- O -
OAS Organization of American States
OAU Organization of African Unity
Obligation What a member country of the WTO is required to do and not do. There are many obligations, including especially keeping tariffs at or below bound levels, using only approved trade barriers and doing so in a nondiscriminatory (MFN) way, and according national treatment to imported products.
OBM Obsolescing Bargain Model
OBOR One Belt, One Road
Observatory of Economic Complexity A "tool that allows users to quickly compose a visual narrative about countries and the products they exchange," produced initially by Alexander Simoes at the MIT Media Lab in 2010. It provides Economic Complexity Rankings of both products and countries.
Observer 1. In the WTO, a country that is not a member but that has been granted observer status. "With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers."
2. Also in the WTO, a large number of intergovernmental organizations have observer status, enabling them to follow discussions on matters of direct interest to them.
Obsolescing Bargain Model A model of interaction between a multinational enterprise and a host country government, which initially reach a bargain that favors the MNE but where, over time as the MNE's fixed assets in the country increase, the bargaining power shifts to the government. Due to Vernon (1971).
Oceania "The collective name for the islands scattered throughout most of the Pacific Ocean," sometimes including Australia, but usually not. [Source]
Oceania Customs Organisation The OCO was established in August 1998 to promote efficiency and effectiveness in all aspects of customs administration in the Oceania region. It has 23 countries and territories as members.
OCO Oceania Customs Organisation
ODA Official Development Assistance
ODI Outward direct investment
Odious debt Debt incurred by a government without the consent of, and without benefiting, the people of the country, as when the government is a dictatorship that is later replaced by a democracy. It is argued that the democracy should not have to repay that debt. [Origin]
OEA Organización de Estados Americanos (Spanish for Organization of American States)
OEC Observatory of Economic Complexity
OECD Organisation for Economic Co-operation and Development
OEEC Organisation for European Economic Co-operation
OFAC Office of Foreign Assets Control
Offer curve 1. A curve showing, for a two-good model, the quantity of one good that a country will export (or "offer") for each quantity of the other that it imports. Also called a reciprocal demand curve, it is convenient for showing exports and imports in the same curve and can be used for analyzing tariffs and other changes. [Origin]
2. Offer curves are also used to represent the supplies and demands of individual consumers in a barter economy and to illustrate equilibrium and its properties in that context.
Offer curve Diagram
A diagram that combines the offer curves of two countries (or one country and the rest of world) to determine equilibrium relative prices.
Office of Foreign Assets Control The part of the US Department of Treasury that "administers and enforces economic and trade sanctions based on US foreign policy and national security goals."
Office of Textiles and Apparel The part of the United States Commerce Department's International Trade Administration that deals with trade in textiles and apparel.
Official development assistance Foreign aid provided by governments. Reported to and documented by OECD and its Development Assistance Committee, which reports rankings of countries by ODA totals and as percent of GDP.
Official Monetary and Financial Institutions Forum "An independent think tank for central banking, economic policy and public investment, providing a neutral platform for public and private sector engagement worldwide."
Official rate The par value of a pegged exchange rate.
Official reserve transactions Transactions by a central bank that change its official reserves. These are usually purchases or sales of its own currency in exchange for foreign currencies or other foreign-currency-denominated assets. In the balance of payments a purchase of its own currency is a credit (+) and a sale is a debit (−).
Official reserves The reserves of foreign-currency-denominated assets (and also gold and SDRs) that a central bank holds, sometimes as backing for its own currency, but usually only for the purpose of possible future exchange market intervention.
Official settlements balance One of several measures of the balance of payments surplus, this equals the change in official reserves minus the net increase in foreign official holdings of the country's assets.
Offset requirement As a condition for importing into a country, a requirement that foreign exporters purchase domestic products and/or invest in the importing country. A form of countertrade.
Offshorable A productive activity that can be done at a distance from the production process to which it contributes, including in another country.
Offshore company An offshore company, or offshore firm, is one whose legal home, through registration or incorporation, is a different country than the one where its headquarters and/or main investors are located.
Offshoring Movement to a location in another country of some part of a firm's activity, usually a part of its production process or, frequently, various back office functions.
