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Definition of international trade
International trade is the exchange that is based on the voluntary
will of each country. The motive is to gain trade benefits or gains
of trade.
FUNCTIONS OF INTERNATIONAL TRADE
INCREASED ECONOMIC
GROWTH ACCELERATING
ECONOMIC GROWTH OF A
COUNTRY
PRODUCTION
TECHNOLOGY USE ANY
BETTER
Roduk INCREASED
COMPETITIVENESS
NATIONAL PRODUCTION
INCREASED
Benefits of International Trade
Improving the
country's
Streamlining
foreign
exchange
export activities
earnings (public
exchange)
Imports of
goods needed
help domestic
industry
Intensified the
domestic
industry
Increase
incomes /
population
Encouraging
business growth
The emergence of International Trade
Because not all types of resources are adequately possessed by
a country including developed countries
The big difference in production resources, differences in the
distribution system, and the difference in taste / consumption
patterns from country to country
The main driving factor is the existence of international trade is
the desire to realize the acceleration of the country prosperity
MATTERS RELATING TO INTERNATIONAL TRADE
• INTERNATIONAL TRADE THEORY
• the Mercantilism
• Absolute Excellence (Absolute Advantage) by
Adam Smith
• Comparative Advantage (Comparative
advantage) by David Ricardo
INTERNATIONAL TRADE THEORY mercantilism
 Source of prosperity lies in the amount of precious metal inventories and the export surplus reached
on the value of imports
Steps to realize that:
1. Increase exports
2. Restricting imports
3. Extending the colony / colony in order to obtain
precious metals or raw materials are cheap
4. Obtain a monopoly of trade
The advantages obtained a state for running specialization (international division of labor)
Example-1. Consider the following data:
The production of batik cloth and cars per day before going bilateral trade as follows:
Production country Batik
Car Production
Indonesia 100 yards = 1 day
10 cars = 4 days
American 100 yards = 2 days
10 cars = 1 day
From the table above, we can conclude that:
Indonesia is absolutely more efficient when focusing (specialization) in the production of batik cloth.
The United specialization on car production.
That occurs in bilateral trade:
Indonesia will export batik cloth to America and America will export cars to Indonesia.
The advantages obtained a state for running specialization (international division of labor)
EXAMPLE 2. Consider the following data:
The production of cloth and wine for each unit of resource per day before the bilateral trade as follows:
Production Fabric
Production Wine Country
England 20 yard
125 bottles
Portugal 25 yards
60 bottles
Asked:
1. Production table after a run of specialization
2. Countries exporting / importing fabrics and wine
3. Table production after bilateral perdag, if known ds.tk 1 yard of fabric = 5 bottles of wine and a country that is
called as importer pd point 2 above will import as much as 100 bottles of wine
4. Make analysis of the advantages of specialization
Let us answer the question? EXAMPLE 2 one by one:
1.
Table cloths and wine production after a run of specialization:
Production Fabric
England
- yard
Portugal
50 yards
2.
Production Wine Country
250 bottles
- bottle
From the trade the UK as a wine exporter and importer of cloth while Portugal as an exporter of cloth and wine importer
3. Table production after the bilateral trade:
Production Fabric
England 20 yard
Portugal 30 yards
Production Wine Country
150 bottles
100 bottles
4. Efficiency Analysis:
Before occur After Gains / Losses
English
Fabric 20 yards 20 yards
125 wine bottles
150 bottles
25 bottles /
Portugal
Fabric 25 yards 30 yards
60 wine bottles
100 bottles
0 yards /
5 yards / -
40 bottles / -
-
PROBLEMS ONE
Consider the following data:
Overview of the work of one person per day is shown in the following table:
State
India
Rice Production
Fabric Production
20 yards 40 tons
Indonesia 60 yards 48 tons
Basis Swap Home Affairs
1 yard of fabric = 2 tons of rice
1 yard of fabric = 0.8 tonnes of paddy
Asked:
Based on the above data, in case of arriving sarkan interbnasional trade foreign exchange rate, what is
the advantage to the domestic market each country?
