International Trade
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 Text book
International Economics:Theory and Policy(7ed)
Paul R. Krugman
Maurice Obstfeld
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Chapter 1
Introduction
About This Course…
 Principle of Economics
 Theoretical Economics vs. Applied Economics
 About Mathematics
 Our stress: concepts & applications
 Lecture: week 6-19; Test: week 20
 Attendance
 Assignments & Class Discussions
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BRIEF CONTENTS
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PREFACE
1 Introduction
PART I INTERNATIONAL TRADE THEORY
2 World Trade: An Overview
3 Labor Productivity and Comparative Advantage: The
Ricardian Model
4 Resources, Comparative Advantage and Income
Distribution
5 The Standard Trade Model
6 Economies of Scale, Imperfect Competition, and
International Trade
7 International Factor Movements
5
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BRIEF CONTENTS
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PART II INTERNATIONAL TRADE POLICY
8 The Instruments of Trade Policy
9 The Political Economy of Trade Policy
10 Trade Policy in Developing Countries
11 Controversies in Trade Policy
6
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Why are we caring about International trade?
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Fig 1-1
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Trade Openness
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Exports and Imports of China
Billion
Billion
Dollars
dollars
exports,imports
1500
Export
Export
1000
Import
500
0
Import
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
year(1978-2008)
1
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Introduction
 What is International Economics About?
 International Economics: Trade and Money
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What is International Economics About?
 International trade deals with economic interactions
that occur between sovereign nations.
(eg. Trade between U.S. & Mexico; Shanghai & Beijing?)
• The role of governments in regulating international trade
and investment is substantial.
• Analytically, international markets allow governments to
discriminate against a subgroup of companies.
• Governments also control the supply of currency.
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1.What Is International
Economics About?
Micro-part
The Gains
from Trade
The Pattern
of Trade
1
Protectionism
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What is International Economics About?
 The Gains from Trade
• Can & cannot produce by itself.
• Why import when a good could be produced domestically?
• When countries sell goods and services to one another, all countries
benefit.
(ch3, productivity & wage; ch4, production factor abundance; ch6,
economies of scale Specialization & effieicncy _tangible goods
ch7, factor movements: international migration & borrowing and
lending._intangible goods)
• Trade and income distribution
– International trade might hurt some groups within nations. (eg.
specific resources owners; labor and capital owners)
– Trade, technology, and wages of high and low-skilled workers.
(disputs) (ch4,ch5)
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What is International Economics About?
The Pattern of Trade (Who trade with whom or sells what to whom?)
– Climate and resources determine the trade pattern of several goods.
– In manufacturing and services the pattern of trade is more subtle.
(eg. Japan for autos vs. U.S. for aircraft? )
-International difference in labor productivity.(ch3, Ricardo,19C)
-The relative supply & use of national resources such as capital, labor,
and land.(ch4,20C, powerful but controversial)
-A substantial random component.(ch6, economy of scale, market
structure, policy etc.)
– There are two types of trade
» Interindustry trade depends on differences across countries.
» Intraindustry trade depends on market size and occurs among
similar countries.
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What is International Economics About?
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Protectionism? (How much to trade?)
• Globalization: for or against? (NAFTA vs. EU? WTO negotiation,
ASIA…) (Seattle)
• Cost-benefit analysis? Many governments are trying to shield certain
industries from international competition. (eg. Export subsidizing or
import quota)
• Government interventions: politics.
(ch4 income distribution effects; ch9-11 power within countries matters)
• This has created the debate dealing with the costs and benefits of
protection relative to free trade.
– Advanced countries’ policies engage in industrial targeting.
– Developing countries’ policies promote industrialization:
– Import substitution versus export promotion industrialization.
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What is International Economics About?
 The Balance of Payments
• Some countries run large trade surpluses.
– For example, in 1998 both China and South Korea ran
trade surpluses of about $40 billion each.
• Global Imbalance
• Is it good to run a trade surplus and bad to run a trade
deficit?
 Exchange Rate Determination
• The role of changing (floating) exchange rates is at the
center of international economics.
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What is International Economics About?
 International Policy Coordination
• A fundamental problem in international economics is
how to produce an acceptable degree of harmony
among the international trade and monetary policies of
different countries without a world government that
tells countries what to do.
 The International Capital Market
• There are risks associated with international capital
markets:
– Currency depreciation （even contagious）
– National default
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Macro-part
The Balance
of Payments
International Policy
Coordination
The International
Capital Market
Exchange Rate
Determination
19
返回
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2.International Economics: Trade
and Money
International
Economics
Our Focus
International
Trade (real
transactions)
International
Money (financial
transactions)
20
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International Economics:
Trade and Money
 International trade analysis focuses primarily on the
real transactions in the international economy.
• These transactions involve a physical movement of
goods or a tangible commitment of economic
resources.
– Example: The conflict between the United States and
Europe over Europe’s subsidized exports of agricultural
products.
– Antidumping case. Customs duties. Cow diseases…
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International Economics:
Trade and Money
 International monetary analysis focuses on the
monetary side of the international economy.
• That is, financial transactions such as foreign
purchases of U.S. dollars.
– Example: The dispute over whether the foreign
exchange value of the dollar should be allowed to float
freely or be stabilized by government action.
– Should RMB appreciate ? Is it undervalued? If yes, how
much is it undervalued?
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International Economics:
Trade and Money
 International trade issues
• Part I: International Trade Theory
• Part II: International Trade Policy
 International monetary issues
• Part III: Exchange Rates and Open-Economy
Macroeconomics
• Part IV: International Macroeconomic Policy
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