lec 27-28 international trade.ppt

8/20/2019 LEC 27-28 INTERNATIONAL TRADE.ppt

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PAKISTAN’S EXPORTSPAKISTAN’S EXPORTS

TextilesTextiles

RiceRice

Leather goodsLeather goods Sports goodsSports goods

ChemicalsChemicals


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PAKISTAN’S I!PORTSPAKISTAN’S I!PORTS

Petrole"m prod"ctsPetrole"m prod"cts

!achi#er$!achi#er$ Tra#sportatio# e%"ipme#tTra#sportatio# e%"ipme#t OilOil

TeaTea


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INTERNATIONAL TRA'EINTERNATIONAL TRA'E


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'ESIRE' LEARNIN) O*+ECTI,ES'ESIRE' LEARNIN) O*+ECTI,ES

I# this chapter- .e’ll st"d$/0I# this chapter- .e’ll st"d$/0

Importa#ce o I#ter#atio#al Trade2Importa#ce o I#ter#atio#al Trade2

'iere#ce i# I#ter#atio#al a#d 'omestic'iere#ce i# I#ter#atio#al a#d 'omestic

Trade2Trade2

Reaso#s or i#ter#atio#al trade2Reaso#s or i#ter#atio#al trade2


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3hat are the eco#omic orces that lie3hat are the eco#omic orces that lie

4ehi#d i#ter#atio#al trade54ehi#d i#ter#atio#al trade5

Trade Promotes Speciali6atio# a#dTrade Promotes Speciali6atio# a#d

Speciali6atio# i#creases prod"cti7it$Speciali6atio# i#creases prod"cti7it$

8


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INTERNATIONAL ,S2 'O!ESTICINTERNATIONAL ,S2 'O!ESTIC

TRA'ETRA'E

Three !ai# 'iere#ces/0Three !ai# 'iere#ces/0

Tradi#g Opport"#itiesTradi#g Opport"#ities

So7ereig#t$ o Natio#sSo7ereig#t$ o Natio#s

I#ter#atio#al :i#a#ceI#ter#atio#al :i#a#ce


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TRA'IN) OPP


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SO,EREI)NT@ O: NATIONSSO,EREI)NT@ O: NATIONS

I#ter#atio#al trade i#7ol7es people a#d irmsI#ter#atio#al trade i#7ol7es people a#d irms

o diere#t co"#tries- .here mo#e$ lo.so diere#t co"#tries- .here mo#e$ lo.sacross the 4order- .hich is i# co#trast toacross the 4order- .hich is i# co#trast to

domestic trade2domestic trade2

Sometimes- co"#tries impose trade 4arriersSometimes- co"#tries impose trade 4arriers

li=e taris a#d %"ota i# order to protect theirli=e taris a#d %"ota i# order to protect their

o.# i#d"stries2o.# i#d"stries2


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INTERNATIONAL :INANCEINTERNATIONAL :INANCE

I#ter#atio#al trade e#a4les co"#tries toI#ter#atio#al trade e#a4les co"#tries to

ear# oreig# excha#ge2ear# oreig# excha#ge2

:oreig# excha#ge i# t"r# acilitates:oreig# excha#ge i# t"r# acilitates

i#ter#atio#al trade2i#ter#atio#al trade2


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A4o7e all- it ma=es people to people A4o7e all- it ma=es people to people

i#teractio# possi4le across the glo4e2i#teractio# possi4le across the glo4e2

Th"s- i#ter#atio#al trade promotesTh"s- i#ter#atio#al trade promotes

i#ter#atio#al peace a#d harmo#$2i#ter#atio#al peace a#d harmo#$2

1B


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REASONS :OR INTERNATIONALREASONS :OR INTERNATIONAL

TRA'ETRA'E

'i7ersit$ i# Nat"ral Reso"rces'i7ersit$ i# Nat"ral Reso"rces

'iere#ces i# Tastes'iere#ces i# Tastes

'iere#ces i# Costs'iere#ces i# Costs


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'I,ERSIT@ IN NAT


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'I::ERENCES IN TASTES'I::ERENCES IN TASTES

