dale r. deboer university of colorado, colorado springs 1 - 1 an introduction to international...
TRANSCRIPT
Dale R. DeBoerUniversity of Colorado, Colorado Springs
1 - 1
An Introduction to International Economics
Chapter 1: Introduction
Dominick Salvatore
John Wiley & Sons, Inc.
1 - 2Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– An example: Sony Televisions
1 - 3Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– A key issue – its not just imports!
• Exports of Boeing Aircraft• Exports of Microsoft Software
1 - 4Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– A key issue – its not just imports!– Its also not just for consumers!
• Trade in component parts• Monitors for Dell Computers
1 - 5Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– A key issue – its not just imports!– Its also not just for consumers!– Services, not just goods!
• Lloyd’s of London
1 - 6Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– A key issue – its not just imports!– Its also not just for consumers!– Services, not just goods!– International trade is expanding
1 - 7Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services– A key issue – its not just imports!– Its also not just for consumers!– Services, not just goods!– International trade is expanding
Value of World Merchandise Exports (1995 = 100)
0
20
40
60
80
100
120
140
1950 1960 1970 1980 1990 2000
Source: World Trade Organization
1 - 8Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services
• International ownership of assets– Examples
• Foreign stock ownership• Automobile assembly plants
– Toyota WWW link
• US government debt
1 - 9Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services
• International ownership of assets
• Currency exchange– International transactions require conversions
between currencies– Foreign exchange markets
• Federal Reserve Bank Exchange Rate Data WWW link
1 - 10Dale R. DeBoerUniversity of Colorado, Colorado Springs
What is International Economics?
• International trade in goods and services
• International ownership of assets
• Currency exchange
• International organizations– World Trade Organization
• WWW link
– International Monetary Fund• WWW link
– European Union• WWW link
1 - 11Dale R. DeBoerUniversity of Colorado, Colorado Springs
Standard of Living
• The International Economy generates Interdependence– Economic growth in the United States spurs
increased demand for imports– Increased import demand by the United States
generates economic growth in other countries
1 - 12Dale R. DeBoerUniversity of Colorado, Colorado Springs
Standard of Living
• The International Economy generates Interdependence
• Sources of potential gain– Access to items not available domestically
• Coffee• Bananas• Tin• Tungsten
1 - 13Dale R. DeBoerUniversity of Colorado, Colorado Springs
Standard of Living
• The International Economy generates Interdependence
• Sources of potential gain– Access to items not available domestically– Access to lower cost products– Access to greater product variety
1 - 14Dale R. DeBoerUniversity of Colorado, Colorado Springs
Standard of Living
• The International Economy generates Interdependence
• Sources of potential gain
• Is it always a gain?– Import competing sectors may experience
production and job losses– This loss is at least partially (and potentially,
completely) offset by gains in the exporting sectors
1 - 15Dale R. DeBoerUniversity of Colorado, Colorado Springs
Subjects in International Economics
• International Trade Theory– Analyzes the basis of and the gains from
international trade– Focuses on the microeconomic aspects of the
international economy
1 - 16Dale R. DeBoerUniversity of Colorado, Colorado Springs
Subjects in International Economics
• International Trade Theory
• International Trade Policy– Examines the reasons for and the effects of
restrictions on international trade– Analyzes the implications for International
Trade Theory of such restrictions
1 - 17Dale R. DeBoerUniversity of Colorado, Colorado Springs
Subjects in International Economics
• International Trade Theory
• International Trade Policy
• Balance of Payments– A summary statement of all the international
transactions of the residents of a nation with the rest of the world during a particular period of time, usually a year.
– Provides a statistical summary of the size of international trade and international asset ownership for a country
1 - 18Dale R. DeBoerUniversity of Colorado, Colorado Springs
Subjects in International Economics
• International Trade Theory
• International Trade Policy
• Balance of Payments
• Foreign Exchange Markets– The institutional framework for the exchange of
one national currency into another– Part of the study of International Finance (or
Open-Economy Macroeconomics) that is concerned with the macroeconomic implications of the International Economy
1 - 19Dale R. DeBoerUniversity of Colorado, Colorado Springs
Subjects in International Economics
• International Trade Theory
• International Trade Policy
• Balance of Payments
• Foreign Exchange Markets
• Adjustments in the Balance of Payments– Focuses on the relationship between internal and
external aspects of the economy– Examines how disequilibria lead to
macroeconomic adjustment under difference international monetary systems
1 - 20Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Trade Protectionism in Industrial Countries– What are the reasons for this protection?– What are the implications of this protection for the
industrial countries?– What are the implications of this protection for the
rest of the world?– How do regional trade blocks (the NAFTA, the
European Union, etc.) complicate efforts to reduce this protection?
