Supplementary slides 1

Questions
• How do we know there is a foreign market interaction in the our
market
Section 1: Important questions to be asked

• Does international trade merit its own attention

• How is trade recorded
• Reasons for countries to trade
• How do we explain trade
• Does foreign trade positively impact on a country’s welfare
Does international trade merit its own attention

• Competition
• Inside/outside
• Import/exports
• Task?
• Measuring openness
• Factors influencing X/M
• agricultural
• Manufacturing
• Agricultural vs manufacturing & experience by RSA
• Task?
Continued
• Borders
• Distance?
• Others
• Tradeable products (modern products)
How is trade recorded
Accounting concept…current account….balance sheet item under
international transactions
Why and how do countries trade
• Specialisation….two forms
• Pros?
• Example
• Link between firms and countries
• X (efficient)/M
• Trade is linked to? CD
continued
• Absolute advantage
• What is this?
• founder
• Biggest issue with model
• example
• Terms of trade approach/CA
• What is this?
• Founder
• example
Continued
• Michael Porter (1990) take on CA
• Firm competitiveness is linked to country competitiveness
• Demand, factor conditions, relationships, supporting
industries, rivalry of firms
continued
• Main issues with AA/CA
• Factors or production
• Opportunity costs
• Factors of production and combinations
• Not like for like replacement
• Type of worker
• Capital vs labour intensive good
So does foreign trade positively impact on
welfare ?
So does foreign trade positively impact on
welfare ?
• X link to GDP
• X link to E
• Cheap M
• Choice
• Competition
So why if trade is good why do we have
interference
• Govt
• Revenue
• Protectionism
• Import substitution
• Export orientated growth
• How do we protect locally and overseas, NTBS? Natural Barriers
(distance and risk)?
• Removing barriers protectionism
Removing barriers
• FTA/WTO/Customs union
Section 2 history of trade
• 1000-1820
• Prior WWI
• Prior WWII
• Lesson learnt (GATT-general agreement on tariff and trade)

• Three forms of trade

• High tariffs-restrict
• Low tariffs but subsidies-manage
• Unbridled (regulation low)
• Having established ideas of free trade
• Why is international trade important
• Moving to borderless countries
• Multinationals/ conglomerates/ value chain systems
• Those with exports and more international ties have grown faster than their
other counterparts
• Those who haven’t e.g. low income countries
• Politics
• Infrastructure
• Wealthy countries policies against (double standards)
Self study
• Composition of trades
• Changes in primary and manufactured good patterns
• Most traded
• Biggest trader
• General patterns of trade
• Imports and exports (most. Largest)
• Trade organisations and roles
• UN/WTO/IMF ect.
Regional Integration [RI]
• Why do they exist
• Conflict, FTA, Trade blocs
• Issues with RI
• Trade diversion
• EXAMPLE: NAFTA
• Geography
• Location
• mobility
• Resources
• Entrepreneurial culture
• Labour, manufacturing skills. Technology capacity
• Based on treaty and actual effort
Linear integration
• FTA-CU-CM-EU-PU