Essential Economic and Business Concepts

Key Economic and Business Definitions

Tariff

A tax levied on the price of a product when it crosses the border into a country, with the objective of protecting domestic production from foreign competition. Thus, policies of market liberalization and those promoted by the World Trade Organization (WTO) tend to lower tariffs to stimulate free international trade.

Balance of Payments

Reflects all economic transactions made by a country with the rest of the world. This includes the trade balance, services, capital flows, and migrant remittances. This balance is often in deficit in Spain, and would be even more so without significant tourism income.

Balance of Trade

A crucial component of the balance of payments, it specifically includes the exports and imports of goods from one country. Spain's chronic trade deficit is largely due to massive imports of energy products, technology, and capital goods.

European Central Bank (ECB)

An institution of the European Union headquartered in Frankfurt. It conducts the monetary policy for the Eurozone and issues the single currency (the Euro). Its primary focus is to stabilize prices by controlling interest rates.

Retail Trade

A commercial establishment that purchases goods wholesale and sells them directly to final consumers. This includes both traditional and modern trade formats, such as convenience stores and large shopping centers.

Wholesale Trade

A commercial enterprise that purchases goods in large quantities from producers for resale to small retailers or other wholesalers. Examples include central markets (e.g., Mercamurcia), auctions, and some specialized stores.

Foreign Trade

Trade that occurs between companies from different countries. It encompasses both imports and exports, which are reflected in the trade balance as either a surplus or a deficit.

Domestic Trade

Trade that develops within the geographical limits of a country to supply goods to its inhabitants, either wholesale or retail.

Public Deficit

Occurs when state spending exceeds state revenues within a budgetary period. This imbalance often leads to the need for the state to issue public debt or seek credits.

Foreign Currency

Foreign currency obtained from international transactions, tourism, and foreign capital investment.

EU Structural Funds

Financial instruments used by the European Union to reduce economic and social disparities between its regions. They are intended to improve the economies of poorer EU regions. Key funds include the European Regional Development Fund (ERDF), the European Agricultural Guidance and Guarantee Fund (EAGGF), and the European Social Fund (ESF).

Mass Media

Channels of communication that enable people to access various types of information, such as radio, newspapers, television, and the internet. Their development has led to significant changes in the personal and professional lives of the population.

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country's borders during a specific period, typically one year, regardless of the nationality of the producing companies.

Gross National Product (GNP)

The total monetary value of all final goods and services produced by a country's residents, both domestically and abroad, during a specific period, typically one year.

Transport Networks

A system of interconnected routes and infrastructure that is spatially organized across a territory, allowing for the movement and exchange of people and goods.

Service Economy

An economic system where the tertiary (service) sector becomes the dominant sector, contributing the largest share to the national economy compared to the primary (agriculture) and secondary (manufacturing) sectors.

Tourism Sector

Involves the temporary movement of people from their usual place of residence to other places for leisure, business, or other purposes. In Spain, traditional forms include sun and beach tourism, alongside growing alternatives such as cultural tourism.