1 - 21Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Trade Protectionism in Industrial Countries
• Excessive Fluctuations and Large Disequilibria in Exchange Rates– Large exchange rate fluctuations may disrupt
international trade and harm economic growth– What is the source of these fluctuations?– How can the international financial system be
reformed to eliminate these fluctuations?
1 - 22Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Trade Protectionism in Industrial Countries
• Excessive Fluctuations and Large Disequilibria in Exchange Rates
• Financial Crises in Emerging Market Economies– The causes and consequences of a sudden
collapse in the value of a currency of an emerging economy
1 - 23Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Trade Protectionism in Industrial Countries
• Excessive Fluctuations and Large Disequilibria in Exchange Rates
• Financial Crises in Emerging Market Economies
• High Structural Unemployment and Slow Growth in Europe and Stagnation in Japan
1 - 24Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Trade Protectionism in Industrial Countries
• Excessive Fluctuations and Large Disequilibria in Exchange Rates
• Financial Crises in Emerging Market Economies
• High Structural Unemployment and Slow Growth in Europe and Stagnation in Japan
• Job Insecurity from Restructuring and Downsizing in the United States
1 - 25Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Excessive Fluctuations and Large Disequilibria in Exchange Rates
• Financial Crises in Emerging Market Economies
• High Structural Unemployment and Slow Growth in Europe and Stagnation in Japan
• Job Insecurity from Restructuring and Downsizing in the United States
• Restructuring Problems of Transition Economies
1 - 26Dale R. DeBoerUniversity of Colorado, Colorado Springs
Current International Economic Problems
• Excessive Fluctuations and Large Disequilibria in Exchange Rates
• Financial Crises in Emerging Market Economies
• High Structural Unemployment and Slow Growth in Europe and Stagnation in Japan
• Job Insecurity from Restructuring and Downsizing in the United States
• Restructuring Problems of Transition Economies
• Deep Poverty in Many Developing Countries
1 - 27Dale R. DeBoerUniversity of Colorado, Colorado Springs
Globalization
• What is globalization?– Increasing international economic connections
• International Trade• International Asset Ownership
1 - 28Dale R. DeBoerUniversity of Colorado, Colorado Springs
Globalization
• What is globalization?– Increasing international economic connections– Increasing role of International Organizations in
constraining domestic policies
1 - 29Dale R. DeBoerUniversity of Colorado, Colorado Springs
Globalization
• What is globalization?– Increasing international economic connections– Increasing role of International Organizations in
constraining domestic policies– Increasing cultural homogeneity
1 - 30Dale R. DeBoerUniversity of Colorado, Colorado Springs
Globalization
• What is globalization?– Increasing international economic connections– Increasing role of International Organizations in
constraining domestic policies– Increasing cultural homogeneity– Increased domestic economic growth caused by
expanded international connections• Potential harm?
– Environmental concerns
1 - 31Dale R. DeBoerUniversity of Colorado, Colorado Springs
Globalization
• What is globalization?
• The Anti-Globalization movement– A loose coalition of groups opposed to
globalization– Concerns
• Environmental damage• Loss of domestic labor protections• Erosion of domestic sovereignty
1 - 32Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4– International Trade Theory
1 - 33Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4
• Part Two: Chapters 5-6– International Trade Policies
1 - 34Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4
• Part Two: Chapters 5-6
• Part Three: Chapters 7-9– International Asset Ownership
1 - 35Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4
• Part Two: Chapters 5-6
• Part Three: Chapters 7-9
• Part Four: Chapters 10-12– Balance of Payments and Exchange Rate Markets
1 - 36Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4
• Part Two: Chapters 5-6
• Part Three: Chapters 7-9
• Part Four: Chapters 10-12
• Part Five: Chapters 13-14– Open-Economy Macroeconomics
1 - 37Dale R. DeBoerUniversity of Colorado, Colorado Springs
Organization of the Text
• Part One: Chapters 2-4
• Part Two: Chapters 5-6
• Part Three: Chapters 7-9
• Part Four: Chapters 10-12
• Part Five: Chapters 13-14
• Part Six: Chapters 15-16– The International Economy in Operation