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Summary International Economics - Theory and Policy
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Samenvatting van het boek International Economics Theory and Policy (10th edition)
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International Economics – Theory and PolicyHoofdstuk 1 Introduction
David Hume Of the Balance of Trade (first real exposition of an economic model).
International trade has roughly tripled in importance compared with the economy as a
whole. Imports has grown more than exports. The US pay for all those imports by
large inflows of capital (money invested by foreigners willing to take a stake in the US
economy).
Sovereign states = alleenheersend land (bijv. US en Mexico; Hawaï en Florida niet).
The gains from trade (H3,4,5,6,20) = when countries sell goods and services to each
other, this exchange is almost always to their mutual (wederzijds) benefit. The range
of circumstances under which international trade is beneficial is very wide. For
example, it is a common misconception that trade is harmful if large disparities exist
between countries in productivity or wages. International trade also allows countries
to specialize in producing narrower ranges of goods, giving them greater efficiencies
of large-scale production. Not only trade in tangible goods, but also international
migration, international borrowing and lending. So goods and services. Or a trade of
current goods for the promise of future goods. Except this, stocks and bond are also
tradable.
International trade leads to gain, but sometimes it can hurt some groups That
international trade will have strong effects on the distribution of income.
The pattern of trade (H3,5,7,8)= who sells what to whom.
How much trade? (H9, 10)
16th century => protectionist policies
1990 => removing barriers >> Free trade agreements:
- NAFTA (North American Free Trade Agreement) = agreement between US,
Canada and Mexico (1993)
- Uruguay Round agreement (World trade organization 1994)
Now => framework, but government do not necessarily do what the cost-
benefit analysis of economists tells them they should. Conflicts of interest
within nations are usually more important in determining trade policy than
conflicts of interest between nations. H4,5 trade has usually very strong
effects on income distribution within countries. H10-12 the relative power of
different interest group within countries, rather than some measure of overall
national interest, is often the main determining factor in government policies
toward international trade.
Balance of Payments (H8, 13, 17-22)
Foreign direct investment by multinational corporation (H8)
International transactions to national income accounting (H13)
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