2. International Trade theory and policy (2011)

Apunte Inglés
Universidad Universidad Internacional de Cataluña (UIC)
Grado Administración y Dirección de Empresas (ADE) English Programme - 1º curso
Asignatura World Economics
Año del apunte 2011
Páginas 2
Fecha de subida 05/06/2014
Descargas 2
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International  Trade  Theory  &  Policy:       •International  Trade:  exchange  of  goods  and  services  between  economic  agents  within   different  sovereign  states   o Special  Features:   § Goods  cross  borders  (trade  barriers  or  other  limitations)   § Transactions  involve  different  currencies  (a  system  to  convert  them  is   necessary  and  there  has  to  be  a  exchange  rate)   • Actions  of  the  governments   o Against:  Protecting/  promoting  international  industries   § Limiting  exports   § Subsiding  exports   o Pro:  remove  of  barriers  (free  trade  areas,  regional  trade  agreements:  WTO)   • Consequences:   o Less  technologically  advanced  countries  fear  that  they  wont  be  able  to  compete   o Technologically  advanced  nations  fear  that  trade  with  lower  wage  countries  will   lower  their  life  standards.   • Reasons  to  trade:   o To  take  advantage  of  the  differences  between  countries  (comparative  advantages,   factors  of  production)   o Specialization  +  exchange  is  the  alternative  to  autarky   o Economies  of  scale:  producing  goods  at  a  larger,  more  efficient  scale   • Kinds  of  trade:   o Classical  Theory   § Comparative  advantages:  implies  that  every  country  can  gain  from  trade  by   finding  a  place  in  the  international  division  of  labor   § Absolute  advantage:  clear  difference  on  who  should  do  what   § Comparative  advantage:  not  that  clear.   • A  country  has  a  comparative  advantage  at  producing  a  good  when  the   opportunity  cost  is  lower  than  to  other  countries   • When  the  term  of  trade  is  1  both  countries  will  specialize.   • BUT  it  doesn’t  consider  factor  mobility   • BUT  it  doesn’t  consider  tensions  derived  from  trade   § Factors  of  production:  Differences  based  on  resources,  not  productivity   • Emphasis  on  the  proportion  of  resources  (availability  of  factors  of   production)   • Capital-­‐intensive  countries:  are  the  ones  that  invest  a  lot  in   technological  innovation,  equipment,  high  skilled  labor,  etc.   • The  abundant  factor  ends  up  better  off  and  the  scarce  one  ends  up   worse  off.   o New  Trade  Theory:  explains  a  growing  trend  of  intraindustry  trade.   § Intraindustry  transactions  are  opposite  to  interindustry  trade   • Interindustry:  reflects  comparative  advantage   • Intraindustry  trade:  countries  with  similar  capital-­‐labor  ratio  produce   differentiated  products.       Advantages:   • Consumers  gain  wider  variety  of  products   o Horizontal  differentiation  (different  features)   o Vertical  differentiation  (different  quality  and  price  range)   • Pro-­‐competitive  effect:  opening  of  the  market  increases  the  effect  of   competition.   § Implications:  advanced  technologies  +  critical  mass  with  purchasing  power   • Of  interindustry  trade:  negative  income  distribution  impacts   • Of  intraindustry  trade:   o Lower  costs  and  higher  efficiencies  à  economies  of  scale   o Doesn’t  imply  social  conflict   § Intraindustry  trade  is  not  exclusive  for  industrialized  countries   (Disintegration  of  the  production  chain)   § Economic  and  commercial  integration   o Trade  Policy:   § Liberalism  vs.  protectionism   • Liberalism:  opening  free  markets   o Efficiency  gains  linked  to  comparative  advantage   • Protectionism:  discriminating  against  foreign  products   o Allows  national  companies  to  grow  initially  in  a  protected   environment  from  competitors  (infant  industry  argument)   o Social  and  environmental  dumping   § Lower  wages  of  unskilled  workers  in  developing   countries  bring  down  the  wages  of  the  ones  in  develop   countries)   § More  relaxed  environmental  standards   § Effects  of  tariffs  (tax  applied  when  a  good  is  imported  à  provides  revenue   and  protects  particular  domestic  sectors)   • They  create  inefficiencies   § Export  subsidies:  a  payment  from  the  government  to  a  firm  that  exports  to   foreign  markets.   § Import  quotas:  restrictions  of  the  quantities  imports,  raises  the  domestic   prices  and  the  government  doesn’t  get  any  revenue.   § Voluntary  export  restraints  (not  that  common):    a  quota  on  trade  imposed   by  the  exporting  country  at  the  request  of  the  importer.   o Process  of  Liberalization:  economic  order  designed  that  allows  traders  to  trade   across  national  boundaries  without  interference  from  the  respective  governments   § ...