct-plus-indirect factor content A measure of factor content that includes factors used in producing intermediate inputs, factors used in producing intermediate inputs to the intermediate inputs, and so forth. That is, it includes all primary factors that contributed however indirectly to production of the good. Contrasts with direct factor content.
Direction of trade 1. Refers to the particular countries or kinds of countries toward which a country's exports are sent, and from which its imports are brought, in contrast to the commodity composition of its exports and imports. Thus the pattern of its bilateral trade.
2. Direction of Trade Statistics
Direction of Trade Statistics DOTS is a publication of the International Monetary Fund.
Directly Unproductive Profit-Seeking Activities Activities with no direct productive purpose (not contributing to consumer utility directly or indirectly through production) and motivated by profit from market distortions created by government policies. Examples of DUP activities are rent seeking and revenue seeking. [Origin]
Director General Title given to the persons who head certain international organizations, including the WTO, ILO, and WIPO. Some other organizations use Secretary General.
Dirigiste Centrally planned; that is, under the direction of a central authority, normally the government. Contrasts with decentralized, or a system in which economic decisions are determined by market forces in a market economy.
Dirty compromise The deal struck between New England and states of the US south in writing the US constitution, whereby the latter supported the Commerce Clause and the former supported (i.e., would not ban or tax) the slave trade and prohibited export taxes. [Source]
Dirty float Same as managed float.
Dirty tariffication 1. Tariffication but at rates that are higher than the tariff equivalents of existing nontariff barriers. The size of this excess is called water in the tariff by definition #3.>
2. In practice, much claimed tariffication was not a simple tariff, but rather a tariff rate quota, with a low tariff on the in-quota imports and a higher, even prohibitive tariff on imports above the quota, but claiming an average tariff equal to the tariff equivalent. [Origin]
Disaggregation The opposite of aggregation, this refers to the categorization of data into a greater number of smaller categories.
Disarticulation The absence of linkage among sectors of an economy, so that growth in some does not spill over into improved productivity and well being in others.
DISC Domestic International Sales Corporation
Discipline See GATT discipline.
Discount 1. Any reduction in price or value, especially when below a stated or normal price.
2. To buy or sell commercial paper or trade acceptances at a price below face value to account for interest to accrue before maturity and/or payment uncertainty.
3. To attach a lower weight to the importance of -- or utility derived from -- one thing compared to another, as in time preference that discounts later consumption compared to earlier.
Discount rate 1. The rate, per year, at which future values are diminished to make them comparable to values in the present. Can be either subjective (reflecting personal time preference) or objective (a market interest rate).
2. The interest rate that the Fed charges commercial banks for very short-term loans of reserves. One of the tools of monetary policy.
Discount window The mechanism by which the Fed makes loans to commercial banks, charging them an interest rate that is the discount rate and also sometimes exerting some pressure on the banks to limit their borrowing.
Discounted present value Present value.
Discrete random variable A random variable that can take on only a countable set of specific values. Contrasts with a continuous random variable.
Discrete time The division of time into indivisible units. In economic models, these units represent periods, such as days, quarters, or years. Contrasts with continuous time.
Discretionary licensing Licensing that is left to the discretion of an office or agent of government, and thus is not predictable based on stated criteria.
Discrimination Unequal treatment. In the WTO, nondiscrimination is required in the form of most favored nation treatment. However, many exceptions are permitted, including preferential trade agreements, anti-dumping duties, countervailing duties, and GSP.
Discriminatory tariff A higher tariff against one source of imports than against another. Except in special circumstances, such as anti-dumping duties and countervailing duties, this is a violation of MFN and is prohibited by the WTO against other members.
Diseconomies of scale Decreasing returns to scale.
Disequilibrium 1. Inequality of supply and demand.
2. An untenable state of an economic system, from which it may be expected to change.
Disguised protection Any policy other than a tariff or other border measure that has the effect of benefiting a domestic industry and cannot be justified as correcting a distortion.
Disintegration Fragmentation. Term used by Feenstra (1998).
Disinvest 1. To allow a stock of capital to become smaller over time, either by selling parts of it or by allowing it to depreciate without replacing it.
2. To reduce inventories, either absolutely or by more than any increase in plant and equipment.
3. To sell all or a portion of a portfolio of financial assets.
Disparity Inequality, usually income disparity.
Disposable income Income minus taxes. More accurately, income minus direct taxes plus transfer payments; that is, the income available to be spent (including on imports) and saved.
