Economics
International Trade
International trade refers to the exchange of goods and services between countries. It allows nations to specialize in the production of goods where they have a comparative advantage and import those where they are less efficient. This leads to increased efficiency, higher productivity, and a wider variety of goods for consumers.
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9 Key excerpts on "International Trade"
eBook - ePubEconomics After the Crisis
An Introduction to Economics from a Pluralist and Global Perspective
- Irene van Staveren(Author)
- 2014(Publication Date)
- Routledge(Publisher)
14International Trade14.1 Introduction
14.1.1 Globalisation and trade
Globalisation is the process through which the world becomes increasingly interconnected through the international expansion of markets. This happens along four axes:- International Trade in goods and services: imports and exports;
- International capital flows with foreign direct investments and portfolio investments;
- International labour migration, for example within trade unions such as the European Union or through undocumented migrant workers without official residence permits;
- Internationalisation of production processes in global value chains through the production facilities of multinational companies and subcontracting (outsourcing).
In our globalised world, these four axes are closely inter-related in global production networks producing for global value chains. Global value chains (GVCs) are the globally organised production activities for a final good driven by a lead firm. They organise production either through foreign subsidiaries of a single multinational company, or through outsourcing production activities to a variety of foreign firms. Lead firms in global value chains, often a well-known consumer brand such as Wall-Mart, IKEA, or Mitsubishi, break up their activities across the globe, sourcing inputs and organising production activities from a large number of low-cost suppliers. Some lead firms, such as Nike, are even ‘fab-less firms’: they are manufacturers without factories for fabrication (fab). Approximately 50 per cent of global trade occurs within multinational companies (MNCs).International Trade is key to globalisation. Trade is the international exchange of goods and services. It is the opposite of autarky, when a country is self-sufficient and produces everything that it consumes. Trade makes sense when it provides benefits as compared to autarky. These are called the gains from trade
No longer available |Learn more- (Author)
- 2014(Publication Date)
- College Publishing House(Publisher)
____________________ WORLD TECHNOLOGIES ____________________ Chapter- 3 International Trade Global Competitiveness Index (2008-2009): competitiveness is an important determinant for the well-being of states in an International Trade environment. ____________________ WORLD TECHNOLOGIES ____________________ International Trade uses a variety of currencies, the most important of which are held as foreign reserves by governments and central banks. Here the percentage of global cummulative reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most sought-after currency, with the Euro in strong demand as well. International Trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While International Trade has been present throughout much of history, its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the International Trade system. Increasing International Trade is crucial to the continuance of globalization. Without International Trade, nations would be limited to the goods and services produced within their own borders. International Trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that International Trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.
eBook - PDF- James D Gwartney, Richard Stroup, J. R. Clark(Authors)
- 2014(Publication Date)
- Academic Press(Publisher)
PART FIVE ^ ^ ^ ^ ^ ^ . ^ ^ k L. ^ ^ V r r r r mj Y « m r r m m r W r V À A r A •'W À A m m A m m m A m m m r AÎ 1 1 w Am m m V A m m m r A m m m r A m m m r A m m m r m m m r m m m r A A r A AmmWT V Am. AÎ Am Am ^ ^mv k. A A ^ . Am ^ Am j A A A A A A A A A A INTERNATIONAL ECONOMICS This page intentionally left blank //' a foreign country can supply us with a commodity cheaper than we ourselves can make it, /we had/ better buy it of them with some part of our own in-dustry, employed in a way in which we have some advantage. The general industry of the country will not thereby he dimin-ished, but only left to find out the way in which it can be employed with the greatest advantage.' Adam Smith 21 GAINING FROM International Trade We live in a shrinking world. Wheat raised on the flatlands of western Kansas may be processed into bread in a Russian factory. The breakfast of many Americans might include bananas from Honduras, coffee from Brazil, or hot chocolate made from Nigerian cocoa beans. The volume of world trade, en-hanced by improved transportation and communications, has grown rapidly in recent years. In 1979, the total trade among nations was approximately $3 trillion. Approximately 16 percent of the world's total output is now sold in a different country than that in which it was produced—double the figure of two decades ago. In this chapter, we will analyze the impact of foreign trade on the price, consumption, and domestic production of goods. The effects of trade restrictions, such as tariffs and quotas, will also be considered. International Trade is an area of economics where fallacies seem to abound. Indirect effects are often ignored. As we progress, we will discuss several examples of economic nonreasoning. THE COMPOSITION OF THE INTERNATIONAL SECTOR As Exhibit 1 shows, the size of the trade sector varies among nations.
