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|
|Año del apunte||2011|
|Fecha de subida||05/06/2014|
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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 § ...