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• Lecture , Chapter 1: The International Economy & Globalization

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• International economy concerns the flow of?

  1. Commodities
  2. Services
  3. Productive factors. 

  All across national boundaries

• 6 Identifiable areas of the Conduct of Trade are:

  1. Exchange rates
  2. Commercial policies
  3. Different domestic policies
  4. Statistical data
  5. Relative immobility of productive factors
  6. Marketing considerations.     

• Forums for trade & Monetary issues:

  1. World Trade Organization (WTO)
  2. International Monetary Fund (IMF)
  3. The European Union EU / NAFTA
  4. World Bank
  5. Group of Industrial Countries G5/G7/G10
  6. The United Nations Conference on Trade & Development (UNCTAD)
  7. Organization for economic cooperation and development (OECD)      

• What do Trading Partners?

  1. The international movement of goods and / or services
  2. Labor
  3. Business enterprise
  4. Investment funds
  5. Technology     

• What forces are driving globalization?

  1. Technical talent
  2. Multilateral trade negotiations
  3. Continuing liberalization of trade and investment
  4. Widespread liberalization of investment transactions
  5. Development of international financial markets.    

• Trade Patterns & Openness

  Openness measures how important international trade is within a nation's economy by using the percentage of all imports, exports, and GDP of a country.

• The Law of Comparative Advantage states:

  1. Citizens of each nation must gain.
  2. All nations must spend more of their time and resources doing those things in which they have a relative advantage.
  3. If a good can be obtained more economically through trade.
  4. Trade for it instead of producing it domestically.
  5. Use the available resources to obtain all goods for the lowest possible costs.    

• Traits of open economies are:

  1. Produce a larger joint output.
  2. Competition of innovation and production.
  3. International competition
  4. Domestic producers: strong incentive to improve the quality of their products.
  5. Weakens monopolies.
  6. More competition.
  7. More firm turnover.
  8. Improvements for the industry.          

• Economic growth rates are related to:

  1. Openness to trade
  2. Education
  3. Communications infrastructure.  

• The fallacies (misconcepties) of globalization are:

  1. Import reduces employment
  2. Export promotes growth and employment
  3. All import restrictions will save jobs and promote more employment.