eBook - PDF- Henk Jager, Catrinus Jepma(Authors)
- 2017(Publication Date)
- Red Globe Press(Publisher)
CHAPTER 3 International Trade Theory 3.1 Introduction In the modern world, businesses in different countries are increasingly linked through a network of trade relations. As we saw in Chapter 2, after the Second World War the growth in global International Trade was much faster than the rise in world production. This leads us to ask two key questions: ◦ Why does International Trade take place? ◦ Who gains or loses from such trade? In the past, traditional trade theories have attempted to address these questions: ◦ Why do countries trade with one another? ◦ What groups in society gain or lose from International Trade? ◦ How can both the regional pattern and the composition of trade flows be explained? These traditional theories rely on the study of general country characteristics to explain international patterns of competitiveness; they do so by distinguishing between a number of broad categories of economic actors or sectors in the national economies. By contrast, new trade theory stresses the characteristics of individual industries or com-panies (factors such as economies of scale, market form and market dominance) rather than national or sectoral characteristics. New trade policy theories address why certain industries are competitive in international markets. The theories discussed in this chapter attempt to explain why countries trade with one another. It begins with a case study about the economies of China and India, which have experienced rapid economic growth from the 1970s and are generally regarded as emerging economic superpowers. This introductory case study is followed by a discussion of traditional trade theory based on the concept of comparative costs – that is, the production costs for one commodity expressed in terms of the costs of producing another commodity. These theories are the foundation of all trade theories and arise from the idea that location factors determine international competitive relationships and the pattern of trade flows.
- Richard Anthony Johns(Author)
- 2013(Publication Date)
- Bloomsbury Academic(Publisher)
PARTI Trade and the international economy Distinctive economic structural strengths and weaknesses as well as political ideologies and even cultures give the major individual players in International Trade policy differing objectives, approaches, and domestic constraints on foreign commitments. Cline(1983: 220) A nation is a political unit, but it is only as a consequence of its political unity that it becomes an economic unit Hicks (1959: 162) International economic intercourse... confines the freedom of countries ... by embedding each country in a matrix of constraints. Cooper (1968: 45) The state... is not an isolated unit, but lives in an environment of other political organisms, and its external activity is conditioned by this fact. Beer (1908: 1) The study of international exchange involves the causal investigation of particular activities which necessitate the crossing of national territorial borders and an assessment of their geographical impact. These activities include: On the production OUTPUT side the inter-country transfer of goods and services, of which: (a) Visible trade constitutes trade in primary (raw material) and secondary (manufactures/processed) industrial products; and, (b) Invisible trade includes the provision of services (such as transport, insurance and banking) to promote visible exchange; unilateral financial transfers (aid and migrants' remittances); and international tourism. On the production INPUT side the international circulation of the means of production as a result of: (a) labour migration, whether at the managerial, skilled or unskilled levels; and (b) inter-country capital movements and investment flows. Orthodox trade theories specifically exclude the latter types of inter-national transfer and concentrate on the former, thereby ignoring the possibility that such resource transfers may promote or substitute for visible and invisible exchange. As Kojima (1975: 4) has generalised with respect to capital flows:
eBook - PDF- Michael Veseth(Author)
- 2014(Publication Date)
- Academic Press(Publisher)
International Trade 303 THE FOREIGN EXCHANGE MARKET INTERNATIONAL ECONOMICS 349 PROBLEMS, GOALS, AND TRADE-OFFS 13 International Trade Preview Why do nations trade? What are the economic effects of trade? Who gains from trade? How? What are tariffs and quotas? What are the arguments for and against trade restrictions? Who really pays the tariff? Should we worry about balance-of-payments problems? Why does the United States have a balance-of-payments deficit? Are automobile import quotas a good idea? 304 International Trade T J L HE LEADERS of the industrialized nations gathered together for a summit conference in Versailles in 1982. Which international issue do you sup-pose caused the most controversy? Peace and war? Nuclear weapons? Human rights? Political alliances? No. The key issue was high U.S. interest rates and their International Trade consequences; such is the importance of international economics. open economy: an economy You live in an open economy. The nations of the world are like so many that trades with other toy boats in a bathtub. Political and economic waves in other countries rock countries. you and your actions send ripples that are felt on faraway foreign shores. closed economy: an The economic models discussed so far in this text have described a closed economy with no interaction economy—International Trade and payments have not played a major role in with other countries. the macroeconomic theories discussed thus far. We have ignored just one thing— the rest of the world! It is time to correct this oversight. The next four chapters examine the causes and consequences of international economic interdependence. The United States is such a dominant economic force that the traditional focus on closed economy economics is understandable. Other countries do not take this parochial view, however.