Dispute settlement In the GATT, the adjudication of disputes among parties. In the WTO this is done by the dispute settlement mechanism.
Dispute Settlement Body The entity within the WTO that formally deals with disputes between members. It consists of all WTO members meeting together to consider reports of panels and the Appellate Body. It is subordinate to the WTO's General Council. [Source]
Dispute Settlement Mechanism The procedure by which the WTO settles disputes among members, primarily by means of a 3-person panel that hears the case and issues a report, subject to review by the Appellate Body.
Dispute Settlement Understanding The agreement within the WTO creating the dispute settelement mechanism. Formal name: "Understanding on rules and procedures governing the settlement of disputes."
Dissipate rent To use up, in real resources, part or all of the economic rents that are being sought by rent seeking.
Distortion Any departure from the ideal of perfect competition that therefore interferes with economic agents maximizing social welfare when they maximize their own. Includes taxes and subsidies, tariffs and NTBs, externalities, incomplete information, and imperfect competition. Same as market imperfection.
Distress dumping Intermittent dumping.
Distress good Name used by Kindleberger (1973) for goods that firms have produced but are unable to sell due to a decline in aggregate demand. He viewed a contributing cause of the Great Depression to be that the United States failed to remain open to imports and thus provide an outlet for distress goods from abroad.
Distribution 1. The productive activity of getting produced goods from the factory into the hands of consumers.
2. Income or wealth distribution: the amounts of income or wealth in the hands of different portions of a population.
3. Probability distribution.
Diversification Reliance by a country, industry, or firm on multiple products for export and/or multiple trading partners to export them to.
Diversification cone For given prices in the Heckscher-Ohlin Model, a set of factor endowment combinations that are consistent with producing the same set of goods and having the same factor prices. Such a set has the form of a cone. Concept was first used by McKenzie (1955). [Origin]
Diversified portfolio A portfolio that includes a variety of assets whose prices are not likely to all change together. In international economics, this usually means holding assets denominated in different currencies.
Diversify 1. In trade theory, for a country to produce more than one thing. In the Heckscher-Ohlin Model with two goods, it means to produce both of them. With more than two goods, it may mean to produce two, or it may mean to produce all of the goods that are possible.
2. For an owner of assets, to hold a diversified portfolio.
Diversion See trade diversion.
Diversionary dumping Dumping of a good, not directly into a country, but indirectly through a third country where it is minimally further processed for export.
Dividend The amount paid each quarter by a corporation to its stockholders for each share of stock.
Division of labor Splitting a production process across multiple workers, each performing a different task repeatedly rather than having a single worker perform all tasks. Adam Smith (1776) pointed out the increased productivity that can result, as well as the potential for gains from trade when division of labor takes place across countries.
Dixit-Stiglitz function A symmetric CES function, the innovation of Dixit and Stiglitz (1977) (and Spence (1976)) was to let the number of arguments be variable in a model of monopolistic competition. As a utility function, with elasticity > 1, there is a preference for variety. As a production function, costs fall with variety. Also called the Spence-Dixit-Stiglitz function.
Dixit-Stiglitz utility The Dixit-Stiglitz function used as a utility function. [Origin]
DMA Digital Markets Act
Do whatever it takes The promise by ECB President Mario Draghi in a speech on July 26, 2012 to "do whatever it takes" to preserve the euro. He continued, "And believe me, it will be enough." It was. Interest rates came down and largely ended the European sovereign debt crisis.
Docking provision A part of an agreement among a group of countries, such as an FTA, to allow other like-minded countries to join the agreement on specified terms without renegotiating the agreement.
Doctrine of Immaculate Transfer The mistaken idea that a trade imbalance can be removed solely by countries changing their levels of spending without any change in the real exchange rate. Named by John Williamson. [Source]
Dodge Plan "Implemented [in 1948] to bring Japan back to its complete strength and economic recovery." In contrast to the Marshall Plan for Europe, this "focused on resolving the serious problem of inflation and establishing a more stable Japan" by "suspending new loans and ... eliminating subsidies." [Source]
Doha Declaration The document agreed upon by the trade ministers of the member countries of the WTO at the Doha Ministerial meeting. It initiated negotiations on a range of some 21 subjects. A distinctive feature was the emphasis placed on the interests of developing countries.
