International economics relates to study of economics inclusive of the foreign sector. The domestic conditions of an economy are shaped by the economic interrelationship between countries. In other words, we can say that international economics deals with the economic activities of various countries and their consequences. Thus, the students of economics should have in-depth understanding about the international economic. The principle of comparative advantage has been the basis of international trade for over a century. When a country enters into trade with some other country, it will export those commodities in which its comparative costs of production are less, and will import those commodities in which its comparative costs of production are high. This book discusses Ricardo's theory of international trade. The modified Ricardian model; on the basis of rectification of its drawbacks; Haberler's Opportunity Cost is undertaken. The importance and impacts of factor endowment and factor price on trade and intensity is discussed. This text examines understands Leontief Paradox, Stolper Samuelson Theorem: Factor Price Equalization Theorem and International Trade and Imperfect Competition. The Terms of Trade is the ratio of export price to imports. By understanding the concept of Terms of Trade, we can easily calculate whether the terms of trade between the countries is favorable or unfavorable. Thus, we have discussed Terms of Trade comprehensively. The reader will learn about the relaxation in the assumption of factor constancy and its subsequent outcomes in the fifth unit. The Ryvczynski Theorem, Stolper-Samuelson theorem, immiserizing growth and finally technical changes are discussed. A Balance of Payment Account is a systematic record of all economic transactions between residents of a country and the rest of the world carried out in a specific period.
Simeon Alder joined the SIS faculty in the Fall of 2013 with research and teaching expertise in international economics. Prior to moving to Washington, he was Professor of International Economics and Director of the Globalization and Economic Policy Research Centre at the University of Nottingham. Previously he taught at Clark University. He also held visiting positions at Brandeis University, Tufts University, University of Munich, University of Bordeaux, University of Tokyo and Ritsumeikan University. Simeon has published widely on the theoretical, empirical and historical aspects of international trade. His research has appeared in outlets such as the American Economic Review, the Journal of Political Economy, the Journal of Economic Perspectives and the Journal of International Economics. He is also co-editor of the Handbook of International Trade. His research has been funded by the National Science Foundation, the Leverhulme Trust, the British Academy and the Alexander von Humboldt Foundation.
Preface 1. INTERNATIONAL TRADE THEORY ........................................................1 1.1 Who Trades With Whom? 1.2 The Changing Pattern of World Trade 1.3 Do Old Rules Still Apply? 1.4 Summary 2. FINANCIAL GLOBALIZATION: OPPORTUNITY AND CRISIS...................................................................15 2.1 The International Capital Market and The Gains From Trade 2.2 International Banking and The International Capital Market 2.3 Regulating International Banking 2.4 How Well Have International Financial Markets Allocated Capital and Risk? 2.5 Summary 3. THE INSTRUMENTS OF TRADE POLICY.............................................50 3.1 Basic Tariff Analysis 3.2 Costs and Benefits of A Tariff 3.3 Other Instruments of Trade Policy 3.4 The Effects of Trade Policy 3.5 Summary 4. TRADE REGULATIONS AND INDUSTRIAL POLICIES............................................................................73 4.1 U.S. Tariff Policies Before 1930 4.2 Smoot-Hawley Act 4.3 Reciprocal Trade Agreements Act 4.4 General Agreement On Tariffs and Trade 4.5 World Trade Organization 4.6 From Doha To Hong Kong: Failed Trade Negotiations 4.7 Trade Promotion Authority (Fast-Track Authority) 4.8 Safeguards (The Escape Clause): Emergency Protection From Imports 4.9 Antidumping Duties: Protection Against Foreign Dumping 4.10 Section 301: Protection Against Unfair Trading Practices 4.11 Trade Adjustment Assistance 4.12 Industrial Policies of The United States 4.13 Industrial Policies of Japan 4.14 Economic Sanctions 4.15 Summary 5. REGIONAL TRADING ARRANGEMENTS............................................122 5.1 Regional Integration Versus Multilateralism 5.2 Types of Regional Trading Arrangements 5.3 Impetus For Regionalism 5.4 Effects of A Regional Trading Arrangement 5.5 The European Union 5.6 Economic Costs and Benefits of A Common Currency: The European Monetary Union 5.7 North American Free Trade Agreement 5.8 Free Trade Area of The Americas 5.9 Asia-Pacific Economic Cooperation 5.10 Transition Economies 5.11 Summary 6. DEVELOPING COUNTRIES: TRADE POLICY....................................163 6.1 Import-Substituting Industrialization 6.2 Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization 6.3 Trade Liberalization Since 1985 6.4 Summary 7. CONTROVERSIES IN TRADE POLICY.................................................178 7.1 Sophisticated Arguments For Activist Trade Policy 7.2 Globalization and Low-Wage Labor 7.3 Globalization and The Environment 7.4 Summary 8. THE BALANCE OF PAYMENTS............................................................203 8.1 Double-Entry Accounting 8.2 Balance-Of-Payments Structure 8.3 U.S. Balance of Payments 8.4 What Does A Current Account Deficit (Surplus) Mean? 8.5 Balance of International Indebtedness 8.6 Summary 9. NATIONAL INCOME ACCOUNTING AND THE BALANCE OF PAYMENTS...................................................232 9.1 The National Income Accounts 9.2 National Income Accounting For An Ope
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