OFID OPEC Fund for International Development
Ohlin definition The price definition of factor abundance. In contrast to the quantity definition, the price definition incorporates differences in demands as well as supplies. [Origin]
OICV International Organization Of Securities Commissions
OIE World Organization for Animal Health
Oil shock A large increase in the relative international price of oil (petroleum). Oil is a sufficiently important input, both for energy and as a raw material, that its price is a major determinant of real incomes and levels of economic activity. Its price is subject to manipulation by governments, especially OPEC.
OIM French acronym of International Organization for Migration
OIT Organización Internacional del Trabajo (Spanish for International Labor Organization)
Okun's Law An approximate linear relationship between unemployment and real GDP, proposed by Arthur Okun: for every percentage point drop in the unemployment rate, real GDP rises 3%.
OLI Paradigm A framework for analyzing the decision to engage in FDI, based on three kinds of advantage that FDI may provide in comparison to exports: Ownership, Location, and Internalization. Due to Dunning (1979).
Oligopoly A market structure in which there are a small number of sellers, at least some of whose individual decisions about price or quantity matter to the others.
Oligopsony A market structure in which there are a small number of buyers.
OLS Ordinary least squares
OMA Orderly Marketing Arrangement
OMC Organización Mundial de Comercio (Spanish for World Trade Organization)
OMFIF Official Monetary and Financial Institutions Forum
OMI Open Markets Index
Omnibus Foreign Trade and Competitiveness Act US trade legislation in 1988 strengthening unilateral instruments such as Section 301 and authorizing participation in the Uruguay Round. "Omnibus" indicates that this was comprehensive trade legislation -- the first since World War II.
OMO Open market operation.
OMT Outright Monetary Transaction.
On consignment See consignment.
On-migration The further migration of a person to yet another country.
On the year Same as year on year: "August sales were up 14% on the year."
One Belt, One Road An initiative announced by China in 2013 to expand the infrastructure for international trade along a land route through Central Asia (One Belt) and along a sea route through Southeast Asia and the Indian Ocean (One Road), both to Europe. Now usually called the Belt and Road Initiative.
One cone equilibrium A free-trade H-O equilibriumin in which all goods can be produced in any one country, and there is only one diversification cone. This arises if country factor endowments are sufficiently similar compared to industry factor intensities. Contrasts with two-cone and multi-cone equilibria.
One-dollar-one-vote yardstick A characterization of the Kaldor-Hicks welfare criterion normally used in evaluating trade policies and more generally in cost-benefit analysis, based on a sum of monetary values including consumer and producer surplus.
One Road See One Belt, One Road.
One-sided Intervention Exchange-market intervention that is only intended to push the exchange rate in one direction, such as to keep a currency undervalued.
One-way arbitrage The use, by a potential supplier or demander in a market, of a different market or markets to accomplish its purpose, taking advantage of a discrepancy among their prices. With transaction costs, this enforces smaller price discrepancies than would be permitted by conventional arbitrage. Due to Deardorff (1979).
One-way option Refers to the situation of a speculator on an exchange market with a pegged exchange rate. If there is doubt about the viability of the peg, the speculator can sell the currency short knowing that there is only one direction (one way) it is likely to move. Therefore there is little risk associated with such speculation.
Only representative "Companies based outside the EEA can appoint a European-based "only representative" to take over the tasks and responsibilities of importers for complying with REACH. This can simplify access to the EEA market for their products, secure the supply and reduce the responsibilities for importers."
Onshoring Reversal of offshoring. Thus movement of a firm's activity back to its home country. Sometimes used interchangeably with nearshoring, and reshoring.
ONU Organización de Naciones Unidas (Spanish for United Nations)
OPA Open plurilateral agreement
OPEC Organization of the Petroleum Exporting Countries
OPEC Fund for International Development A "multilateral financial facility to channel OPEC aid to developing countries."
OPEC Plus The collaboration between OPEC and other non-OPEC oil producers in efforts to control the world price of oil. The additions most often include Russia and former Soviet-bloc oil producers such as Kazakhstan, but also Mexico.
Open currency position An open position.