E7e# i all co"#tries .ere e#do.ed .ith sameE7e# i all co"#tries .ere e#do.ed .ith same#at"ral reso"rces a#d ide#tical prod"ctio##at"ral reso"rces a#d ide#tical prod"ctio#

acilities- the$’d ha7e preerred trade d"e toacilities- the$’d ha7e preerred trade d"e to

diere#t tastes2diere#t tastes2 Ex/ Pa=ista# a#d I#dia appear to 4e ide#tical i#Ex/ Pa=ista# a#d I#dia appear to 4e ide#tical i#

ma#$ respects> $et most o Pa=ista#is preerma#$ respects> $et most o Pa=ista#is preer

chic=e# o7er p"lses2chic=e# o7er p"lses2 *oth I#dia a#d Pa=ista# ca# 4e#eit rom m"t"al*oth I#dia a#d Pa=ista# ca# 4e#eit rom m"t"al

trade o chic=e# a#d p"lses2trade o chic=e# a#d p"lses2


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'I::ERENCES IN COSTS'I::ERENCES IN COSTS

Cost actor is perhaps the most importa#t reaso#sCost actor is perhaps the most importa#t reaso#sor trade2or trade2

Co#sider I#tel Compa#$- .hich prod"ces high Co#sider I#tel Compa#$- .hich prod"ces high

e#d Semico#d"ctors has acilities i#


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RECAPIT


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CO!PARATI,E A',ANTA)ECO!PARATI,E A',ANTA)E

PRINCIPLEPRINCIPLE

The pri#ciple holds that a co"#tr$ ca#The pri#ciple holds that a co"#tr$ ca#

4e#eit rom i#ter#atio#al trade e7e# i it is4e#eit rom i#ter#atio#al trade e7e# i it is

a4sol"tel$ more eicie#t or less eicie#ta4sol"tel$ more eicie#t or less eicie#ttha# other co"#tries i# prod"ci#g diere#ttha# other co"#tries i# prod"ci#g diere#t

goods2goods2

Trade- accordi#g to the Comparati7eTrade- accordi#g to the Comparati7e

Ad7a#tage Pri#ciple- pro7ides m"t"al Ad7a#tage Pri#ciple- pro7ides m"t"al

4e#eits to all tradi#g co"#tries24e#eits to all tradi#g co"#tries2


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CO!PARATI,E A',ANTA)ECO!PARATI,E A',ANTA)E

PRINCIPLEPRINCIPLE

It holds that each co"#tr$ .ill 4e#eit i itIt holds that each co"#tr$ .ill 4e#eit i it

speciali6es i# the prod"ctio# a#d export ospeciali6es i# the prod"ctio# a#d export o

those goods that it ca# prod"ce at relati7el$those goods that it ca# prod"ce at relati7el$

lo. cost2 Co#7ersel$- each co"#tr$ .illlo. cost2 Co#7ersel$- each co"#tr$ .ill

4e#eit i it imports those goods .hich it4e#eit i it imports those goods .hich itprod"ces at relati7el$ high cost2prod"ces at relati7el$ high cost2


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I La4or is a4sol"tel$ more prod"cti7e i#I La4or is a4sol"tel$ more prod"cti7e i#

America tha# i# E"rope- 'oes this mea# America tha# i# E"rope- 'oes this mea#

that America .ill import #othi#g5that America .ill import #othi#g5

Is it Eco#omicall$ .ise or E"rope toIs it Eco#omicall$ .ise or E"rope to

protect its mar=ets .ith taris a#d %"otas5protect its mar=ets .ith taris a#d %"otas5

'a7id Ricardo'a7id Ricardo

I#ter#atio#al Speciali6atio# 4e#eits aI#ter#atio#al Speciali6atio# 4e#eits a

#atio#2#atio#2

1


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lec 27-28 international trade.ppt

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