Chapter 1
Introduction
Copyright? 2003 Pearson Education,Inc,Slide 1-2
Introduction
What is International Economics About?
International Economics,Trade and Money
Copyright? 2003 Pearson Education,Inc,Slide 1-3
International economics deals with economic
interactions that occur between independent nations.
The role of governments in regulating international trade
and investment is substantial（ 重要的）,
Analytically,international markets allow governments to
discriminate against a subgroup of companies.
Governments also control the supply of currency.
There are several issues that recur throughout the study
of international economics.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-4
The Gains from Trade
Many people are skeptical about importing goods that a country could produce for itself.
When countries sell goods and services to one another,all countries benefit.
Trade and income distribution
– International trade might hurt some groups within nations.
– Trade,technology,and wages of high and low-skilled workers.
What is International Economics About?
– The Pattern of Trade (who sells what to whom?)
– Climate and resources determine the trade pattern of several goods.
– In manufacturing and services the pattern of trade is more subtle.
-International difference in labor productivity.
-The relative supplies of national resources such as capital,labor,and land on
one side and the relative use of these factors in the production of different
goods on the other.
-A substantial random component.
– There are two types of trade:
Interindustry trade depends on differences across countries.
Intraindustry trade depends on market size and occurs among similar
countries.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-5
Protectionism?
Many governments are trying to shield certain industries
from international competition.
This has created the debate dealing with the costs and
benefits of protection relative to free trade.
– Advanced countries’ policies engage in industrial targeting.
– Developing countries’ policies promote industrialization:
– Import substitutionversus export promotion industrialization.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-6
The Balance of Payments
Some countries run large trade surpluses.
– For example,in 1998 both China and South Korea ran
trade surpluses of about $40 billion each.
Is it good to run a trade surplus and bad to run a trade
deficit?
Exchange Rate Determination
The role of changing (floating)exchange rates is at the
center of international economics.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-7
What is
International Economics About?
International Policy Coordination
A fundamental problem in international economics is how to
produce an acceptable degree of harmony among the
international trade and monetary policies of different countries
without a world government that tells countries what to do.
The International Capital Market
There are risks associated with international capital markets:
– Currency depreciation（ 货币贬值）
– National default（ 违约）
Copyright? 2003 Pearson Education,Inc,Slide 1-8
International Economics:
Trade and Money
International trade analysis focuses primarily on the
real transactions in the international economy.
These transactions involve a physical movement of
goods or a tangible commitment of economic
resources.
–Example,The conflict between the United States and
Europe over Europe’s subsidized （ 津贴） exports of
agricultural products
Copyright? 2003 Pearson Education,Inc,Slide 1-9
International monetary （ 国际金融） analysis
focuses on the monetary side of the international
economy,
That is,financial transactions such as foreign
purchases of U.S,dollars.
– Example,The dispute over whether the foreign
exchange value of the dollar should be allowed to float
freely or be stabilized by government action
International Economics:
Trade and Money
Copyright? 2003 Pearson Education,Inc,Slide 1-10
International trade issues
Part I,International Trade Theory
Part II,International Trade Policy
International monetary issues
Part III,Exchange Rates and Open-Economy
Macroeconomics
Part IV,International Macroeconomic Policy
International Economics:
Trade and Money
Introduction
Copyright? 2003 Pearson Education,Inc,Slide 1-2
Introduction
What is International Economics About?
International Economics,Trade and Money
Copyright? 2003 Pearson Education,Inc,Slide 1-3
International economics deals with economic
interactions that occur between independent nations.
The role of governments in regulating international trade
and investment is substantial（ 重要的）,
Analytically,international markets allow governments to
discriminate against a subgroup of companies.
Governments also control the supply of currency.
There are several issues that recur throughout the study
of international economics.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-4
The Gains from Trade
Many people are skeptical about importing goods that a country could produce for itself.
When countries sell goods and services to one another,all countries benefit.
Trade and income distribution
– International trade might hurt some groups within nations.
– Trade,technology,and wages of high and low-skilled workers.
What is International Economics About?
– The Pattern of Trade (who sells what to whom?)
– Climate and resources determine the trade pattern of several goods.
– In manufacturing and services the pattern of trade is more subtle.
-International difference in labor productivity.
-The relative supplies of national resources such as capital,labor,and land on
one side and the relative use of these factors in the production of different
goods on the other.
-A substantial random component.
– There are two types of trade:
Interindustry trade depends on differences across countries.
Intraindustry trade depends on market size and occurs among similar
countries.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-5
Protectionism?
Many governments are trying to shield certain industries
from international competition.
This has created the debate dealing with the costs and
benefits of protection relative to free trade.
– Advanced countries’ policies engage in industrial targeting.
– Developing countries’ policies promote industrialization:
– Import substitutionversus export promotion industrialization.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-6
The Balance of Payments
Some countries run large trade surpluses.
– For example,in 1998 both China and South Korea ran
trade surpluses of about $40 billion each.
Is it good to run a trade surplus and bad to run a trade
deficit?
Exchange Rate Determination
The role of changing (floating)exchange rates is at the
center of international economics.
What is
International Economics About?
Copyright? 2003 Pearson Education,Inc,Slide 1-7
What is
International Economics About?
International Policy Coordination
A fundamental problem in international economics is how to
produce an acceptable degree of harmony among the
international trade and monetary policies of different countries
without a world government that tells countries what to do.
The International Capital Market
There are risks associated with international capital markets:
– Currency depreciation（ 货币贬值）
– National default（ 违约）
Copyright? 2003 Pearson Education,Inc,Slide 1-8
International Economics:
Trade and Money
International trade analysis focuses primarily on the
real transactions in the international economy.
These transactions involve a physical movement of
goods or a tangible commitment of economic
resources.
–Example,The conflict between the United States and
Europe over Europe’s subsidized （ 津贴） exports of
agricultural products
Copyright? 2003 Pearson Education,Inc,Slide 1-9
International monetary （ 国际金融） analysis
focuses on the monetary side of the international
economy,
That is,financial transactions such as foreign
purchases of U.S,dollars.
– Example,The dispute over whether the foreign
exchange value of the dollar should be allowed to float
freely or be stabilized by government action
International Economics:
Trade and Money
Copyright? 2003 Pearson Education,Inc,Slide 1-10
International trade issues
Part I,International Trade Theory
Part II,International Trade Policy
International monetary issues
Part III,Exchange Rates and Open-Economy
Macroeconomics
Part IV,International Macroeconomic Policy
International Economics:
Trade and Money