Open Door Notes A series of notes sent by John Hay to Britain, France, Germany, Japan, and Russia articulating his Open Door Policy. [Source]
Open Door Policy 1. A policy initiated by US Secretary of State John Hay in 1899 and 1900, stipulating that countries trading with China should have equal access to each of its ports. This became official US policy toward the Far East for the next half century.
2. The policy permitting FDI into China initiated by Deng Xiaoping in 1978.
Open economy An economy that permits transactions with the outside world, at least including trade of some goods. Contrasts with closed economy.
Open-economy multiplier The simple Keynesian multiplier for a small open economy. Equals 1/(s+m), where s is the marginal propensity to save and m is the marginal propensity to import.
Open market operation The sale or purchase of government bonds by a central bank, in exchange for domestic currency or central-bank deposits. This changes the monetary base and therefore the domestic money supply, contracting it with a bond sale and expanding it with a bond purchase.
Open for Business Ranking A survey-based ranking of countries by U. S. News based on global perceptions of five qualitative indicators: "bureaucratic, cheap manufacturing costs, corrupt, favorable tax environment, transparent government practices."
Open markets Markets that are free of restrictions on who can buy and sell.
Open Markets Index A ranking of countries (75, in the 4th edition, 2017) produced by the International Chamber of Commerce based on openness to international trade and investment.
Open mouth policy A public statement by a policymaker of what they either expect or desire to happen to a market-determined economic variable, such as an exchange rate or an interest rate. Such a statement can cause market pressure in the direction they have indicated. [Source]
Open plurilateral agreement An agreement among like-minded members of the WTO that applies only to those who sign on but is open to other members to join. [Source]
Open position An obligation to take make delivery of an asset or currency in the future without cover. Aside from simple ownership and debt, an open position in a currency can be acquired or avoided using the forward market.
Open regionalism 1. Regional economic integration that is not discriminatory against outside countries; typically, a group of countries that agrees to reduce trade barriers on an MFN basis. Adopted as a fundamental principle, but not defined or adhered to, by APEC in 1989.
2. Bergsten (1997) offers five definitions, ranging from open membership in an FTA to global liberalization and trade facilitation.
Open Skies Agreement "Bilateral or multilateral agreements between the U.S. Government and the governments of foreign countries that allow travelers to use foreign air carriers from these countries for government-funded international travel." [Source]
Openness The extent to which an economy is open to trade, and sometimes also to inflows and outflows of international investment, travel, and migration.
Openness coefficient The coefficient in a regression on any variable measuring openness, often a regression explaining economic growth. Thus an estimate of the importance of openness for growth.
Openness index 1. Any measure of openness.
2. The ratio of a country's trade (exports plus imports) to its GDP.
Ophelimity Term used by Pareto, in Pareto (1906) and earlier, in place of utility. According to Chipman (2002), Pareto meant this term to denote the satisfaction that an individual maximizes, whether or not it is truly a benefit (as in the case of a drug addict).
OPIC Overseas Private Investment Corporation
Opinion 2/15 The opinion handed down by the Court of Justice of the EU that "provisions on labour rights and environmental protection" that are included in FTAs fall under the EU's exclusive competence and therefore do not require ratification by its member states. [Source]
Opium Wars Wars fought against China by Britain in 1839-42 and by Britain and France in 1856-60 to force China to admit imports of opium, to which people in China had become addicted. China lost.
Opportunity cost The cost of something in terms of opportunity foregone. The opportunity cost to a country of producing a unit more of a good, such as for export or to replace an import, is the quantity of some other good that could have been produced instead with the same resources.
Opt-out On becoming a member of an organization -- especially one made up of countries such as the EU -- permission to not be bound by one of the organization's rules or requirements.
Optimal Best, by whatever criterion decisions are being made; thus yielding the highest level of utility, profit, economic welfare, or whatever other objective is being pursued.
Optimal currency area The optimal grouping of regions or countries within which exchange rates should be held fixed. First defined (as "optimum currency areas") by Mundell (1961). [Origin]
Optimal externality The level of an externality the equates the marginal benefit of changing it to the marginal cost of changing it.
