Transcript INTERNATIONAL TRADE

INTERNATIONAL
TRADE
LECTURE 1:
The World of International Economics
Contents

To make a brief introduction of international
economics

To research the nature of merchandise trade
including geographical composition and the
commodity composition of trade
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To realize the increasing importance of service
transaction
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To understand the changing degree of economic
interdependence
International Economics
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The world is getting smaller every day
 What
does it mean?
 What proof it? Any sign?
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International trade is very important
 Ancient
times
 Nowadays
International Economics
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The development of international trade
and its attribute to early economic thinking
 Increase
the well-being of nation
 Differences between inside transaction and
foreign trade
International Economics
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The contents of international economics
study
 Concern:
allocate limited resources to meet
desired economic objectives
 How to influence social welfare, income
distribution, employment, growth, and price
stability and so on…
The Nature of Merchandise Trade
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The geographical composition of trade
 Table
1
Composition
 Time tendency and reason
 Conclusion: exports outgrown production which
means countries are becoming more
interdependent
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The Nature of Merchandise Trade
 Table
2
Focus on North America, Europe, and Asia
 Reason of different performance
 Conclusion: the industrialized countries dominate
world trade and new economies have become
increasingly important.
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The Nature of Merchandise Trade
 Table
3
Category 1: North America, Europe, Asia
 Category 2: South and Central America, CIS
 Category 3: Africa and Middle East
 Conclusion: the major markets for all regions’
exports are in North America, Europe, and Asia
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The Nature of Merchandise Trade
 Table 4
 2005 data
 2008 data:
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2010 data:
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Exports: Germany 1327, China 1218, United States
Imports: USA, Germany, China, Japan, France, UK
Exports: China 1577.8, United States 1278.1, Germany 1268.1,
Japan, Netherland, France, South Korea, Italy, Belgium, Russia
Imports: USA, China, Germany, Japan France, UK, Netherland,
Italy, Hong Kong, South Korea
Nature conditions, technology conditions, education, law, and
political conditions differences
Conclusion: world trade tends to be concentrated among
relatively few major traders
The Nature of Merchandise Trade
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The commodity composition of trade
 Table
5
Primary goods: food, beverage, fuel, mining,
grease
 Manufactures
 Conclusion: increasing importance of
manufactures trade and declining importance of
primary goods
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The Nature of Merchandise Trade
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Example: U.S. International Trade
 Geographical:
Canada, Mexico, China, Japan
 Commodity:
Exports: capital goods, industrial supplies and
materials
 Imports: industrial supplies and material, consumer
goods, capital goods
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The Nature of Merchandise Trade
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Example: China
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Geographical
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2005: E.U, U.S.A, Japan, Hong Kong, ASEAN, Korea, Taiwan,
Russia, Australia, Canada (81.5%)
2006: E.U, U.S.A, Japan, Hong Kong, ASEAN, Korea, Taiwan,
Russia, Australia, India (79.7% )
2007: E.U, U.S.A, Japan, ASEAN, Hong Kong, Korea, Taiwan,
Russia, Australia, India (78.6%)
2008: E.U, U.S.A, Japan, ASEAN, Hong Kong, Korea, Taiwan,
Australia, Russia, India (75.9%)
2009: E.U, U.S.A, Japan, ASEAN, Hong Kong, Taiwan, Korea,
Australia, Russia, India
2010: E.U, U.S.A, Japan, ASEAN, Hong Kong, Korea, Taiwan,
Australia, Brazil, India
Australia, Brazil, Kazakhstani, ASEAN, Burma, Malaysia, Japan,
Africa, Angola, Iran, Russia, South Korea, Vietnam, South Africa…
The Nature of Merchandise Trade
 Tendency:
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First eight countries are China’s fundamental market in the
future
The rank will reflect political situation: Canada, India
Hong Kong and Taiwan will keep stable and Taiwan may
exceed Hong Kong in the future
The proportion of top ten partner is slowly declining and ratio
of Africa and Latin America will increased in the future
Brazil has rapid development in trade and may squash in top
ten partner
Also, India and Russia have tremendous potential in the
future
World Trade in Services
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Service category now accounts for the largest
share of income and employment in many
industrial countries
 Including:
wholesale and retail trade, restaurants and
hotels, transport, storage, communications, financial
services, insurance, real estate, business services,
personal services, community services, social
services, and government services
 International trade in services: commercial services,
investment income, and government services
World Trade in Services
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Commercial service is hard to estimate
accurately
 No
agreed definition of what constitutes a
traded service
 No agreed ways to measure the service trade
 Most service transactions are not observable
World Trade in Services
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Geographical nature of trade in services—in line
with merchandise trade
 Table 8
 2005 data
 2008 data
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2010 data
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Exports: United States, U.K. Germany, France, China, Japan,
Spain, Italy, India, Netherlands
Imports: United States, Germany, U.K. Japan, China, France,
Italy, Spain, Ireland, Netherlands
Exports: United States, Germany, U.K., China, France, Japan,
Spain, Singapore, Netherlands, India
Imports: United States, Germany, China, U.K., Japan, France,
India, Netherlands, Italy, Ireland
Conclusion: concentrated on the industrial countries and
emerging economies
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Industrialization and urbanization in progress
1978
2008
OECD
Agriculture
28%
11%
2.6%
Industry
48%
49%
27%
Service
24%
40%
70%
GDP decomposition
Population
Rural
81%
57%
23.3%
Urban
19%
43%
76.7%
World Trade in Services
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GATT and WTO
 GATT:
temporary institute
 WTO: contemporary organization which
independent to UN
Object: to eliminate the tariff and other restrictions
and develop a stable, fair, and free international
trade
 Core: all agreement
 Fundamental principle: indiscriminate principle
 Including intellectual property, investment measure,
and service transaction
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The Changing Degree of Economic
Interdependence
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Index of trade volume:
international interdependence=(export + import) / GDP
export – import = net export
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GDP = C + I + G + NX
Table 9
 Focus
on Belgium, Netherlands, Czech Republic, and
Nigeria.
 Focus on Singapore
International interdependence= (ex+im)/economic aggregate (GDP +
foreign products)
 Conclusion:
increasing importance of international
interdependence
Review

To make a brief introduction of international
economics

To research the nature of merchandise trade
including geographical composition and the
commodity composition of trade

To realize the increasing importance of service
transaction

To understand the changing degree of economic
interdependence
Homework
Research your own country’s trade data in
last three years and in 1990, do a
geographic and commodity composition
analyze.
 Try to find trade tendency of your country
and explain.
 Try to say something about consumption
habits in your country.
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