anhui university of finance and economics 1/23 international economics professor xu song anhui...

ANHUI UNIVERSITY OF FINANCE AND ECONOMICS 1/23

INTERNATIONALECONOMICS

Professor Xu Song

ANHUI UNIVERSITY OF FINANCE & ECONOMICS0552-3179196(O) [email protected]

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Books on International EconomicsBooks on International EconomicsDominick Salvatore: Dominick Salvatore: International Economics, 8th ed. 2004International Economics, 8th ed. 2004 John Wiley & Sons Inc. & Tsinghua Uni. PressJohn Wiley & Sons Inc. & Tsinghua Uni. Press

Dennis R. Appleyard & Alfred J. Field. Jr..Dennis R. Appleyard & Alfred J. Field. Jr.. International Economics, 6th ed., 2007 International Economics, 6th ed., 2007 The McGraw-Hill, Inc.The McGraw-Hill, Inc.

Robert J. Carbaugh: Robert J. Carbaugh: International Economics, 10th ed. 2006 International Economics, 10th ed. 2006 South-Western College Pub. South-Western College Pub.

Paul R. Krugman & Maurice Obstfeld Paul R. Krugman & Maurice Obstfeld International Economics, 5th ed. 2000International Economics, 5th ed. 2000 Addison Wesley & Tsinghua Uni. PressAddison Wesley & Tsinghua Uni. Press


Dr. Dominick SalvatoreDr. Dominick SalvatoreProfessor at Fordham Uni. of New York CityProfessor at Fordham Uni. of New York City


Contents 1 Introduction1 Introduction2 The Law of Comparative Advantage2 The Law of Comparative Advantage3 The Standard Theory of International Trade3 The Standard Theory of International Trade4 Offer Curves and Terms of Trade4 Offer Curves and Terms of Trade5 Factor Endowments and the H-O Theory5 Factor Endowments and the H-O Theory6 Economies of Scale, Imperfect Competition 6 Economies of Scale, Imperfect Competition 7 Economic Growth and International Trade7 Economic Growth and International Trade8 Trade Restrictions8 Trade Restrictions9 Nontariff Trade Barriers 9 Nontariff Trade Barriers 10 10 Economic IntegrationEconomic Integration11 International Trade and Economic Development11 International Trade and Economic Development12 International Movement and MNCs12 International Movement and MNCs


Contents of Each Chapter Six Sections in each chapterSix Sections in each chapter Summary ----- 6 paragraphsSummary ----- 6 paragraphs A Look Ahead--- What is to be discussed in A Look Ahead--- What is to be discussed in the next chapterthe next chapter Key TermsKey Terms Questions for Review----13 QuestionsQuestions for Review----13 Questions Problems---- 13 Problems.Problems---- 13 Problems. Appendix----- More advanced knowledge.Appendix----- More advanced knowledge.


Introduction

Chapter 1


1 Introduction Know the importance of international economiKnow the importance of international economi

cscs Define the definition of foreign trade dependenDefine the definition of foreign trade dependen

cece learn the relationship between international trlearn the relationship between international tr

ade and the standard of lovingade and the standard of loving Know the purposes of international economic Know the purposes of international economic

theories and policiestheories and policies


1 Introduction InterdependenceInterdependence New protectionismNew protectionism Balance of paymentBalance of payment Foreign exchange marketForeign exchange market Adjustment in the balance of paymentsAdjustment in the balance of payments Open-economy macroeconomicsOpen-economy macroeconomics


It deals with the economic interdependence It deals with the economic interdependence among nations. It analyzes the flow of goods among nations. It analyzes the flow of goods and services, payments between nations, and services, payments between nations, policies regulating the flow and their effects on policies regulating the flow and their effects on national welfare.national welfare.

2 International Economics


2 International Economics

International International Trade TheoryTrade Theory

International International Trade TheoryTrade Theory

International International FinanceFinance

International International FinanceFinance

International International Trade PolicyTrade Policy

International International Trade PolicyTrade Policy

InternationalInternationalEconomicsEconomics

InternationalInternationalEconomicsEconomics


International Trade and Economic Development

International Trade and Economic Development

2.1 International Trade Theory

MercantilismMercantilism

Absolute AdvantageAbsolute Advantage

Comparative AdvantageComparative Advantage

Heckscher-OhlinHeckscher-Ohlin Stolper-SamuelsonStolper-Samuelson

Factor Price EqualisationFactor Price Equalisation

RybzcynskiRybzcynski

Immiserising GrowthImmiserising Growth

TradeTradeTheoryTheoryTradeTrade

TheoryTheory


International ResourceMovements

International ResourceMovements

Tools of the Trade Policy Analysis

Tools of the Trade Policy Analysis

TariffsTariffs

Other TradePolicies

Other TradePolicies Regional Trade

AgreementsRegional Trade

Agreements

2.2 International Trade Policy

InternationalInternationalTradeTradePolicyPolicy

InternationalInternationalTradeTradePolicyPolicy


Open economy macroeconomics

Open economy macroeconomics

Foreign exchange markets

Foreign exchange markets Balance of paymentsBalance of payments

2.3 International Finance

International FinanceInternational FinanceInternational FinanceInternational Finance


2.4 Purpose to Study International Economics

To analyze the effect of the int’l flow of goods, services and factors on the welfare of domestic consumers. To examine or forecast how national policies di

rected at regulating these int’l flows affect domestic welfare.To form intelligent opinions on these matters.To predict and explain the economic events in

the world.To understand what is going on in the world an

d their effects on the world economy.To have a better job in joint ventures !!! Why ?