Doha Declaration on Public Health The portion of the Doha Declaration that affirms the rights of countries "to protect public health and ... promote access to medicines for all," expanding rights under the Trips Agreement for countries to grant compulsory licences to deal with epidemics of HIV/AIDS, tuberculosis, malaria and other diseases. [Source]
Doha Ministerial The WTO ministerial meeting held in Doha, Qatar, November 10-14, 2001, at which it was agreed to begin a new round of multilateral trade negotiations, the Doha Round.
Doha Round The round of multilateral trade negotiations begun January 2002 as a result of agreement at the Doha Ministerial. Also called the Doha Development Round or the Doha Development Agenda. Negotiations continued, without success, until the Nairobi Ministerial in 2015, at which they terminated.
Doing Business A project of the World Bank that rated and ranked countries of the world by several indicators of the ease of doing business. After "data irregularities" were reported for the 2018 and 2020 reports, the report was discontinued as of September 16, 2021.
Dollar 1. The currency of the United States, the US dollar.
2. The currency of any of several other countries whose major unit of currency is also named the dollar. Their values are determined by markets and/or their governments or central banks and are not normally the same as the US dollar. Most are subdivided into 100 cents.
Dollar Diplomacy The disparaging term for the policy, begun by US President Taft and formally repudiated in 1913 by President Wilson, of using dollar loans as a tool of foreign policy to ensure financial stability and protect US commercial interests in other countries.
Dollar dominance The situation in which most trade and financial transactions are conducted in terms of US dollars and countries hold and accumulate dollar reserves to be used, when needed, for exchange market intervention.
Dollar gap Referring specifically to Europe in the years following World War II during the dollar shortage, this was the difference between the dollars (or other hard currency) that Europe earned on its exports and what it needed to pay for its imports. [Source]
Dollar glut The abundance of US dollars held by foreign central banks that arose after the dollar shortage was resolved and foreign economies recovered, leading to chronic balance of payments deficits by the US.
Dollar Index Denoted DXY, this is a measure of the value of the US dollar in terms of a basket of hard currencies based on their trading relationships with the US. The basket currently (2022) includes the euro, UK poound, Canadian dollar, Japanese yen, Swedish kroner and Swiss franc. [Source]
Dollar recession A decline in a country's GDP when measured in U.S. dollars. This may occur due to an appreciation of the dollar even if the country's GDP does not fall as measured in its own currency.
Dollar shortage The post-World War II period when the world had few US dollars and difficulty getting them, as their economies had been destroyed. The US, in contrast, was unharmed and able to produce needed goods for export, if there were dollars to buy them. Shortage was alleviated by the Marshall Plan.
Dollar smile The observation, by Stephen Li Jen and Fatih Yilmaz in the early 2000s, that the foreign exchange value of the US dollar tends to be strong both when the US economy is extremely weak and when it is extremely strong, so that a graph of it looks like a smile. [Source]
Dollar standard An international financial system in which the U.S. dollar is used by most countries as the primary reserve asset, in contrast to the gold standard in which gold played this role.
Dollarization 1. The official adoption by a country other than the United States of the U.S. dollar as its local currency. Or more generally the adoption by a country of another country's currency rather than issuing its own.
2. The circulation of another more stable country's currency, perhaps illegally, alongside of a country's own currency.
Domestic 1. From or in one's own country. A domestic producer is one that produces inside the home country. A domestic price is the price inside the home country. Opposite of "foreign" or "world."
2. Used in contrast to international, this means involving only entities or actions inside a country.
Domestic arrears The amount by which a government has fallen behind in its payment of interest and principal on debt to lenders within its own country.
Domestic bias Home bias.
Domestic content protection Use of trade policies such as domestic content requirements to increase the portion of a product's value that is provided by domestic factors of production, either in direct production or through produced inputs.
Domestic content requirement A requirement that goods sold in a country contain a certain minimum of domestic value added.
Domestic credit Credit extended by a central bank to domestic borrowers, including the government and commercial banks. In the US, the largest component is the Fed's holdings of U.S. government bonds, but it also makes some loans to banks and, recently, has held other assets as part of quantitative easing.
Domestic demand Demand for a product by buyers in one's own country.
Domestic distortions argument for protection See second best argument.
Domestic International Sales Corporation A type of U.S. corporation, authorized in 1971, with income primarily from exports. Usually wholly owned U.S. subsidiaries, DISCs had special treatment in borrowing or taxation. A 1976 GATT case found against the U.S., which settled with the EC in 1981. DISC was replaced in 1984 by FSCs.
Domestic law The laws and legal system of a country, which may be constrained by international obligations such as WTO membership. Sometimes a domestic law is inconsistent with such obligations and must be changed. This may be seen as a threat to the country's sovereignty.
