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International Economics
Mordecai E. Kreinin
Copyright ©2002 South-Western/Thomson Learning.
All rights reserved.
Chapter 1
World Trade and the
National Economy
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OVERVIEW
 International Economics, Defined
 What is Unique about International
Economics?
 International Transactions—An Empirical
Glimpse
 Foreign Trade in the National Economy
 Forums for Trade and Monetary Issues
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Important Concepts
 Specialization
 Exchange rate
 Export subsidy
 Tariff
 Relatively closed
economy
 Nontraded goods
 Export industries
 Import quota
 Import-competing
industries
 Voluntary export
restraint
 Exchange control
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Concerns flow of commodities,
services, capital and labor
across national boundaries
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What’s Unique About International
Economics?
 Specialization
 Exchange Rates
 Commercial Policies
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







Tariff
Import quota
Voluntary export restraint VER
Export subsidy
Exchange control
Different Domestic Policies
Statistical Data
Relative Immobility of Productive Factors
Marketing Considerations
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International Transactions—
Empirical Glimpse
 Uninterrupted trade expansion, 1958 –1999 ($108 billion
to $5.6 trillion)
 Manufactured products showed greatest increase; service
transactions also rising ($1.35 trillion in 1999)
 U.S., Germany, Japan, largest exporters; one-third world
trade among European countries
 Real volume of trade accounts for price increases;
increase in private capital flows
 Globalization—global marketplace for most goods and
services
 Political shifts toward market economies raising
development status of many countries.
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Foreign Trade in the National
Economy
 Aggregate Measures

U.S. GDP comprises over ¼ global output,
U.S. leading trading nation

Relatively closed economy, not reliant upon
foreign trade
 Disaggregation

Nontraded goods

Export- and import-competing industries
 Qualitative Considerations
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Forums for Trade and Monetary
Issues
 World Trade Organization (WTO)
 International Monetary Fund (IMF)
 World Bank
 The European Union (EU)
 Group of Ten (G-10)
 United Nations Conference on trade and
Development (UNCTAD)
 Organization of Economic Cooperation and
Development (OCED)
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Summary
 International economics concerns movement of
goods, services, and productive factors across
national boundaries.
 Conduct of trade, rather than reasons or benefits,
distinguish international from domestic
transactions.
 International transactions have grown faster than
global output.
 Though U.S. engages in smaller share of foreign
trade, it plays a significant role in certain
industries.
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