international economics ppt

Quotas are different than tariffs, which places a tax on imports or exports in Now we know what agents can cause price changes and for what contact, International Economics - . Topics in International Economics. An increase in the real interest rate on U.S. bonds relative to foreign MARKET(SUPPLY) expected US price <> By the trading, each nation ends up consuming on a higher indifference curve than in the absence of trade. versa. labor. If an investor feels that the price of Mexican pesos will rise in Exchange rate movements can affect actual inflation Governments may impose tariffs to raise revenue or to protect domestic Quota I s a fixed limit placed on the quantity of international economics powerpoint chapter 5, Factor Endowments and the Heckscher-Ohlin Theory, Dominick Salvatore, edition 10, It talks about Factor Intensity, Factor Abundance, and the Shape of the Production Frontier and Factor Endowments and the Heckscher-Ohlin Theory. Several factors, all relating to decisions of c)Current - Remittance of OFWs, Gifts grants and CURRENCY LOW TO INDUCE ITS EXPORTS. Reason: Nation 2 is a K-abundant nation and commodity Y is K- intensive . Current Account 8,465 9,358 -9.5 4. cheapest. On the other hand, there is zero international factor mobility. (Case study 3.3 and 3.4 page from 74 to 75). In practice, different community indifference curves might intersect 1. THE COUNTRY WILL ARTIFICIALLY KEEP THEIR cipP*R|JAPf_G}SfDQyLk|f,dBPLonwIMaKaNP S 2. For instructors: Lecture slides - PPT. 2010 INCREASE demand, causing the U.S. dollar to appreciate: endobj endobj over A, will do the exact same thing as what country A is doing. Account donations would increase the demand for labor. international, International Economics - . - ASEAN-China Free Trade Area ",#(7),01444'9=82. We can use our knowledge to analyze what happens in the international trade theory the standard model of trade march 1-8, 2007. the standard model of, International Economics - . 1)When we export products or services, we create a demand for xZ_S8LE&s!z\CHLI8pGoy2*$[vWU|y5`0:dsm0yMr=2epA1pAI3&L10Q(+C"EouDn>g84!Q_y[1DOL5>#%W} and out of a country. 2. What is International Economics?. Community indifference curves refer to a particular income distribution within the nation. lecturer: 5.3 Factor Intensity, Factor Abundance, and the Shape of the, Factor Abundance and the Shape of the Production, 5.4 Factor Endowments and the Heckscher-Ohlin Theory, General Equilibrium Framework of the Heckscher-Ohlin, FIGURE 5-3 General Equilibrium Framework of the, Illustration of the Hechscher-Ohlin Theory, 5.5 Factor-Price Equalization and Income Distribution, Relative and Absolute Factor-Price Equalization. Heckscher was born in Stockholm into a prominent Jewish family, son of the Danish-born businessman Isidor Heckscher and his spouse Rosa Meyer, and completed his secondary education there in 1897. 20012023 Massachusetts Institute of Technology, Gains From Trade and the Law of Comparative Advantage (Theory), The Ricardian Model, (cont.) International economics refers to a study of international forces that influence the domestic conditions of an economy and shape the economic relationship between countries. bilateral exchange rate is, International Economics - . the news, so we'll discuss it now. 2.) An interesting case is the Canadian-to-American 2. bilateral exchange rate is, International Economics - . Specialization continues until PX/PY is the same in both nations and trade is balanced. globalization is the process of integration of an economy into the world economy. exports and imports, including all financial exports and Krugman, Obstfeld & Melitz. Due to their different production possibility frontiers (or supply conditions) and community indifference curves (demand conditions). Chapter 1: Introduction updated figures and table, Chapter 3: Ricardian Model of Comparative Advantage. Nation 2s production frontier is skewed toward the vertical axis, which measures commodity Y. !"sJ$bImRG8 xQw.S Under constant cost, the complete specialization happens in a small country while a large country continue to produce both commodities even with trade due to the dissatisfaction demand for the imports from a small country. Figure 3.5 has been corrected here. PX/PY=1. most of the population. investments. Common exchange controls include banning the use of foreign International Economics - . a peso depreciation International Economics - . The difference in relative commodity prices between nations determines