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International Trade ∙
Internasionale handel
Session ∙ Sessie 5:

Economic and Management Sciences | EyeNzululwazi ngoQoqosho noLawulo | Ekonomiese en Bestuurswetenskappe

 News ∙ Nuus
https://www.news24.com/fin24/companies/just-in-sa-strikes-deal-
with-eu-to-release-tons-of-oranges-stuck-at-harbours-20220810
Economic and Management Sciences | EyeNzululwazi ngoQoqosho noLawulo | Ekonomiese en Bestuurswetenskappe
What will I Learning Objectives Leerdoelwitte

learn in this Engaging with this sub-module content, you

Deur gefokus deur die inhoud van die sub-
module te werk, behoort studente:
module?
will learn to:  

  die huidige ekonomiese toestande en hul implikasies vir

Wat gaan ek in  Understand the current economic conditions and the

implications for economic growth and trade
prospects;√
ekonomiese groei- en handelsvooruitsigte te verstaan; √
* insig te put uit Internasionale Handelsteorieë wat
verduidelik waarom handel belangrik is;
hierdie module  * Gain insights from International Trade Theories that
explain why international trade matters;
te verstaan waarom, hoe en met watter impak owerhede in
internasionale handel inmeng;

leer?
 Understand why, how and to what effect governments die multilaterale handelsregime en hoe dit internasionale
intervene in international trade;
handel bevorder, verstaan;
 Understand the multilateral global trading system and
streeksintegrasie, die rationale, doelstellings, moontlikhede
how it advances trade amongst countries;
en struikelblokke daarby betrokke, te verstaan;
 Understand regional integration, its purpose, possibilities
and obstacles; die insigte uit die handelsteorieë te benut om te verstaan hoe

* today.  Use the insights from theory to understand how the

confluence of freer trade under the World Trade
die samevloei van vryer handel onder die
Wêrelhandelsorganisasie se Handelsfasiliteringsooreenkoms,
die Afrika Kontinentale Vryhandelsooreenkoms en die Vierde

vandag
Organisation’s Trade Facilitation Agreement, the African
Continental Free Trade Agreement and the Fourth Industriële Revolusie Afrika kan help om ekonomiese welvaart
Industrial Revolution can propel Africa into economic te skep, tenspyte van verskeie hindernisse en die Covid-19
prosperity, despite many obstacles and the Covid-19 pandemie.
pandemic.

3
 Theme 1: Tema 1:
Trade and economic growth Handel- en ekonomiese
prospects in the time of the Covid-19 groeivooruitsigte in die era van Covid-19
Content: pandemic and global uncertainty. √ en globale onsekerheid. √

International Is this the end of International Trade

and why did it matter in the first
Beteken dit die einde van internasionale
handel en waarom was handel in die
Trade. place? eerste plek so belangrik?
What are the significant barriers to Wat is die belangrikste beperkings op
* increased global trade and economic meer internasionale handel en
growth? ekonomiese groei?
Inhoud: READER: Jafta & Semenya, PART I & READER: Jafta & Semenya, PART I & II
Internasionale II

Handel

4
 Intra-
industry
trade
Intra-industrie handel

5
Economic and Management Sciences | EyeNzululwazi ngoQoqosho noLawulo | Ekonomiese en Bestuurswetenskappe
 In classical theories • In In ‘new’ trade theory • in
klassieke teorieë ‘nuwe’ handelsteorie
What was new
about the ‘new’
 Imperfect competition •
trade theory? onvolmaakte mededinging
*  Perfect competition •
volmaakte mededinging  Internal and external
Wat was nuut aan economies of scale • Interne
 Constant returns to scale •
die ‘nuwe’ konstante skaalopbrengs en eksterne skaalvoordele
 Increasing returns to scale
handelsteorie?  No technological change • possible • toenemende
geen tegnologiese skaalopbrengs moontlik
READER, p.21 verandering  Technological change •
Tegnologiese verandering
 Q1.9. How does Linder explain trade patterns on the basis of
overlapping demand? [6]

Today’s Q1.10. How does Paul Krugman explain the role of economies of
scale as basis for international trade? Substantiate your answer.
session [10]

* Vr.1.9.Hoe verklaar Linder handelspatrone op grond van

Vandag se ooreenstemmende vraag? [6]
sessie
Vr.1.10. Hoe verduidelik Paul Krugman die rol van skaalvoordele as
basis vir internasionale handel? Motiveer jou antwoord. [10]

• READER, pp.19-23

7
 “Martin Staffan Burenstam
Linder (born H. M. S. Linder, 13
September 1931 in Norberg, 
Västmanland, died 22 July 2000 in 
Djursholm) was a Swedish
 economist and conservative
politician. He was Swedish 
Minister for Trade from 1976–78
How can we make sense of
and from 1979-81”.
modern trade patterns (1)?
*
Hoe verklaar ons modern
handelspatrone (1)?
Unique contribution to
trade theory: the first to
 Intra-industry trade patterns
look at comparative
 • advantage from the
 Intra-industrie handelspatrone DEMAND side.
 (pp.19-21)

8
Clicker 2

9
Clicker Question
Lower per unit cost as a result of an
increase in production output due to
increased efficiency. This is an example
of what type of economy of scale?

10
Answer:
Technical Economies of
Scale
GROUP 1: 52.17% Score:
GROUP 2: 62.50% Group 1 Group 2

0 1
11
Clicker Question
A larger firm can get a better interest
rate from the bank, due to its lower
risk profile. This is an example of
what type of economy of scale?