Domestic market The market within a country's own borders. Dumping, for example, may be defined by comparing the price charged for export with the price charged on the domestic market, i.e., to buyers within the exporting country.
Domestic resource cost A measure, in terms of real resources, of the opportunity cost of producing or saving foreign exchange. It is an ex ante measure of comparative advantage, used to evaluate projects and policies. The term was introduced to the economics literature by Bruno (1963, 1972).
Domestic subsidy A subsidy to production, independent of where the product is to be sold. Contrasts with export subsidy.
Domestic supply Supply of a product by sellers in one's own country.
Domestic support A policy that assists domestic industry, including a subsidy to production, payment to not produce, price support, and other means of increasing the income of producers.
Domestic trade Commerce within a country; wholesale and retail trade.
Domestic trade share The fraction of total sales by a country's producers that are sold to domestic purchasers (as opposed to being exported).
Doom loop The negative feedback effect experienced in Europe and especially Greece when weak banks had made loans to their weak governments, and the weakness of each then destabilized the other.
Dornbusch-Fischer-Samuelson Model See DFS Model
Dornbusch overshooting See exchange rate overshooting
DOT Direction of Trade
DOTS Direction of Trade Statistics
Double counting Counting the same thing twice, or more than twice. For example, the total value of output of all firms in a country overstates the its output, since the value of produced inputs is counted again in the value of what they help to produce. To avoid this, GDP is measured either from value added or from only final goods.
Double factoral terms of trade The purchasing power, in terms of factors used abroad to produce imports, of domestic factors producing exports. It accounts for both the net barter terms of trade and factor productivities: its own producing exports, Ax, and foreign producing its imports, Am. DFTT = NBTT×Ax/Am = (Px/Pm)×(Ax/Am). The price at which domestic factors exchange, via trade, for foreign factors. Contrasts with SFTT. [Origin]
Double Irish A means of avoiding/delaying taxes using a difference between tax laws in Ireland and elsewhere. Ireland taxes a company only if it is managed there; US taxes based on country of registration. By registering in Ireland but managing from a tax haven, a US multinational can minimize taxes until profits are repatriated. [Source]
Double Irish with a Dutch Sandwich A tax avoidance technique, no longer available since a 2015 change in Irish tax law. It involved sending profits first through an Irish company, then a Dutch company, and finally through another Irish company headquartered in a tax haven.
Double remedy The use of both an anti-dumping duty and a countervailing duty on the same imports. China objected to this in a 2008 WTO case against the US. In its 2011 report on that case, "The Appellate Body found that 'double remedies' are inconsistent with the requirement in Article 19.3 of the SCM Agreement...."
Double switching Reswitching
Double taxation The taxation of the same income twice, by two different governments. Tax treaties are intended to avoid this.
Double taxation treaty Tax treaty
Doux commerce The thesis advocated by many writers in the Enlightenment that commerce, including especially international trade, is a civilizing force, because successful trade requires honesty, tolerance, reliability, and prudence among other virtues. Translated as both gentle commerce and soft commerce. [Source]
Dow Jones Industrial Average An index of prices of stocks, based on U.S. stocks of 30 large industrial companies.
Downstream In a supply chain, the firms to which a producer provides its product as an input, plus the firms that they provide to, and so forth. Contrasts with upstream.
Downstream dumping The export of a good whose cost is reduced by access to a domestically produced intermediate input that is sold below cost. This is not (yet) eligible under any anti-dumping statute for an anti-dumping duty.
Downstreaming The shifting of exports from originating in high-income countries to originating in lower-income economies. Used in reference to shifts in the location of production especially of high-technology goods.
Drawback Rebate of import duties when the imported good is re-exported or used as input to the production of an exported good. Also called a duty drawback.
DSB Dispute settlement body
DSSI Debt Service Suspension Initiative
DRC Domestic resource cost
Dry port A hub for transshipment of cargo located at some distance from the sea but connected to it by road or rail.
DSM Dispute settlement mechanism
DSSI Debt Service Suspension Initiative
DSC Debt suspension clause
DSU Dispute settlement understanding
Dual circulation Term used by China for the economic strategy that they were shifting to in 2020, relying less on international trade (external circulation) and more on production for their domestic market (internal circulation).
Dual policy paradox The inverse correlation that exists historically between liberal trade policies and liberal immigration policies in labor-scarce economies. Noted and explained by Hatton and Williamson (2007).
