Transcript International Trade - nazarethhonorseconomics

A modern term used to describe the
changes in societies and the world
economy that result from dramatically
increased international trade and
cultural exchange.
“Countries engage in international trade for two basic
reasons, each of which contributes to their gain from
trade. First, countries trade because they are
different from each other. Nations, like individuals,
can benefit from their differences by reaching an
arrangement in which each does the things it does
relatively well. Second, countries trade to achieve
economies of scale in production. That is, if each
country produces only a limited range of goods, it
can produce each of these goods at a larger scale
and hence more efficiently than if it tried to produce
everything. In the real world, patterns of international
trade reflect the interaction of both these motives.”
~Paul Krugman, International Economics
 Definition~
Preventing a foreign product
from freely entering into a nation’s
territory.
1.
2.
3.
4.
Import Quota
Voluntary Export Restraint
Tariff
Informal Barriers
• Government Licensing Restrictions
• Government Health and Safety Requirements
The overall impact of trade barriers is that
they limit supply. This results in two
common consequences:
1. Increased price of foreign goods
2. Trade wars
Definition~ The use of trade barriers to protect
industries from foreign competition.
Positives
 Protect jobs
 Protect infant industries
 Enhance national security
Negatives
 Limits LDC’s ability to compete on a global
scale
 Reduces global living standard
 Limits attempts for international peace



World Trade Organization (1995)~ The only international
organization dealing with the global rules of trade between
nations. Its main function is to ensure that trade flows as
smoothly, predictably and freely as possible.
European Union (1951/1999)~ A regional economic
agreement among 27 countries across the European
continent.
NAFTA (1994)~ This agreement removed most barriers to
trade and investment among the United States, Canada,
and Mexico. Under the NAFTA, all non-tariff barriers to
agricultural trade between the United States and Mexico
were eliminated. The agreement was phased in from
1994-2008 and has increased trade by over 200% since it
was enacted.




Development- Process by
Indicators of Development
which a nation improves the
economic, political and social 1. Per capita GDP
2.
Energy Consumption
well being of its people.
3.
Labor Force
Developed-High level of
4.
Literacy
material well being (US)
Less Developed- Low level of 5. Infant Mortality
6.
Life Expectancy
material well being
7.
Consumer Goods
(Ethiopia)
Newly Industrializing- Better
performing LDC’s (Mexico)
Levels of Development
Northern
Europe
Western
Europe
Canada
Eastern
Europe
Western Asia
Southern Europe
United States
Northern Africa
Tropic of Cancer
Central
America
Caribbean
South
Central Asia
East Asia
Western
Africa
Eastern
Africa
Equator
Southeast
Asia
Middle
Africa
South
America
Tropic of Capricorn
Southern
Africa
Oceania
Three Levels of Development
 Developed Countries
 Less Developed Countries
 Newly Industrialized Countries
1.
2.
3.
4.
Rapid population growth
Resource distribution
Lack of physical capital
Lack of human capital
•
•
•
5.
Political Factors
•
•
•
6.
Health/Nutrition
Education/Training
“Brain Drain”
Colonial Dependency to Independent Planning
Government Corruption
Political Instability (civil wars, social unrest, lack of
government infrastructure)
Debt
World Bank
International Monetary Fund
World Trade Organization