Optimal output 1. For a firm this usually means the output of the good that it produces that, when sold, maximizes profit.
2. For a country, this usually means the combination of different goods (and services) that it can produce that is worth the most at world prices, perhaps adjusted for any externalities.
Optimal tariff The level of a tariff that maximizes a country's welfare. In a nondistorted small open economy, the optimal tariff is zero. In a large country it is positive, due to its effect on the terms of trade. [Origin]
Optimal tariff argument An argument in favor of levying a tariff in order to improve the terms of trade. The argument is valid only in a large country, and then only if other countries do not retaliate by raising tariffs themselves. Even then, this is a beggar thy neighbor policy, since it lowers welfare abroad. See Johnson (1953/54).
Optimal tax 1. Given a constraint of a minimum amount of revenue that a taxation must raise, a system of optimal taxes will minimize the distortion that they cause.
2. In the presence of an externality, the optimal tax (or subsidy) is that which will internalize its effects so that optimal decisions will be made.
Optimum 1. The best. Usually refers to a most preferred choice by consumers subject to a budget constraint, a profit maximizing choice by firms or industry subject to a technological constraint, or in general equilibrium, a complete allocation of factors and goods that in some sense maximizes welfare.
2. As an adjective, same as optimal.
Optimum optimorum The best of the best, or the global optimum. This term is used, when there are several allocations each of which is locally optimal, to refer to the best among these.
Optimum tariff Optimal tariff
Option A contract permiting one party to buy from (a call), or sell to (a put), the other party something at a pre-specified price in a pre-specified time period. The first party, who buys the option, has the choice of whether to do this ("exercise" the option). Options exist for many assets, including foreign exchange.
Orange box See amber box.
Orderly Marketing Arrangement An agreement involving a pair or group of exporting and importing countries to restrict the quantities traded of a good or goods. Since the impetus normally comes from the importers protecting their domestic industry, and is implemented by the exporters, an OMA is effectively a multi-country VER or VRA.
Ordinance of Nullification A law enacted by South Carolina in 1832, precipitating the Nullification Crisis. It declared the Tariff of Abominations null and void and prohibited collection of duties within the state.
Ordinary least squares The simplest and most common method of fitting a straight line to a sample of data: by minimizing the sum of the squares of the deviations of the data from the line.
Øre Subunit of a krone and a kroner.
Organisation for Economic Co-operation and Development An international organization of developed countries that "provides governments a setting in which to discuss, develop and perfect economic and social policy." The Economist calls it a "rich-country think tank." As of February 2024, it had 38 member countries.
Organisation for European Economic Co-operation An international organization established in 1948 as the recipient institution of aid through the Marshall Plan. In 1961 it was replaced by the OECD.
Organisation Internationale de Normalisation An early effort to establish a system of voluntary regulatory standards, begun in 1947, abbreviated "ISO" from the Greek "isos." It evolved into today's ISO system. [Source]
Organization for Trade Cooperation An organization agreed to by the contracting parties of the GATT that would have no power over trade policies but that would administer GATT rules. It was never ratified by the United States Congress. [Source]
Organization of African Unity Formed May 25, 1963, the OAU was "intended to form the continental base for pan-Africanism but result[ed] in a watered-down compromise between competing ideological blocs." It was succeeded by the African Union in 2002.
Organization of American States An international organization of the countries of the Western Hemisphere, fostering cooperation among them and advancing their common interests. It has 35 member states, although the government of one of them, Cuba, was excluded from participating from 1962 to 2009.
Organization of the Petroleum Exporting Countries A group of countries that includes many, but not all, of the largest exporters of oil. Its major purpose is to regulate the supply of petroleum and thereby to stabilize (often raise) its price. The international oil cartel. As of April 2020, it had 13 member countries.
Organized exchange An institution in which products from multiple sources are traded, giving rise to a single price that applies to all. Used in the Rauch classification to indicate homogeneous products.
Origin engineering 1. Defined by Krueger (2020 p. 296) as "changing the location of a sufficient part of assembly to make the good’s origin a country other than China," done in response to the Trump tariffs on China.
