Key economic and business terms in brief

Gross domestic product (GDP): Gross Domestic Product is a measure of a nation’s economic output during a specific period of time. It is the market value of all goods and services produced within a country (value added), provided these are not used as intermediate input for the production of other goods and services. General Agreement on Tariffs and Trade (GATT): GATT came into force on 1 January 1948. This international agree­ment simplified world trade by systematically breaking down customs duties and other obstacles. GATT was replaced by the WTO. Just-in-time production (JIT): JIT focuses on producing and supplying a product at exactly the time it is needed. The individual production steps have to be coordinated. The supplier delivers goods and components directly to the production line as and when they are required. Only very small stocks need to be stored directly at the manufacturer’s production line, dispensing with long storage periods and related costs. North American Free Trade Agreement (NAFTA): NAFTA is an agreement between Canada, the United States and Mexico that established a free trade zone in North America. NAFTA was founded in 1994 with the aim of eliminating or phasing out numerous tariffs. Organisation for Economic Co-operation and Development (OECD): The OECD is an international organization of European and non-European nations. It was founded in 1948 to create a joint concept for the reconstruction of Europe. Today it aims to support economic growth, to boost employment and raise living standards in the member states. Offshoring: Offshoring is a type of geographic relocation of business functions and processes to another country to take advantage of more favourable conditions, such as lower wages. When this happens the jobs in the home country are lost to locations in the low-wage countries. Outsourcing: Outsourcing is contracting with other companies or independent subsidiaries to provide tasks and services otherwise performed by in-house employees. This frequently means outsourcing jobs to cheaper subsidiaries that are not bound by labour agreements. United Nations Conference on Trade and Development (UNCTAD): The UNCTAD is a permanent organ of the United Nations General Assembly based in Geneva. Its goal is to promote trade between nations at different levels of development (mainly industrial and developing countries). World Trade Organization (WTO): The WTO is an international organization based in Geneva that regulates trade and economic relationships between nations. The World Trade Organization replaced the GATT in 1995 and currently has more than 150 members representing over 90 per cent of total world trade. Economies of scale: Economies of scale occur when the rate of production increases more strongly than the costs of production. In shipping, for instance, economies of scale result from the use of larger ships, which can carry greater amounts of freight, lowering the fixed costs per unit. Rationalizations, such as using standardized containers, can also increase economies of scale. European Conference of Ministers of Transport (ECMT): The ECMT was a forum of European Ministers of Transport which aimed to simplify transport, boost efficiency levels and break down barriers. Following a decision in 2006, ECMT was absorbed by an even larger international Conference, the International Transport Forum (ITF). To keep abreast of the increasing globalization of transport, ITF is now open to experts from outside Europe. Globalization: Globalization is a process which describes the increasing economic, social and cultural integration of nations, forging a greater interdependence between them. Globalization is responsible for a rise in demand for transportation and especially shipping.