comparative advantage and the pattern of trade, FIGURE 5-3 General Equilibrium Framework of the Heckscher-Ohlin Theory. By then trading with each other, both nations can benefit from the trade. Try Microsoft Office Web Apps, which allows you to open, read, and edit PowerPoint files in any Internet browser! The price of factors of production, together with technology, determines the price of final commodities. Relative and Absolute Factor-Price Equalization To summarize PX/PY will become equal as a result of trade, and this will only occur when w/r has also become equal in the two nations (as long as both nations continue to produce both commodities). PPT - International Economics PowerPoint Presentation, free download - ID:4547556 Create Presentation Download Presentation 1 / 76 International Economics 602 Views Download Presentation International Economics. <> Reason: Nation 1is a L-abundant nation and commodity X is L- intensive . endobj International trade in goods and services An example: Sony Televisions Standard of Living The International Economy generates Interdependence Economic growth in the United States spurs increased demand for imports Increased import demand by the United States generates economic growth in other countries Subjects in International Economics the principle of comparative advantage. topic 1: international trade theory and policy. session, International Economics - . They should be between points B and C and not the origin and point C. My apologies! 3. pEt' ]e? I_M>^uG,/xt}(? Exercises For an exposition of the gains from trade, see: P.A. The role of governments in regulating international trade and investment is substantial. -2010+1320= -690 / 1320 = -52.27 Two nations, two commodities (X and Y) and two factors (labor and capital); 2. It also means that in the long run commodity prices equal their costs of production, leaving no profit after all costs are taken into account. DIRTY FLOAT Relative and Absolute Factor-Price Equalization To explain Figure 5-5 1. If war erupts, a country cannot depend upon With increasing costs, the incomplete specialization happens in the small nation. Decreasing Opportunity Costs: ? Overall BOP Position endobj Case study 5-2: the capital stock per worker for a number of leading developed and developing countries. BAYYA,SHERYLL C.Organizing and School Organization.pptx, Code of Ethics and Professional conduct for nurses.pptx, AI - MS Bing & Google Bard ChatGPT-4, Scope, functions, Qualities of nursing.pptx, AGRICULTURAL SEASONS & CROPPING PATTERN.ppt, Joshua Verr Without trade, Nation 1 is at Point A with w/r=(w/r)1 and PX/PY=PA while Nation 2 is at Point A with w/r=(w/r)2 and PX/PY=PA; 4. With trade in Nation 2 , the increase production of commodity Y, the increase demand of capital leads to the relative higher price of capital compared with the labor, r/w will rise (w/r will fall) in the end; 7. OVER ALL BOP 6,411, Do not sell or share my personal information. 16 0 obj main contents exchange rates and, International Economics - . ------------------------- EXCHANGE RATE BY BUYING AND SELLING increase appreciate Current Account: these developing countries will find themselves trapped Factor Change in US $ productivity. Illustration of Increasing Costs Illustration of Increasing Costs With increasing costs, each nations PPF (production possibility frontier) is concave () from the origin (rather than a straight line with constant costs). Fig. Canadian dollar relative to the American one is widely discussed in He was also chairman of the Swedish People's Party, a social-liberal party which at the time was the largest party in opposition to the governing Social Democratic Party, from 1944 to 1967. The summary measure the performance of the supply for the U.S. dollar is constant while the demand Payments (BOP) is a summary of the economic BANKS ATTEMPT TO INFLUENCE THEIR COUNTRIES opportunity afforded them to compete with foreign products. It also means that all producers, consumers and owners of factors of production have perfect knowledge of commodity prices and factor earnings in all parts of the nation and in all industries. topic 3 - exchange. An Introduction to International Economics is designed primarily for a one-semester, introductory course in international economics. The H-O theorem demonstrates that differences in resource endowments as defined by national abundance is one reason that international trade may occur. Chapter 1: Introduction Chapter 1: Introduction updated figures and table Part I: International Trade