2. Presumably this could be used for any changes in input sources made in order to satisfy a rule of origin in a preferential trading arrangement, including China's retaliatory tariffs on the US.
Origin principle The principle in international taxation that value added taxes be kept only by the country where production takes place. Under the origin principle, value added taxes are not collected on imports and not rebated on exports. Contrasts with the destination principle. [Source]
Origin rule See rule of origin.
Original sin In the context of financial problems of developing and emerging economies, this refers to their difficulty in borrowing abroad in their own currencies. Since it is experienced even by well-behaved countries, Eichengreen and Hausmann (1999) dubbed it "original sin" as being beyond their control.
Osaka Track Announced at the 2019 G-20 Summit in Osaka, Japan, the Osaka Declaration on Digital Economy is "a process that aims to intensify efforts on international rule-making on the digital economy." [Source]
Osiris Data A database of "information on listed, and major unlisted/delisted, companies across the globe," provided by Bureau van Dijk, a Moody's Analytic Company.
Oslo Convention Convention of Oslo
OTC Organization for Trade Cooperation
OTEXA Office of Textiles and Apparel
Ottawa Agreements The aggreements negotiated in 1932 between Great Britain and its colonies to institute imperial preference.
Ottawa Group A "small, representative group of WTO members" led by Canada, seeking ways to reform the WTO so as to address various challenges that it is facing. As of March 2020, the group included 12 countries plus the European Union, but notably not the United States, the source of some of those challenges.
Our currency, your problem What US Treasury Secretary John Connally told European finance ministers in late 1971: "The dollar is our currency, but it is your problem." The reason, then, was other currencies' peg to the dollar that had just begun to collapse, but the importance of the dollar in central bank reserves continues today. [Source]
Outcomes One of the four requirements for successful development aid posed by Easterly (2006) in his acronym CIAO: that aid be focused on achievable, measurable outcomes, not on inputs.
Outflow See capital outflow.
Output The quantity of goods or services produced, in a given time period, by a firm, industry, or country.
Output augmenting Said of a technological change or technological difference if one production function produces a scalar multiple of the other. Also called Hicks neutral.
Output gap The amount by which a country's output, or GDP, falls short of what it could be given its available resources. A positive output gap is considered to exist when a country's unemployment rate is greater than the NAIRU.
Outright Monetary Transaction The purchase by the European Central Bank of the short-term bonds of the government of a eurozone member country, the purpose being to reduce discrepancies in interest rates that had appeared across eurozone members as part of the European sovereign debt crisis. .
Outsourcing 1. Performance outside a firm or plant of a production activity that was previously done inside.
2. Manufacture of inputs to a production process, or a part of a process, in another location, especially in another country.
3. Another term for fragmentation.
Outward direct investment Outward FDI
Outward FDI Foreign direct investment by a domestic firm establishing a facility abroad. Contrasts with inward FDI.
Outward oriented strategy Export promotion.
Over-invoicing The provision of an invoice that reports the price as higher than is actually being paid. This might be done by a multinational company on imported inputs from a subsidiary in order to shift profit to a lower-taxed jurisdiction.
Over-valued currency The situation of a currency whose value on the exchange market is higher than is believed to be sustainable. This may be due to a pegged or managed rate that is above the market-clearing rate, or, under a floating rate, it may be due to speculative capital inflows. Contrasts with under-valued currency.
Overdraft facility In the IMF, an arrangement permitting countries to draw more foreign currency from it than they have deposited. The right to do so is a Special Drawing Right and, when used, is transferred to the country whose currency is withdrawn.
Overhang See debt overhang, money overhang, and tariff overhang.
Overhead The costs of a firm that are not directly related to its output, usually interpreted in economic models as fixed costs.
Overseas Private Investment Corporation An agency of the US government that works with the private sector to facilitate the financing of investments in developing countries, with the aim of promoting economic development.
Overshooting See exchange rate overshooting.
Oxfam Oxfam International is confederation of 20 NGOs (as of April 2020), all including the name Oxfam together with a country identifier, working in more than 90 countries to fight poverty. Among their objectives is "to end unfair trade rules."
Oxford World Outlook A collection of economic data made available for purchase by the Conference Board of Canada.