2013/7/27(Sat)	
  
Review	
  of	
  previous	
  studies

Interna;onal	
  Economics	
  
	
  theory	
  and	
  policy	
  
1	...
Previous	
  contents	
•  Chapter1	
  Introduc;on	
  
•  Chapter2	
  World	
  trade:	
  An	
  overview	
  
•  Chapter3	
  L...
Chapter1	
  
	
  Introduc;on	
7	
  themes	
  	
  recur	
  throughout	
  the	
  study	
  of	
  
interna;onal	
  economic	
 ...
Chapter2	
  	
  
World	
  trade:	
  An	
  overview	
•  The	
  gravity	
  model	
  
–  The	
  trade	
  between	
  any	
  tw...
How	
  much	
  trade?	
•  The	
  seemingly	
  eternal	
  debate	
  over	
  how	
  much	
  
trade	
  allow	
  is	
  the	
  ...
Chapter3	
  	
  
Labor	
  produc;vity	
  and	
  compara;ve	
  advantage	
  
:The	
  Ricardian	
  model	
  
	
•  The	
  Ric...
Chapter4	
  	
  
Specific	
  factors	
  and	
  Income	
  distribu;on	
•  Specific	
  factor	
  model	
  
–  Differences	
  in...
Chapter5	
  	
  
Resources	
  and	
  trade	
  
:The	
  Heckscher-­‐Ohlin	
  model	
  	
•  Model	
  of	
  two-­‐factor	
  e...
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20130727 international economics brief summary

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20130727 international economics brief summary

  1. 1.   2013/7/27(Sat)   Review  of  previous  studies
 Interna;onal  Economics    theory  and  policy   1  
  2. 2. Previous  contents •  Chapter1  Introduc;on   •  Chapter2  World  trade:  An  overview   •  Chapter3  Labor  produc;vity  and  compara;ve  advantage   –  :The  Ricardian  model   •  Chapter4  Specific  factors  and  Income  distribu;on   •  Chapter5  Resources  and  trade   –  :The  Heckscher-­‐Ohlin  model   2
  3. 3. Chapter1    Introduc;on 7  themes    recur  throughout  the  study  of   interna;onal  economic   1.  The  gains  from  trade   2.  The  paSern  of  trade   3.  How  much  trade?   4.  Balance  of  payments   5.  Exchange  rate  determina;on   6.  Interna;onal  policy  coordina;on   7.  The  interna;onal  capital  markets   3
  4. 4. Chapter2     World  trade:  An  overview •  The  gravity  model   –  The  trade  between  any  two  countries  is  propor;nal  to  the  products  of   their  GDP  and  diminishes  with  distance.   •  Interna;onal  trade  is  at  record  levels  rela;ve  to  the  size  of   the  world  economy.   •  Manufactured  goods  dominate  modern  trade  today.   –  Developing  countries  have  shied  from  being  mainly  exporters  of   primary  products  to  being  mainly  exporters  of  manufactured  goods.   4
  5. 5. How  much  trade? •  The  seemingly  eternal  debate  over  how  much   trade  allow  is  the  most  important  policy  theme.   -­‐100   -­‐80   -­‐60   -­‐40   -­‐20   0   20   40   60   80   100   1979   1980   1981   1982   1983   1984   1985   1986   1987   1988   1989   1990   1991   1992   1993   1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   exports   import   net  exports   (Trillion  yen) 5
  6. 6. Chapter3     Labor  produc;vity  and  compara;ve  advantage   :The  Ricardian  model   •  The  Ricardian  model   –  Labor  is  the  only  factor  of  produc;on,  and  countries  differ  only  in  the   produc;vity  of  labor  in  different  industries.   –  A  countries  produc;on  paSers  is  determined  by  compara;ve   advantage.   •  Trade  benefits  a  country  in  either  of  two  ways.   –  Instead  of  producing  a  good  for  itself,  a  country  can  produce  another   good  and  trade  it  for  the  desired  good.   –  Trade  enlarges  a  countries  consump;on  possibili;es. 6
  7. 7. Chapter4     Specific  factors  and  Income  distribu;on •  Specific  factor  model   –  Differences  in  resources  can  cause  countries  to  have  different  rela;ve   supply  curves,  and  thus  cause  interna;onal  trade.   –  Factors  specific  to  export  sectors  in  each  country  gain  from  trade,   while  factors  specific  to  import-­‐compe;ng  sectors  lose.  Mobile  factors   that  can  work  in  either  sector  may  either  gain  or  lose.   •  Interna;onal  trade  oen  has  strong  effects  on  the   distribu;on  of  income  within  countries.   –  Factors  cannot  move  instantaneously  and  costlessly  from  one  industry   to  another.   –  Changes  in  an  economy’s  output  mix  have  differen;al  effects  on  the   demand  for  different  factors  of  produc;on.   7
  8. 8. Chapter5     Resources  and  trade   :The  Heckscher-­‐Ohlin  model   •  Model  of  two-­‐factor  economy   –  Two  countries,  two  goods,  two  factors  of  produc;on   •  Heckscher-­‐Ohlin  theory   –  Countries  tend  to  export  goods  that  are  intensive  in  the  factors   with  which  they  are  abundantly  supplied.   •  The  owners  of  a  country’s  abundant  factors  gain  from   trade,  but  the  owners  of  scarce  factors  lose.   –  There  are  s;ll  gains  from  trade,  in  the  limited  sense  that  that   winners  could  compensate  the  losers,  and  everyone  would  be   beSer  off. 8

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