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International Trade
Chapter I: Introduction to
International Trade
Lectured by: Mrs. LONG Mamidi
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The growth of market day to day
The effect: the growth in economic and develop
of nations Eg: GDPs Cambodia 1997-2007-2011
=> 302- 459-850
The flow of goods and service of one countryand not only local
Effect on Consumers, Suppliers, Government
I. Introduction
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I. The introduction
Globalization more formally refers to the economic,
social, cultural or environmental changes
that tend to interconnect peoples aroundthe world.
Global marketplace on consumers,businesses and governments.
That is where the study of internationaleconomics begins.
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I. Introduction of International Trade
International trade - appliesmicroeconomic models to help understandthe international economy.
Its content includes:
supply and demand analysis,
firm and consumer behavior,
perfectly competitive,
oligopolistic and monopolistic marketstructures,
the effects of market distortions.
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The Definition of Int. Trade
International trade is the exchange ofgoods and services across internationalboundaries or territories. In most
countries, it represents a significant shareofGDP.
Industrialization, advancedtransportation, globalization,multinational corporations, and
outsourcing are all having a majorimpact. Increasing international trade isthe primary meaning of "globalization".
http://www.answers.com/topic/gross-domestic-producthttp://www.answers.com/topic/industrialisationhttp://www.answers.com/topic/transporthttp://www.answers.com/topic/globalizationhttp://www.answers.com/topic/multinational-corporationhttp://www.answers.com/topic/outsourcinghttp://www.answers.com/topic/globalizationhttp://www.answers.com/topic/globalizationhttp://www.answers.com/topic/outsourcinghttp://www.answers.com/topic/multinational-corporationhttp://www.answers.com/topic/globalizationhttp://www.answers.com/topic/transporthttp://www.answers.com/topic/industrialisationhttp://www.answers.com/topic/gross-domestic-product8/4/2019 Chapter 1-Introduction to Int Trade
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Objective of Int. trade
Effects on individuals and businesses because of international trade itself, because of changes in trade policies
and due to changes in other economic
conditions. The course will develop arguments that
support a free trade policy as well as arguments that support various types
of protectionist policies.
understand the centuries-oldcontroversy between free trade andprotectionism.
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II. Why International Trade?
1. The Reasons of Trade
Why International Trade?
Why one country conduct trade with
other? The deficient of raw material, lumber or
oil
Resources to produce goods and/or
services Exchange of food and finished goods
Each country has it own specialist:Capital, labor, land
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Specialization
Capital-intensive product: car, truck,heavy construction equipment, industrialmachinery- highly developed industrial
base. Eg:Japan-Car Labor-intensive commodities: clothes,
shoes, other consumer good- low laborcosts &modern production facilities. Eg:China, Indonesia, Philipine
Land-intensive product: cattleproduction &Wheat farming. The countrywith no large tracts of land- buy. Eg:USA-leading exporter of wheat.
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III. Factors Influence InternationalTrading Activities
1. Political Environment
Encourage: reduce taxes or some otherinvestment incentive
Discourage Impose strict regulation- cause large
companies to leave &open a plant in a countrythat provide more favorable operating
conditions. So, the concern of political stability-foreign trade and investment.
Foreign currency- subject to price fluctuation
Former Soviet Union: Strong political belief
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III. Factor Influence InternationalTrading Activities
2. Economic Environment The important factor: tax-apply to
imported goods, import tariff Protective tariffto protect domestic
companies Import quota: limited the amount of a
particular product export. Eg: Quota Carfrom Japan
Non-tariff barrier- help to protect domesticcompanies. Eg: licenses, permit, paperallow imports- Japan&EU use this strategyoften
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III. Factor Influence InternationalTrading Activities
3. Cultural environment
General Motor sell Chevy Nova.
Nova in Speanish mean doesntgo.
Bribery
4. Physical environment
Near River is potential market
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IV. World Trade Organization andAgreement
1. GATT
1947: USA+23 countries- GeneralAgreement on Tariff and Trade( GATT)which is now more than 100 countries.
Purpose: foster equal (nondiscriminatory
treatment for all member nations) Promote the reduction of tariff by
multilateral negotiation Foster the elimination of import Quotas
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Now begin to liberalize agriculture andservices market.
They would eliminate the many quotasystems - like the multi-fiber agreement in
clothing - that had sprouted up in previousdecades.
minimum standards to protect intellectualproperty rights such as patents, trademarks
and copyrights.
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The WTO: created to manage this system of new
agreements, to provide a forum for regular
discussion of trade matters process for settling trade disputes that
might arise among countries.
As of 2006, 149 countries were members
of the WTO "trade liberalization club" andmany more countries were stillnegotiating entry.
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2. USA+Canada+Mexico North American FreeTrade Agreement (NAFTA) in 1994 To compete effectiveness with EEC( European
Economic Commodity) and other trading blocsthat might develop in future.
3. IMF: International Monetary Fund mission provideloan to country that are in financial trouble.
IMF: dictates the term of the loans, includingcutting domestic subsidies, privatizinggovernment industries, and moderation trade
policies.4. World Bank: 157- help less developed countries
achieve economic growth through improvedtrade. ( provide laon, guaranteeing, insuringprivate loans to nation in need financial assistant.
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V. Some Trade Terminology
In trade policy discussions terms such as: protectionism free trade,
trade liberalization are used repeatedly.
One other term is commonly used in theanalysis of trade models: namely national autarky, or just
autarky.
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Some countries, Singapore and(formerly) Hong Kong, highly freetrade oriented.
Others, like North Korea and Cuba,have long been relatively closedeconomies and thus are closer to
the state of autarky. The rest of the world lies
somewhere in between.
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Most policy discussions are not aboutwhether governments should pursue oneof these two extremes.
Instead, discussions focus on whichdirection a country should move alongthe trade spectrum.
Since every country today is somewhere
in the middle, discussions should movethe nation in the direction of free tradeor in the direction of autarky.
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