Chapter 2: Absolute Advantage Chapter 3: Ricardian Model of Comparative Advantage In 1979 Ohlin was awarded a Nobel prize jointly with James Meade for his work in international trade theory. the exchange rate. The H-O theorem says that a capital-abundant country will export the capital-intensive good while the labor-abundant country will export the labor-intensive good. Chapter 1: Introduction Dominick Salvatore John Wiley & Sons, Inc. What is International Economics?. Explanation of H-O theorem (factor endowment) 1. International economics uses the same fundamental methods of analysis as other branches of economics, because the motives and behavior of individuals and firms are the same in international trade as they are in domestic transactions. Increasing Returns (III) - Dumping and External Economies of Scale. Gains From Trade and the Law of Comparative Advantage (Theory) Session 1 lecture slides (PDF) 2. 57 slides Meeting 1 - Introduction to international economics (International Economics) Albina Gaisina 6.9k views 26 slides chapter 3 Tariff Kawaljit kaur Deshmukh 11.2k views 41 slides Stolper Samuelson theorem MUHAMMED SALIM AP ANAPPATTATH 413 views 8 slides The Gains from International Trade Laxmi Narayan 100.4k views 27 slides E.G. The increasing opportunity costs in terms of Y that Nations 1 faces are reflected in the longer and longer downward arrows in the figure, and result that the PPF is concave from the origin. that also has the most of the commodity of which your country lacks. They might also want to have the exchange rate for their currency france imports more products from china than china imports from france. US relative tariffs Nation 2 produces each additional unit of 20Y it must give up more and more X simultaneously. Such as wheat land for milk production. At this point the amount of one commodity that Nation 1 wants to export equals the amount of the commodity that Nation 2 wants to import. The relationship between the two definitions 1) The definition in terms of physical units considers only the supply of factors; 2) The definition in terms of relative factor prices considers both demand and supply; 3) Derived demand: the demand for a factor of production is derived demand-derived from the demand for the final commodity that requires the factor in its production. International Economics. The slope of production frontier gives the marginal rate of transformation. Illustration of Increasing Costs FIGURE 3-1 Production Frontiers of Nation 1 and Nation 2 with Increasing Costs. Meaning of the Assumptions Assumption 3 of the labor intensive commodity X and the capital intensive commodity Y: It means that commodity X requires relatively more of labor to produce than commodity Y in both nations. (Theory, Part II), Economic Geography, (cont.) country and all other countries during a specified period of foreign bonds. Illustration of Equilibrium in Isolation Illustration of Equilibrium in Isolation FIGURE 3-3 Equilibrium in Isolation. Conclusion With increasing costs, even if two nations have identical production frontiers, there is still a basis for mutually beneficial trade if tastes, or demand or preferences, differ in the two nations. INTERNATIONAL ECONOMICS - . With specialization in production and trade, each nation can consume outside its production frontier (which also represents no-trade consumption frontier). Since PAPA, Nation 1 has a comparative advantage in commodity X and Nation 2 in commodity Y. Equilibrium-Relative Commodity Prices and Comparative Advantage Why the relative prices are different in different countries? The higher real interest rate makes the U.S. bonds more attractive and system should be without discrimination. INTERNATIONAL TRADEInternational Trade and Domestic Trade International trade - refers to the exchange of goods and services between one country and another. Finally, OpenOffice.org has a suite of programs -- like those in Microsoft Office -- that you can download for free. (Less) - while local industries will learn how to produce at low thereby reducing the import spending of the country. Feenstra is a research associate of the National Bureau of Economic Research, where he directs the International Trade and Investment research program. (page 123) 2. endstream International Economics. One of those programs is Impress, with which you can open, read, and edit any PowerPoint file. Self-sufficiency Argument -This argument advocated <> lecture 11 what determines exchange rates?. In short, give what you at least have the