Internationale omo I s will help students to futher learn about the inner workings of nations economies and how the engage in international trade, further more it helps them understand how globalization affects countries economies both negatively and positively and how diplomacy comes in.
INSTITUTE SUPERIEUR DE COMMUNICATION
D’ORGANIZATION ET DE MANAGEMENT.
TABLE OF CONTENT
● INTRODUCTION.
● FUTHER ILLUSTRATION OF INTERNATIONAL ECONOMICS WITH THE USE OF
DIAGRAMS.
● DEFINITION OF INTERNATIONAL ECONOMICS .
● KEY TAKE AWAY POINTS
● THE FIVE CONCEPTS OF INTERNATIONAL ECONOMICS.
● CONCLUSION.
● .
INTRODUCTION
International economics is growing in importance as a field of study because of the rapid
integration of international economic markets. Increasingly, businesses, consumers, and
governments realize that their lives are affected not only by what goes on in their own town,
state, or country but also by what is happening around the world. Consumers can walk into
their local shops today and buy goods and services from all over the world. Local businesses
must compete with these foreign products. However, many of these same businesses also
have new opportunities to expand their markets by selling to a multitude of consumers in
other countries. The advance of telecommunications is also rapidly reducing the cost of
providing services internationally, while the Internet will assuredly change the nature of many
products and services as it expands markets even further.
One simple way to see the rising importance of international economics is to look at the
growth of exports in the world during the past fifty or more years. Figure 1.1 "World Exports,
1948–2008 (in Billions of U.S. Dollars)" shows the overall annual exports measured in
billions of U.S. dollars from 1948 to 2008. Recognizing that one country’s exports are
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, another country’s imports, one can see the exponential growth in outflows and inflows during
the past fifty years.
Figure 1.1 World Exports, 1948–2008 (in Billions of U.S. Dollars)
However, rapid growth in the value of exports does not necessarily indicate that trade is
becoming more important. A better method is to look at the share of traded goods in relation
to the size of the world economy. Figure 1.2 "World Exports, 1970–2008 (Percentage of
World GDP)" shows world exports as a percentage of the world gross domestic product
(GDP) for the years 1970 to 2008. It shows a steady increase in trade as a share of the size
of the world economy. World exports grew from just over 10 percent of the GDP in 1970 to
over 30 percent by 2008. Thus trade is not only rising rapidly in absolute terms; it is
becoming relatively more important too.
One other indicator of world interconnectedness can be seen in changes in the amount of
foreign direct investment (FDI). FDI is foreign ownership of productive activities and thus is
another way in which foreign economic influence can affect a country. Figure 1.3 "World
Inward FDI Stocks, 1980–2007 (Percentage of World GDP)" shows the stock, or the sum
total value, of FDI around the world taken as a percentage of the world GDP between 1980
and 2007. It gives an indication of the importance of foreign ownership and influence around
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