FOR EXAMPLE ONE
INDIA :
1 yard fabric= 2 ton paddy
1 ton paddy = 0,5 yard fabric
Negara
• India
• Indonesia
Specialization
Paddy
fabric
INDONESIA
1 yard fabric= 48/60 = 0,8 ton paddy
1 ton paddy = 60/48 = 1,25 yard fabrc
Advantages
1,25 yard - 0,50 yard = 0,75 yard fabric
2 ton - 0,80 ton = 1,2 ton paddy
Excellence acquired a state krn dpt produce products with lower relative costs that drpd other
countries.
CONTOH 2. COMPARATIVE ADVANTAGE. Consider the following data::
The production of cloth and wine for each unit of resource per day before the bilateral trade as
follows:
State
Production of Fabric
Production of Wine
• England
20 yard
60 bottle
• Portugal
25 yard
125 bottle
Conclusion :
1. PORTUGAL State has the absolute advantage in the production. FABRIC.
2. PORTUGAL countries also who has an absolute advantage in prod.ANGGUR
3. ENGLISH country has a comparative advantage in the production FABRIC.
4. PORTUGAL countries have the comparative advantage in the production WINE
Let us answer the questions one by one EXAMPLE :
1.
•
•
2.
3.
•
•
4.
Table cloths and wine production after a run of specialization:
State
Production of Fabric
Production of Wine
English
- yard
250 bottle
Portugal
50 yard
- bottle
The trade, the UK as wine exporter and importer of cloth while Portugal as exporter of fabrics and wine importer
Table production after the bilateral trade:
State
Production of Fabric
Production of Win
England
20 yard
150 bottle
Portugal
30 yard
100 bottle
Efficiency Analysis:
Prior to the trade
After trading
Gains / Losses
England
Portugal
Fabric 20 yard
Wine 125 bottle
20 yard
150 bottle
0 yard / 25 bottle / -
Fabric 25 yard
wine 60 bottle
30 yard
100 bottle
5 yard / 40 bottle/ -
Let us answer the questions one by one EXAMPLE:
1.
•
•
2.
3.
•
•
4.
Inggris
Table cloths and wine production after a run of specialization:
State
Production of Fabric
Production of Fabric
English
- yard
250 bottle
Portugal
50 yard
- bottle
The trade, the UK as a wine exporter and importer of cloth while Portugal as an exporter of cloth and
wine importer
Table production after the bilateral trade;
State
Production of Fabric
Production of Wine
English
20 yard
150 bottle
Portugal
30 yard
100 bottle
Analisa Efisiensi :
Prior to the trade
After trade. Advantages / Disadvantages
Fabric 20 yard 20 yard
Wine 125 bottle150 bottle
Portugal
Fabric 25 yard 30 yard
Wine 60 botol 100 bottle
25 bottle / 40 bottle/ -
0 yard / 5 yard / -
THREE PROBLEMS
Consider the following data:
• Overview of the work of one person per day is shown in the following table:
State Prod. of Shoes Prod. of Bag Basis Swap Home Affairs
• Timor Leste 40
80
1 Shoes = 2 bags
• Indonesia
100
150
2 Shoes = 3 bags
Asked:
 If Timor Leste specialize in handbags and shoes and Indonesia on East Timor would
redeem 150 bags with shoes, then what is the benefit gained?
FOR EXAMPLE THREE
TIMOR LESTE
1 Shoes = 2 bags
1 bag = 0,5 shoes
INDONESIA
1 bag
1 shoes = 1,5 bags
= 2/3 Shoes
Timor Leste do specialization in Tuas, if Timor Leste
Bags redeem 150 to Indonesia will be 100 pairs
Shoes. While in East Timor can be 75 150 Shoes Shoes, means
Fortunately, 25 pairs of shoes.
Indonesia will conduct Specialisation on shoes, if Indonesia
swap. 150 pairs of shoes to Timor Leste will be 300 pieces
Bag. While in Indonesia can be 225 pieces Bag, meaning Lucky 75
fruit Bags
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