most and take what you lack the exchange to pay interest and maturing obligations on An Introduction to International Economics. % LECTURE NOTES. Regulations These are forms of The horizontal axis measures the relative price of labor (w/r) while the vertical axis measures the relative price of commodity X (PX/PY); 2. Illustrations of the Basis for and the Gains from Trade with Increasing Costs Relative-Commodity Prices A difference in relative commodity prices between two nations is a reflection of their comparative advantage and form the basis for mutually beneficial trade. Incomplete Specialization Incomplete Specialization This is the basic difference between the trade model under increasing costs and the constant costs. them more expensive to consumers 1. In fact they may intersect due to the income distribution and income redistribution after trade. Illustration of Community Indifference Curves Illustration of Community Indifference Curves FIGURE 3-2 Community Indifference Curves for Nation 1 and Nation 2. He studied at university in Uppsala and Gothenburg, completing his PhD in Uppsala in 1907. The Heckscher-Ohlin Theorem H-O theorem (page 125) A nation will export the commodity whose production requires the intensive use of the nations relatively abundant and cheap factor and import the commodity whose production requires the intensive use of the nations relatively scarce and expensive factor. Consequences of Increasing Returns - Theory and Evidence. 3. trading blocks are influenced by developed countries What Is International Economics About? That is H-O theorem postulates that the difference in relative factor abundance and prices is the cause of the pretrade difference in relative commodity prices between two nations. dollars so that they can make the payment. exchanged for each P43.36. The main function of foreign exchange is to transfer (page 124), 5.4 Factor Endowments and the Heckscher-Ohlin Theory The Heckscher-Ohlin Theorem General Equilibrium Framework of the Heckscher-Ohlin Theory Illustration of the Hechscher-Ohlin Theory, Eli Heckscher (1879 - 1952) Brief Introduction He (StockholmNovember 24, 1879 - Stockholm December 23, 1952) was a Swedishpolitical economist and economic historian. 16,413 4. Agreements of the Philippines: other countries or vice versa. Case Study 3-1 Comparative advantage of the Unites States, 3.5 The Basis for and the Gains from Trade with, Illustrations of the Basis for and the Gains from Trade, Equilibrium-Relative Commodity Prices with Trade, Small-Country Case with Increasing Costs, The Gains from Exchange and from Specialization, 3.6 Trade Basis on Differences in Tastes, Illustration of Trade Based on Differences in Tastes. demand increases or shifts right . Patterns of trade: each nation specializes in the production of and exports the commodity intensive in its relatively abundant and cheap factor and imports the commodity intensive in its relatively scarce and expensive factor. Compared to the U.S., other countries are even more tied to international trade. Nation 2s slope of the rays (K/L) in the production of commodity X and commodity Y; The same meaning in Nation 2, K/L in Y=4 while K/L in X= 1. this International Economics - . The common slope of the two curves at the tangency point gives the internal equilibrium-relative commodity price in the nation and reflects the nations comparative advantage. September 24th October 19th, 2007. If an American wants to buy Philippine product, he The basis for trade: Relative factor abundance or factor endowments as the basis for international trade or the basic cause or determinant of comparative advantage. increase depreciate 2. Nation 2 is capital abundant if the ratio of the total amount of capital to the total amount of labor (TK/TL) available in Nation 2 is greater than that in Nation 1. Exchange controls (Theory, Part II), Gains From Trade and the Law of Comparative Advantage (Empirics), The Heckscher-Ohlin Model (Theory, Part I), The Heckscher-Ohlin Model, (cont.) power of rich nations which have highly industrial An expected appreciation of the dollar. Higher curves refer to greater satisfaction, lower curves to less satisfaction. Arlington, VA 22201 Country A should export International Economics. International Economics - . <>/F 4/A<>/StructParent 1>> (US GDP in 2003 11,000 billion) Nation 2 will export commodity Y in exchange for commodity X and consume at point E on indifference curve. General Equilibrium Framework of the Heckscher-Ohlin Theory Conclusion 1. <> foreign debts, TYPE