Read the summary and the most important questions on International economics

• Week 5 - Ch. 7 + Ch. 8

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• Dynamic increasing returns

  When costs fall with cumulative production over time rather than with the current rate of production, then it is a case of ...

• Infant industry argument

  The argument for temporary protection of industries to enable them to gain experience

• Week 6 - Ch. 9

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• Ad valorem tarrifs

  taxes that are levied as a fraction of the value of the imported goods (for example, a 25 percent U.S. tariff on imported trucks)

• Week 8 - Ch. 11 + Ch. 12

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• environmental Kuznets curve

  Empirical evidence suggests that as economies grow, they initially do increasing damage - but they become more environmentally friendly once they become sufficiently rich.

• Overig/Old exam

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• In international trade we distinguish between inter-industry trade and intra-industry trade. Intra-industry trade will tend to dominate trade flows in case of:

  Small differences between relative country factor availabilities

• A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries, and these two countries engage in trade one with the other, then we would expect

  each of the countries will export different varieties of the product to the other

• A key issue for developing countries is the fact that gains in global value chains (GVCs) are often distributed very unequally, particularly for the activities where integration first take place. Since the 1970s the distribution of gains has become

  more unequal, due to more intense competition between developing countries and transfer of technologies leading to cost savings.

• The main redistribution effect of a tariff is the transfer of income from

  Domestic consumers to domestic producers

• The effects of trade policy instruments like an import tariff or an export subsidy for a large country differ from the effects of these instruments for a small country

  An import tariff will improve the terms of trade of a large country, and an export subsidy will deteriorate the terms of trade of a large country.

• A voluntary exports restraint (VER) is a variant on the import quota. Compared to an import quota or a tariff, a VER is very costly to the importing country because

  The rent is earned by foreigners under the VER