Chapter I Introduction
Chapter 1 Introduction
Introduction What is International Economics about? International Economics: Trade and money Copyright C 2003 Pearson Education, Inc Slide 1-2
Copyright © 2003 Pearson Education, Inc. Slide 1-2 Introduction ▪ What is International Economics About? ▪ International Economics: Trade and Money
What is International Economics about? a International economics deals with economic interactions that occur between independent nations 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 There are several issues that recur throughout the study of international economics Copyright C 2003 Pearson Education, Inc Slide 1-3
Copyright © 2003 Pearson Education, Inc. Slide 1-3 ▪ International economics deals with economic interactions that occur between independent nations. • 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. ▪ There are several issues that recur throughout the study of international economics. What is International Economics About?
What is International Economics about? The Gains from Trade Many people are skeptical about importing goods that a country could produce for itself. When countries sell goods and services to one another, all countries benefit Trade and income distribution International trade might hurt some groups within nations Trade, technology, and wages of high and low-skilled workers Copyright C 2003 Pearson Education, Inc Slide 1-4
Copyright © 2003 Pearson Education, Inc. Slide 1-4 ▪ The Gains from Trade • Many people are skeptical about importing goods that a country could produce for itself. • When countries sell goods and services to one another, all countries benefit. • Trade and income distribution – International trade might hurt some groups within nations. – Trade, technology, and wages of high and low-skilled workers. What is International Economics About?
What is International economics about? The Pattern of Trade(who sells what to whom?) Climate and resources determine the trade pattern of several goods In manufacturing and services the pattern of trade is more subtl -International difference in labor productivity The relative supplies of national resources such as capital, labor, and land on one side and the relative use of these factors in the production of different goods on the other A substantial random component There are two types of trade >>Interindustry trade depends on differences across countries >)Intraindustry trade depends on market size and occurs among similar countries Copyright C 2003 Pearson Education, Inc Slide 1-5
Copyright © 2003 Pearson Education, Inc. Slide 1-5 What is International Economics About? – The Pattern of Trade (who 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. -International difference in labor productivity. -The relative supplies of national resources such as capital, labor, and land on one side and the relative use of these factors in the production of different goods on the other. -A substantial random component. – There are two types of trade: » Interindustry trade depends on differences across countries. » Intraindustry trade depends on market size and occurs among similar countries