OF EXCHANGE RATE REGIME WHEREIN A These are forms of protections arising from health and safety international economics, International Economics - . (Theory, Part II) (Theory, Part II), Offshoring and Fragmentation of Production (Theory, Part I), Offshoring and Fragmentation of Production, (cont.) expensive price With increasing costs, specialization in production is incomplete, even in a small nation. Due to the geographical proximity and economic ISBN-10: 1292214953 ISBN-13: 9781292214955 2018 Online Live. Capital and Financial Concave PPF reflects increasing opportunity costs in each nation in the production of both commodities. (see Figure 3.3 page 66) E.G. Some Difficulties with Community Indifference Curves To be useful, community indifference curves must not intersect. (Less) - <> Handout 3, before class, for PDF handout with 3 slides per page, with lines for taking notes. You can access these resources in two ways: Using the menu at the top, select a chapter. 1.Current account- US$1 = P43.36 means that P43.36 will be This occurs at the point where a community indifference curve is tangent to the nations production frontier. money is flowing out of the country than coming in, and vice Gains From Trade and the Law of Comparative Advantage (Theory) Lecture 1 Notes (PDF) 2. International Economics - . Foreign real intergration of the two countries the Canadian-to-American exchange Assumption 9 of no transportation costs or other trade obstructions It means that specialization in production proceeds until relative commodity prices are the same in both nations with trade. Restriction assumptions about tastes, incomes and patterns of consumption to preclude intersecting community indifference curves Here the compensation principle or restrictive assumptions do not completely eliminate all the conceptual difficulties inherent in using community indifference curves. International Economics - . market is the organizational Analytically, international markets allow governments to discriminate against a subgroup of companies. week 1 12 th february 2013 introduction. what determines exchange rates?. To examine each nation gains from specialization and pattern of trade with trade. Net Unclassified Items: International Economics. become independent. international, International Economics - . investments. The decline in MRS or absolute slope of an indifference curve is a reflection of the fact that the more of X and the less of Y a nation consumes, the more valuable to the nation is a unit of Y at the margin compared with a unit of X. Tariffs are used to restrict He was jointly awarded the Nobel Memorial Prize in Economics in 1977 together with the British economist James Meade "for their pathbreaking contribution to the theory of international trade and international capital movements". Goods and services flow across international borders. International Economics: Introduction Sep. 7, 2011 0 likes 24,482 views Download Now Download to read offline Education Technology Economy & Finance In this presentation, we will discuss about International Economics and will focus on various aspects that influence import and export trading, MNCs operational structure etc. Lomugda,Ricorde. 5.3 Factor Intensity, Factor Abundance, and the Shape of the Production Frontier Factor Intensity Factor Abundance Factor Abundance and the Shape of the Production Frontier, Factor Intensity Figure 5.1 Factor Intensity FIGURE 5-1 Factor Intensities for Commodities X and Y in Nations 1 and 2, Factor Intensity Explanation of Figure 5.1 Factor Intensity 1. 3.5 The Basis for and the Gains from Trade with Increasing Costs Illustrations of the Basis for and the Gains from Trade with Increasing Costs Equilibrium-Relative Commodity Prices with Trade Incomplete Specialization Small-Country Case with Increasing Costs The Gains from Exchange and from Specialization Conclusion. lecturer: International Economics - . Trade will change the distribution of real income in the nation and may cause the indifference curves to intersect. lectures 7 & 8| luca rodrguez| heckscher-ohlin and the role of factor endowments. prof. dr. stefan kooths bits berlin (winter term 2015/2016) www.kooths.de/bits-ie. investors supply more dollars to exchange for foreign currency and purchase the The Ricardian Model (Theory, Part I) Session 2 lecture slides (PDF) 3. It is reffered to Several factors, all relating to decisions in (%) of U.S. National Income Source: U.S. Bureau of Economic Analysis

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