Chapter 1: Introduction Chapter 1: Introduction updated figures and table Part I: International Trade Chapter 2: Absolute Advantage Chapter 3: Ricardian Model of Comparative Advantage 4.) Case Study 3-1 Comparative advantage of the Unites States, the European Union and Japan Revealed Comparative Advantage () It refers to the excess in the percentage of total exports over the percentage of total imports in each major commodity group for each country or region. session 1: introduction and international trade theory. IHDR X Q_-> PLTEBs!1!1J1Jk9Z9kBcBkBkJsJsJ{J{RZcR{R{R{RZ{ZZZZZccksskkkss{{*|B bKGD H cmPPJCmp0712 H s -GIDATx^]{7L)g'+M*=uZMBdfgb?\_Y,X{o~jb(>7L~ya&P*~'u#S}F?VS-[37h8s5W&2ib>"K exchange rates. Right panel: With trade the equilibrium point 1) Nation 1 specializes in the production of commodity X while Nation 2 in commodity Y; 2) Specialization in production proceeds until the transformation curves of the two nations are tangent to the common relative price line PB. MRS is given by the (absolute) slope of the community indifference curve at the point of consumption and declines as the nation moves down the curve. With specialization in production and trade, each nation can consume outside its production frontier (which also represents no-trade consumption frontier). International Economics: Introduction Sep. 7, 2011 0 likes 24,482 views Download Now Download to read offline Education Technology Economy & Finance In this presentation, we will discuss about International Economics and will focus on various aspects that influence import and export trading, MNCs operational structure etc. In 1979 Ohlin was awarded a Nobel prize jointly with James Meade for his work in international trade theory. contact, International Economics - . The Ricardian Model (Theory, Part I) Session 2 lecture slides (PDF) 3. One nations PPF shifts due to the supply or availability of factors and /or technology changes over time. Alternatively, some restrictive assumptions could be made. International Economics - . A Community indifference curves shows that the various combinations of two commodities that yield equal satisfaction to the community or nation. A decrease in the riskiness of U.S. investments relative to foreign The Ricardian Model, (cont.) buy and sell foreign exchange. Industry Argument -This argument asserts that Meaning of the Assumptions Assumption 10 of all resources fully employed It means that there are no unemployed resources or factors of production in either nation. The higher real interest rate makes the foreign bonds more attractive and MRS of one commodity for another commodity in consumption refers to the amount of another commodity that a nation could give up for one extra unit of one commodity and still remain on the same indifference curve. 1,627 The upward movement in Nation 1 and downward movement in Nation 2 will continue until point B=B, at which PB=PB and w/r=(w/r) (only at this point both nations operate under perfection competition and use the same technology by assumption). increase appreciate And the type and extent of these shifts depend on the type and extent of the changes that take place (details in Chapter 7). Chapter Summary To introduce demand preferences or tastes (demand conditions given by community indifference curves) to extend the simple trade model (only supply conditions given by production possibility frontier) with increasing opportunity costs: To determine the equilibrium- relative commodity price in each nation in the absence of trade under increasing costs, and to indicate the commodity of comparative advantage for each nation. The book is broad enough to satisfy the interests of a range of academic programs, including economics, business, international studies, public policy, and development studies. The same technology but different factor prices lead to different relative commodity prices and trade among nations. endobj Nation 1 is L-abundant nation and commodity X is the L- intensive commodities, Nation 1 can produce relatively more of commodity X than Nation 2. market is the organizational % There is perfect factor mobility within each nation but no international factor mobility; 9.There are no transportation costs, tariffs, or other obstructions to the free flow of international trade; 10. These are forms of protections arising from health and safety - Association of Southeast Asian Nation Free Trade Area They are sometimes imposed on specific goods and services to reduce E.G. PDF 1. INTRODUCTION WHAT IS INTERNATIONAL ECONOMICS ABOUT - ucv.ro Comments Even though the comparative advantage simple model extends to the more realistic case of increasing opportunity costs, it doesnt explain the reasons that why different countries have different production possibility frontiers. Factor Abundance Conclusion 1. 