Dual pricing Sale of identical products in different countries for prices that differ by more than can be accounted for by differences in shipping costs.
Dual-use Applied to a good or a technology, this refers to being useful by both civilians and the military. This poses challenges for keeping military goods and technologies out of the hands of dangerous foreign powers.
Dublin Regulation Aka the Dublin Convention and adopted by the European Union in 2003, this assigns responsibility for examining asylum applications to the member state where the asylum seeker first entered the EU.
DUKS See baffling pigs.
Dummy In a regression analysis, a dummy (or dummy variable) is used to capture an explanatory variable that is either on (with a value of one) or off (zero). For example, in a gravity equation, the coefficient on a common-language dummy would measure the effect on trade flow between two countries of their sharing a common language.
Dumping Export price that is "unfairly low," defined as below either home market price (normal value) (hence price discrimination) or cost. Except for of predatory dumping, dumping benefits the importing country as a whole (but harms competing producers) and is often normal business practice. [Origin]
Dumping margin In a case of dumping, the difference between the "fair price" and the price charged for export. Used as the basis for setting anti-dumping duties.
Dunkel Draft A draft agreement written in 1991 during the negotiations of the Uruguay Round by GATT Director-General Arthur Dunkel, incorporating all that had been so far agreed and filling in gaps with his proposed text. This was "an historic turning point" in the negotiations that led to the creation of the WTO.
Duopoly An oligopoly with two firms.
DUP Activities Directly Unproductive Profit-Seeking Activities. [Origin]
Durable good A good that can continue to be used over an extended period of time.
Dutch disease The adverse effect on a country's other tradable industries when one industry's exports boom, causing real appreciation. Named for the effects of natural gas discoveries in the Netherlands, and most commonly applied to effects on manufacturing of exports of natural resources. [Origin]
Dutch sandwich Part of the tax avoidance technique known as the Double Irish with a Dutch Sandwich.
Dutiable imports Imports on which a positive duty, or tariff, is levied. (The term seems like it ought to include imports on which the duty is zero but which a government is somehow free, or able, to levy a positive duty. That does not seem to be the way the term is used, however.)
Duties collected The amount of revenue collected by a tariff on a product over a given period of time. The change in duties collected is used as a measure of concessions in determining reciprocity.
Duty Tax, perhaps because you have a duty to pay it. An import duty is a tax on imports, thus a tariff.
Duty drawback See drawback.
Duty-free Without tariff, usually applied to imports on which normally a tariff would be charged, but that for some reason are exempt. Travelers, for example, may be permitted to import a certain amount duty-free.
Duty-free, quota-free Trade that is not encumbered by tariffs or quotas. This was an objective of the Doha Round in the treatment of exports of developing countries, or at least the least developed of them.
Duty remission Rebate of duties paid on imported inputs when used for production for export. Seems to be the same as duty drawback.
Duty suspension Temporary reduction of a tariff to zero, to relieve a shortage or reduce prices to consumers.
DWL Deadweight loss
DWPI Derwent World Patents Index
DXY Dollar Index
Dynamic comparative advantage A changing pattern of comparative advantage over time due to changes in factor endowments or technology.
Dynamic consistency The property that a plan made at one time continues to be viewed as optimal at a later time if anticipated conditions prevail. Dynamic consistency is often violated, especially by policy makers.
Dynamic economies of scale A form of increasing returns to scale in which average cost declines over time as producers accumulate experience, so that average product rises with total output of the firm or industry accumulated over time. See learning by doing, infant industry protection.
Dynamic effects Refers to certain poorly understood effects of trade and trade liberalization, including both multilateral and preferential trade agreements, that are not present in standard static models of trade and that may increase or perhaps undermine the static gains from trade.
Dynamic gains from trade The hoped-for benefits from trade that accrue over time, in addition to the conventional static gains from trade of trade theory. Sources of these gains are not well understood or documented, although there exists a variety of possible theoretical reasons for them and some empirical evidence that countries have benefited more than the static gains alone would suggest.
Dynamic model Any model with an explicit time dimension. To be meaningfully dynamic, however, it should include variables and behavior that, at one time, depend on variables or behavior at another time. Models may be formulated in discrete time or in continuous time. Contrasts with a static model.
Dynamic time path question The question of whether the creation of preferential trading areas leads toward or away from greater multilateral free trade. More succinctly, are PTAs building blocs or stumbling blocs in the path toward free trade? Asked by Bhagwati (1993), this prompted a large, inconclusive literature.