12
Answer:
Financial Economies of
Scale
GROUP 1: 82.61% Score:
GROUP 2: 87.50% Group 1 Group 2

0 2
13
Clicker Question
As firms grow larger, they can benefit
from buying in bulk and at cheaper
prices. This is an example of what
type of economy of scale?

14
Answer:
Purchasing Economies of
Scale
GROUP 1: 95.65% Score:
GROUP 2: 87.50% Group 1 Group 2

1 2
15
Clicker Question
As a company grows bigger, so too does its
network and this makes it more attractive
to new customers. This is an example of
what type of economy of scale?

16
Answer:
Networking Economies of
Scale
GROUP 1: 82.61% Score:
GROUP 2: 91.67% Group 1 Group 2

1 3
17
Clicker Question
By allocating workers to specific tasks, they
can do them more effectively and efficiently.
Each employee has a different role that they
specialize in. This would be an example of
what type of economy of scale?

18
Answer:
Division of Labour
Economies of Scale
GROUP 1: 91.30% Score:
GROUP 2: 87.50% Group 1 Group 2

2 3
19
Wordle 1
Hint: one word

https://
mywordle.strivemath.com/?
word=liifseowej

20
Answer:
PURCHASING

21
 “Paul Robin Krugman born February 28,
1953 is an American economist who is the
Distinguished Professor of Economics at
the Graduate Center of the City
University of New York, and a columnist
for The New York Times. In 2008,
Krugman was awarded the Nobel
Memorial Prize in Economic Sciences for
How can we make sense of
his contributions to New Trade Theory
modern trade patterns (2)?
and New Economic Geography. The Prize
* Committee cited Krugman's work
Hoe verklaar ons modern explaining the patterns of international
handelspatrone (2)? trade and the geographic distribution of
economic activity, by examining the
 Intra-industry trade patterns effects of economies of scale and of
consumer preferences for diverse goods
 •
and services”.
 Intra-industrie handelspatrone
 (pp.21-23)

http://www.krugmanonline.com/
22
 In classical theories • In
What was new klassieke teorieë
about the ‘new’
trade theory?
*  Imperfect competition •
 Perfect competition •
Wat was nuut aan
volmaakte mededinging
die ‘nuwe’
 Constant returns to scale •
handelsteorie? konstante skaalopbrengs
 No technological change •
READER, p.21, 23 geen tegnologiese
verandering
In ‘new’ trade theory • in
‘nuwe’ handelsteorie
onvolmaakte mededinging
 Internal and external
economies of scale • Interne en
eksterne skaalvoordele
 Increasing returns to scale
possible • toenemende
skaalopbrengs moontlik
 *Technological change •
Tegnologiese verandering
 New inventions
Nuwe uitvindings

Economic and Management Sciences | EyeNzululwazi ngoQoqosho noLawulo | Ekonomiese en Bestuurswetenskappe 24


* NB: not the Mike Posner
who took a pill in Ibiza
How can we make sense of
modern trade patterns (3)?
*
Hoe verklaar ons modern
handelspatrone (3)?
 Intra-industry trade patterns
 •
 Intra-industrie handelspatrone
 (pp.23-24)
“Michael Vivian Posner* CBE was
a University of Cambridge
economics lecturer turned
government adviser, who later
worked to safeguard social
science research in the United
Kingdom. Born: 25 August 1931, 
London, United Kingdom
Died: 14 February 2006”.
Unique contribution to
trade theory: introduced
technological change as
cause of comparative
advantage and explained
CA in dynamic sense.
25

How can we make sense of
modern trade patterns (4)?
* of International Affairs at the
Hoe verklaar ons modern
handelspatrone (4)?
 Intra-industry trade patterns
 •
 Intra-industrie handelspatrone
 (pp.25-27)
“Raymond Vernon (September 1, 1913
– August 26, 1999) was an American 
economist. He was a member of the
group that developed the 
Marshall Plan after World War II and
later played a role in the development
of the International Monetary Fund
 and the 
General Agreement on Tariffs and Trad
e
. He was the Clarence Dillon Professor
 
Kennedy School of Government at 
Harvard University, becoming emeritus
 on his retirement. His formulation of
the Product life-cycle theory of US
exports, first published in 1966, in turn
influenced the behavior of
companies.”
26
 Remember to think of
real world examples for
life cycles of products
*
Onthou om werklike
voorbeelde van
produkte en hulle
lewenssiklus te vind

Test yourself: complete Q1.11 & 1.12. Toets

jouself: voltooi Vr. 1.11 & 1.12 27
 Next session: Q1.13. Explain three justifications for restrictions on trade with the aid
Why do governments intervene in of real world examples. [10]
International trade?
 
How does government intervene,
i.e. what are the instruments that Q1.14. Name and describe briefly five non-tariff restrictions. [10]
they use?

* Vr.1.13. Verduidelike drie regverdigings (redes) vir beperkings op handel

met behulp van werklike voorbeelde. [10]
Volgende sessie:
Waarom meng owerhede in
internasionale handel in?
Vr.1.14. Noem en verduidelik kortliks vyf nie-tariefbeperkings. [10]
 
Hoe meng owerhede in, m.a.w
watter instrumente gebruik
hulle?

READER, pp.28-34 28