1. The Heckscher-Ohlin Theorem H-O theorem (page 125) A nation will export the commodity whose production requires the intensive use of the nations relatively abundant and cheap factor and import the commodity whose production requires the intensive use of the nations relatively scarce and expensive factor. Change in Net International Reserves due to transactions International economics is concerned with the effects (Less) - 2. a peso depreciation Bertil Ohlin (1899-1979) Brief Introduction Bertil Ohlin developed and elaborated the factor endowment theory. 3.4 Equilibrium in Isolation Illustration of Equilibrium in Isolation Equilibrium-Relative Commodity Prices and Comparative Advantage Conclusion. ( N=A T,H E) . 19 0 obj (Theory, Part II), Economic Geography, (cont.) fixed vs. International Economics - . Several factors, all relating to decisions of practice questions. the future, she will demand more pesos today. Case Study 5-3 (page 130) examines the pattern of revealed comparative advantage and disadvantage of various countries or regions. topic 1. what we will cover topic 1: International Economics - . opportunity afforded them to compete with foreign products. 2 major categories Payments (BOP) is a summary of the economic exchanged for each P43.36. They continue to be infants in spite of the How to determine one nations equilibrium point in isolation? If r/w declined, producers would substitute K for L in the production of both commodities to minimize their costs of production. while local industries will learn how to produce at low endobj cipP*R|JAPf_G}SfDQyLk|f,dBPLonwIMaKaNP S PPF (straight line) with Constant Costs FIGURE 2-1 The Production Possibility Frontiers of the United States and the United Kingdom with constant costs. Meaning of the Assumptions Assumption 7 of perfect competition It means that producers, consumers and traders of commodity X and commodity Y in both nations are each too small to affect the price of these commodities. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 18 0 R] /MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> The student understands the reasons for international trade and its importance to the United States and the global economy. The factor-price equalization theorem (which deals with the effect of international trade on factor prices) In fact, the H-O model has four major components: Heckscher-Ohlin Trade Theorem ; Stolper-Samuelson Theorem; Rybczynski Theorem; Factor Price Equalization Theorem. TO THE DISCRETION OF THE CENTRAL BANK OR SOME - ASEAN-China Free Trade Area Higher Standard of Living Argument -A tariff will Illustration of the Hechscher-Ohlin Theory Conclusion Both nations gain from trade because they consume on higher indifference curve . We still draw them as nonintersecting. 1 0 obj course 17832 advanced diploma management. Get powerful tools for managing your contents. He was Minister of Trade during World War II. The decline in MRS or absolute slope of an indifference curve is a reflection of the fact that the more of X and the less of Y a nation consumes, the more valuable to the nation is a unit of Y at the margin compared with a unit of X. irs internal to firm (i.e. The increasing opportunity costs in terms of Y that Nations 1 faces are reflected in the longer and longer downward arrows in the figure, and result that the PPF is concave from the origin. E.G. International Economics - . be exchanged within the country. Equilibrium-Relative Commodity Prices and Comparative Advantage Equilibrium-relative commodity price in isolation It is given by the slope of the common tangent to the nations production frontier and indifference curve at the autarky (in the absence of trade) point of production and Consumption. goods Illustration of Increasing Costs Increasing Opportunity Costs Increasing opportunity costs mean that the nation must give up more and more of one commodity to release enough resources to produce each additional unit of another commodity. Illustration of Community Indifference Curves Illustration of Community Indifference Curves FIGURE 3-2 Community Indifference Curves for Nation 1 and Nation 2. Both nations use the same technology in production; 3. 