eBook - ePub- Annie Taylor, Caroline Thomas(Authors)
- 2005(Publication Date)
- Taylor & Francis(Publisher)
1 TRADE IN CONTEXT Approaches to globalizationSimon EagleIntroductionGlobalization is increasingly heralded as an important new development in economic, social, cultural and political life. Anthony Giddens has even made the claim that it is ‘a concept which deserves a central place in the lexicon of the social sciences’ (Giddens 1990: 51). Recent transformations in the international political economy have contributed to the current vogue for globalization. It is common for a whole host of developments and innovations in the world economy to be grouped under the rubric of the globalization of finance and production. Trade is arguably the driving force in this new globalized economy. In part this is due to the differentiation of production processes which results in manufacturing systems being functionally integrated across different areas of the world economy. The importance of trade in this changing world system is also underlined by the fierce competition to drive down costs, and therefore prices, through sales abroad. This chapter argues that, in order to understand the nature and implications of changes to the trade system and the world economy more generally, it is important to go beyond the orthodox debate over globalization and to focus on the phenomenon of international capital and the social forces associated with it.What may be termed the orthodox debate over globalization has important implications for how we understand the emerging trade system. This chapter focuses upon two influential and competing contributions to this orthodox debate. The first part of the chapter considers the position of the economist Ohmae. The second section examines the position of Hirst and Thompson. The third section, through a critical assessment of these positions, establishes some of the limitations of the orthodox debate over globalization. The fourth part of the chapter outlines some implications for our understanding of the changing world trade system, including the need to consider qualitative as well as quantitative indicators of changes in the international economy.
eBook - PDFGovernment Intervention in Globalization
Regulation, Trade and Devaluation Wars
- C. Peláez(Author)
- 2008(Publication Date)
- Palgrave Macmillan(Publisher)
89 Introduction In a rare consensus, economists tend to agree, with important exceptions, that there are benefits from trade in the form of more efficient resource allocation. The first section below provides the important analysis of the gains from trade. The relaxation of the conditions of the first-best of efficiency leads to the analysis of distortions or market failures that motivate more analysis. The main principle is to correct domestic distortions with domestic policy instruments, allowing the economy to obtain the benefits from trade. It is difficult to relate empirically trade openness and economic growth. The US uses antidumping and safeguard sanctions that many con- sider to be disguised protectionism. One of the most debated issues in policy is whether employment and wages of less skilled workers in advanced countries decline because of trade in goods produced by cheap labor, which are exported by developing countries. In 2004, the issue of losses of services jobs to offshore locations received dispropor- tionate attention in the press and public debates. The summary provides some conclusions. The gains from trade The basic analysis of the desirability of International Trade focuses on the gains from trade. It is one of the first analyses of welfare economics: the wellbeing of the state of free trade of goods and services with other nations versus the state of no trade. There is the important proposition that some trade is better than no trade. Even trade with restrictions such as quotas and tariffs is better than no trade. A quota is a quantitative 6 International Trade of Goods and Services 90 Government Intervention in Globalization limit on imports, which are purchases from other countries, or exports, which are sales to other countries.
eBook - PDFGlobalization and the State: Volume I
International Institutions, Finance, the Theory of the State and International Trade
- C. Peláez(Author)
- 2008(Publication Date)
- Palgrave Macmillan(Publisher)
6 International Exchange of Goods and Services Introduction The analysis of the gains from trade began in modern economics with Smith (1776) and Ricardo (1817). In a rare consensus, economists tend to agree that there are benefits from trade in the form of more efficient resource allocation. The first section below provides the important analysis of the gains from trade. The relaxation of the conditions of the first best of efficiency leads to the analysis of distortions or market failures that motivate more analysis. The main principle is to correct domestic distortions with domestic policy instruments to permit the economy to obtain the benefits from trade. It is difficult to relate empirically trade openness and economic growth. The United States uses antidumping and safeguard sanctions that many con- sider to be disguised protectionism. One of the most debated issues in policy is whether employment and wages of less skilled workers in advanced countries decline because of trade in products intensive in cheap labor, which are exported by developing countries. In 2004, the issue of losses of services jobs to offshore locations received disproportionate attention in the press and public debates. The summary provides some conclusions. The gains from trade Adam Smith (1776) argued that it would be advantageous for a country to spe- cialize in those activities in which it had an absolute advantage in production. Absolute advantage means that the country can produce those goods at a cost lower than any other country . An efficient allocation would require that coun- tries specialize in the production of those goods in which they have an absolute advantage. Two classical economists, David Ricardo (1817) and Robert Torrens (1808, 1815), are credited with the discovery of the doctrine of comparative advan- tage (Chipman 1965a, 480–2). This doctrine was a major improvement over the 157 158 Globalization and the State: Volume I absolute advantage proposition.
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