Chapter 2
Size
matters:
Gravity
model
Volume of trade between two
countries = GDP country A x
GDP country B/ Distance
between country A and B
Trade anomalies
Top 5 countries we export to
South
African
trade by
numbers
United States (10.2%)
China (9.7%)
Germany (7.5.%)
Japan (7.2%)
United Kingdom (5.6%)
Top 5 countries we import from:
South
African
trade by
numbers
China (23.9%)
United States (8.5%)
Germany (7.1%)
India (7.0%)
United Arab Emirates (6.3%)
Distance
South Africa, Mozambique and Bulgaria
Impediments
to trade
Barriers
Trade agreements
Borders
Provincial vs national
The fall and
rise of World
trade
Manufactured goods
Agriculture products
What do
we trade
Minerals and raw materials
Services (call centers in the USA)
Service offshoring
• Information technology
• New forms of international trade
• Human-led services (accountants, doctors)
South Africa
Yes!
Are trade
theories
still
relevant
Why?
Then
• The best weather for coffee example
• The classic debate about free trade versus
protectionism
• Cheap food imports
Now
• Human resources and human-created resources
(machinery) new tradeable goods
• Workers whose skills are made less valuable by
imports (clothing industry)
We will build our
first trade model:
Next week
CHAPTER 3 (Ricardo
model of trade)