3 Assumptions in International Trade

2×2×2 model2×2×2 model No trade restrictionsNo trade restrictions Perfect mobility of factors within nations and Perfect mobility of factors within nations and

not internationallynot internationally Perfect competitionPerfect competition No transportation costsNo transportation costs


4 Foreign Trade Dependence

100GDP

ExportImport

What is foreign trade dependence? What is the What is foreign trade dependence? What is the purpose? purpose? How to measure it?How to measure it? -----The ratio of imports and exports of go-----The ratio of imports and exports of goods and services of a nation to its GDP.ods and services of a nation to its GDP.

What nations have the higher degree of foreign What nations have the higher degree of foreign export trade dependence?export trade dependence?


4.1 Foreign Trade Dependence in Some Nations

1970 1980 1990 1993

Developing countries

India 3.5 5.0 6.0 8.6

Indonesia 11.5 28.1 24.2 23.2

Korea 9.3 27.5 25.6 24.8

Pakistan 4.0 11.1 14.0 12.9

Thailand 10.0 20.1 26.9 29.5

Advanced countries

Japan 9.5 12.3 9.8 8.6

Canada 19.8 25.7 22.5 26.6

America 4.2 8.3 7.2 7.4

France 12.5 17.5 17.6 16.5

Germany 18.6 23.8 27.4 19.9

Italy 12.3 17.3 15.6 16.9

United Kingdom 15.7 20.5 19.0 19.3

Singapore 180


4.2 Importance of International Trade

Some nations can not survive without foreigSome nations can not survive without foreign trade, such as Japan, Germany, Belgium and otn trade, such as Japan, Germany, Belgium and others. A nation can not produce all the products it hers. A nation can not produce all the products it needs, for example, US can not produce coffee, cneeds, for example, US can not produce coffee, cocoa, tea, scotch and other products, they don't ocoa, tea, scotch and other products, they don't have the climate.have the climate. The economies of all nations are closely relatThe economies of all nations are closely related to each other. ed to each other. To improve the standard of living.To improve the standard of living.


4.3 China GDP and Foreign Trade Dependency

Data source: China Customs

YearGDP

(bill. ￥ )Exp+Imp

(bill. $)Exp+Imp

GDPExport (bill. $)

Export GDP

Import (bill. $)

Import GDP

Balance($)

1997 7477.2 325.16 36.0% 182.79 20.3% 142.37 15.7% +404.2

1998 7834.5 323.95 33.7% 183.71 19.1% 140.24 14.6% +434.2

1999 8206.7 360.63 36.4% 194.93 19.7% 165.70 16.7% +292.3

2000 8944.2 474.30 44.0% 249.20 23.0% 225.09 21.0% +241.1

2001 9593.3 509.77 45.0% 266.15 24.0% 243.61 21.0% +225.4

2002 10239.8 620.80 50.3% 325.57 26.4% 295.22 23.9% +303.5

2003 11669.4 851.21 60% 438.37 31.09% 412.84 29% +255.4

2004 13651.5 1154.7 69.3% 593.4 35.6% 561.4 33.7% +320.0

2005 15000 1422 80% 762.0 43.0% 660.1 37% +101.9

2006 24662 1760.7 67% 969.1 36.9% 796.6 30.3% +177.5


5 Some Questions1. Import/GDP has _______in recent years in China.1. Import/GDP has _______in recent years in China.

(risen, fallen, remained steady)(risen, fallen, remained steady) (From 15.7 % in 1997 to 37 % in 2005.) (From 15.7 % in 1997 to 37 % in 2005.)

2. Export/GDP has _______in recent years.2. Export/GDP has _______in recent years. (risen, fallen, remained steady) (risen, fallen, remained steady) (From 20 % in 1997 to 40 % in 2005.)(From 20 % in 1997 to 40 % in 2005.)

3. Which nation is our largest trading partner?3. Which nation is our largest trading partner? ( EU:217.3 billion dollars in 2005)( EU:217.3 billion dollars in 2005)

4. Which is the second largest trading partner?4. Which is the second largest trading partner? (US: 211.6 billion dollars in 2005 )(US: 211.6 billion dollars in 2005 )


5 Some Questions (2)

5.The purpose of trade is to_______.5.The purpose of trade is to_______. a. improve consume well-being. b. create jobs. a. improve consume well-being. b. create jobs.

6. Work is a ________.6. Work is a ________. a. cost b.benefita. cost b.benefit

7. Exports are ________. 7. Exports are ________. a. cost b.benefita. cost b.benefit

8. The objective of international trade is to __________. 8. The objective of international trade is to __________. a. get goods cheaply b.create jobsa. get goods cheaply b.create jobs

9. NAFTA has had a greatest impact on the _____ of U.S.9. NAFTA has had a greatest impact on the _____ of U.S. a. inflation rate b.unemployment ratea. inflation rate b.unemployment rate

anhui university of finance and economics 1/23 international economics professor xu song anhui...

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