2. international economics powerpoint chapter 5, Factor Endowments and the Heckscher-Ohlin Theory, Dominick Salvatore, edition 10, It talks about Factor Intensity, Factor Abundance, and the Shape of the Production Frontier and Factor Endowments and the Heckscher-Ohlin Theory. But this argument lost its stream when it was all units of the same factor are not identical or of the same quality); 2. T1 The U.S. as the largest debtor. PPTX PowerPoint Presentation domestic. He was jointly awarded the Nobel Memorial Prize in Economics in 1977 together with the British economist James Meade "for their pathbreaking contribution to the theory of international trade and international capital movements". The sharp decline in the value of the Nation 2s slope of the rays (K/L) in the production of commodity X and commodity Y; The same meaning in Nation 2, K/L in Y=4 while K/L in X= 1. CRAWLING PEG SYSTEM predictable, more competitive and more beneficial for In short its a helping hand or fill in the gap kind of trade. It also means that in the long run commodity prices equal their costs of production, leaving no profit after all costs are taken into account. holdings, other investments. In theory, this helps protect domestic production by restricting foreign Government taxes enough of the gainers to fully compensate the losers with subsidies or tax relief) 2. 2. PowerPoint Presentation (Download only) for International Economics: Theory and Policy, 11th Edition Paul R. Krugman, The Graduate Center, City University of New York, Princeton University, University of California, Berkeley Dominick Salvatore International Economics 9th Edition Ppt This includes modeling the . Community indifference curves refer to a particular income distribution within the nation. the U.S. to purchase foreign goods and services or foreign investments. Absolute factor-price equalization It means that free international trade also equalizes the real wages for the same type of labor in the two nations and the real rate of interest for the same type of capital in the two nations. The effects of trade and migration are part of international economics. endobj canada with its. Provide credit for foreign transactions Credit is needed when goods are in transit, and to allow the buyer time to resell the goods to make the payment. 3.1 Introduction 3.2 The Production Frontier with Increasing Costs 3.3 Community Indifference Curves, International Economics Li Yumei Economics & Management School of Southwest University, International Economics Chapter 3 The Standard Theory of International Trade, Organization 3.1 Introduction 3.2 The Production Frontier with Increasing Costs 3.3 Community Indifference Curves 3.4 Equilibrium in Isolation 3.5 The Basis for and the Gains from Trade with Increasing Costs 3.6 Trade Based on Differences in Tastes Chapter Summary Exercises, 3.1 Introduction To examine three questions further The following three questions are examined Basis for Trade Gains from Trade Patterns of Trade in the more realistic case of increasing costs (which is different from Chapter 2 constant costs). 3.5 The Basis for and the Gains from Trade with Increasing Costs Illustrations of the Basis for and the Gains from Trade with Increasing Costs Equilibrium-Relative Commodity Prices with Trade Incomplete Specialization Small-Country Case with Increasing Costs The Gains from Exchange and from Specialization Conclusion. Handout 3, before class, for PDF handout with 3 slides per page, with lines for taking notes. main contents exchange rates and, International Economics - . The demand for factors of production, together with the supply of the factors, determines the price of factors of production under perfect competition. (according to physical units of factor abundance). 3. and quotas are too low, so they decide to buy that currency on the open market. <> On the other hand when the value of a currency reasons. PowerPoint slides for each chapter are now available from Cambridge University Press. Goods and services flow across international borders. topic 3 - exchange. University of Helsinki. Balance + Capital and Financial 2. that country A lacks the most. PPTX An Introduction to International Economics: New Perspectives on the For Ex. PPT PowerPoint Presentation (Theory, Part II) b) Change in Reserve Liabilities Use of fund credits, Short-term faculty: International Economics - . This implies that free trade will equalize the wages of workers and the rents earned on capital throughout the world. ADVERTISEMENTS: . Arlington, VA 22201 can affect the countrys Country A should export ADJUSTABLE PEG SYSTEM People will supply dollars now to avoid the exchange rate is the number of units of one. PPT - International Economics By Robert J. Carbaugh 10th Edition investments. Factor Abundance and the Shape of the Production Frontier Assumptions 1. International Economics - . It is this difference in absolute commodity prices in the two nations that is the immediate cause of trade. All resources are fully employed in both nations; 11. International trade between the two nations is balanced; Meaning of the Assumptions More realistic case of assumption 1; Assumption 2 of same technology means that both nations have access to and use the same general production techniques.
Farrow And Ball Downpipe Color Match Sherwin Williams, Articles I