The document discusses international economics and globalization. It defines international economics as the study of economies on a global scale and globalization as increased international trade and cultural exchange. It provides reasons why countries engage in international trade, including differences between countries and economies of scale in production. It also discusses trade barriers such as tariffs and quotas that can limit trade and cause trade wars by increasing prices and restricting supply.

2. The study of the
behavior and decisions
of entire economies.

3. A modern term used to describe the
changes in societies and the world
economy that result from dramatically
increased international trade and
cultural exchange.

4. “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

5. Definition~ Preventing a foreign product
from freely entering into a nation’s territory.

6. 1. Import Quota
2. Voluntary Export Restraint
3. Tariff
4. Informal Barriers
• Government Licensing Restrictions
• Government Health and Safety Requirements

7. 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

8. 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

9.  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.

10.  Development- Process by
which a nation improves the
economic, political and social
well being of its people.
 Developed-High level of
material well being (US)
 Less Developed- Low level of
material well being (Ethiopia)
 Newly Industrializing- Better
performing LDC’s (Mexico)
Indicators of Development
1. Per capita GDP
2. Energy Consumption
3. Labor Force
4. Literacy
5. Infant Mortality
6. Life Expectancy
7. Consumer Goods

11. Levels of Development
South
America
Central
America Caribbean
United States
Canada
Southern
Africa
Middle
Africa
Eastern
Africa
Western
Africa
Northern Africa
Southern Europe
Western
Europe
Eastern
Europe
Northern
Europe
Western Asia
South
Central Asia
East Asia
Southeast
Asia
Oceania
Tropic of Cancer
Tropic of Capricorn
Equator
Three Levels of Development
 Developed Countries
 Less Developed Countries
 Newly Industrialized Countries

12. 1. Rapid population growth
2. Resource distribution
3. Lack of physical capital
4. Lack of human capital
• Health/Nutrition
• Education/Training
• “Brain Drain”
5. Political Factors
• Colonial Dependency to Independent Planning
• Government Corruption
• Political Instability (civil wars, social unrest, lack of government
infrastructure)
6. Debt

14. Why are there more babies being born?
1. Children may be needed to help earn money
2. Lack of contraceptive devices may lead to unwanted
pregnancies and babies.
3. The local or national culture or government may
encourage large families
4. Parents may be fearful of infant mortality (children dying
very young)
5. Better medical facilities could be increasing the lives of
mothers and therefore increasing their chances of having
larger families
Why are there fewer deaths now?
1. Better birthing facilities
2. More widely available medicines and medical expertise
3. A general improvement in diet and nutrition in many
countries

15. In parts of Africa, Asia, and Latin
America, physical geography makes
development more difficult.
Only about 10 percent of the world’s
land is arable, or suitable for
producing crops.

16. The lack of economic activity typical
of LDCs is due in part to a lack of
physical capital.
Subsistence agriculture provides little
opportunity for individuals or
families to save.

17. Health and Nutrition
Proper food and nutrition are necessary for physical and
mental growth and development. Inadequate nutrition is
called malnutrition.
Education and Training
To be able to use technology and move beyond mere
subsistence, a nation must have an educated work force.
Brain Drain
The scientists, engineers, teachers, and entrepreneurs of LDCs
are often enticed to the benefits of living in a developed
nation. The loss of educated citizens to the developed world
is called “brain drain.”

18. 1. shifting from colonial dependency Find out
more...
2. political instability Find out more...
3. Corruption Find out more...
4. Debt Find out more...

19.  Many nations, specifically on the African continent, were
under colonial domination until recent times.
 This domination created an economic structure that was
“export” heavy and “import” light. This unequal balance
of trade made nations dependent on the colonial power for
manufactured products.
 In addition to hyper-dependency for manufactured goods,
colonies often lacked infrastructure and internal leadership.
But independence is a good thing…
RIGHT?!!?!?

21. Political instability plagues less
developed nations with civil
wars and social unrest acting
to prevent the necessary social
stability required for sustained
development.

22. “Corruption is a major cause of poverty as well as a barrier to
overcoming it. The two scourges feed off each other,
locking their populations in a cycle of misery. Corruption
must be vigorously addressed if aid is to make a real
difference in freeing people from poverty.”
~ Peter Eigen
“Corruption isn’t a natural disaster: it is the cold, calculated
theft of opportunity from the men, women and children who are
least able to protect themselves. Leaders must go beyond lip
service and make good on their promises to provide the
commitment and resources to improve governance,
transparency and accountability.”
~ David Nussbaum

23. “Debt is an efficient tool. It ensures access to other
peoples' raw materials and infrastructure on the
cheapest possible terms. Dozens of countries must
compete for shrinking export markets and can export
only a limited range of products because of Northern
protectionism and their lack of cash to invest in
diversification. Market saturation ensues, reducing
exporters' income to a bare minimum while the North
enjoys huge savings. The IMF cannot seem to
understand that investing in ... [a] healthy, well-fed,
literate population ... is the most intelligent economic
choice a country can make.”
-- Susan George, A Fate Worse Than Debt, (New York:
Grove Weidenfeld, 1990), pp. 143, 187, 235

24. World Bank
International Monetary Fund
World Trade Organization

25.  The World Bank is a vital source of financial and technical
assistance to developing countries around the world. Their
mission is to fight poverty with passion and professionalism for
lasting results and to help people help themselves.
 It is not a bank in the common sense; it is made up of 186
member countries.
 They provide low-interest loans, interest-free credits and grants to
developing countries.
 The World Bank, established in 1944, is headquartered in
Washington, D.C.
 The three pillars of the World Bank:
• Results
• Reform
• Resources

26.  Started in 1944 at the Bretton Woods
Conference.
 The IMF is an organization of 186 countries,
working to foster global monetary
cooperation, secure financial stability,
facilitate international trade, promote high
employment and sustainable economic
growth, and reduce poverty around the world.
 Creates structural adjustment programs
(SAP) in less developed nations across the
globe.

27.  The World Trade Organization (WTO) is the only global
international organization dealing with the rules of
trade between nations.
 Established on January 1, 1995 and is headquartered
Geneva, Switzerland
 It is made up of 153 countries
 Functions:
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing
countries
• Cooperation with other international organizations