International Economics

by Brown, Wilson B.; Hogendorn, Jan S.

• ISBN13: 9781551112619
• ISBN10: 1551112612
• Format: Paperback
• Copyright: 2000-07-01
• Publisher: Univ of Toronto Pr Higher education

Summary

International Economics in the Age of Globalizationprovides the intellectual basis for an understanding of the increasingly integrated world economy. The requisite background is not solely economic theory, but includes the history and the purposes and workings of the organizations, laws, instruments, and customary practices in the international economy. Economic theory is not limited to the abstract; its concern with institutions has both a practical and theoretical base. How can one evaluate a criticism of the World Trade Organization, a fear of the dangers of financial derivatives, the supposed freedom of a multinational firm, or the presumed unfairness of dumping without knowing both theory and institutions? Where did these institutions come from? What problems are they solving-as well as creating? This book's balance between theory and institutions is akin to texts in Public Expenditure or Money and Banking. The leading international economics texts, in contrast, push the real world into the background and present the subject as a more specialized intermediate theory course, accessible only to people who have a solid theoretical background. The result is that good discussions of many of the key issues in modern international economics simply are not available in the curriculum, or accessible to any but economics majors. This book aims to remedy that failing, challenging economics majors and non-majors alike. It will also be of value to students of business and public affairs and to the economic-literate general public.

Table of Contents

Preface	11	(4)
The Nature of International Economics	15	(28)
Globalization	16	(2)
International Economics in Daily Life	18	(6)
The Growth of Economic Interdependence	24	(7)
Statistics with Some Grains of Salt	31	(8)
Looking Forward	39	(1)
Vocabulary and Concepts / Questions	39	(1)
Notes	40	(3)
PART ONE INTERNATIONAL TRADE
The Theory of Comparative Advantage	43	(36)
The Gains from Trade in General Equilibrium	46	(15)
The Gains from Trade in Partial Equilibrium	61	(3)
Relaxing the Assumptions	64	(8)
Conclusion	72	(1)
Appendix: Offer Curves	73	(3)
Vocabulary and Concepts / Questions	76	(2)
Notes	78	(1)
The Sources of Comparative Advantage	79	(58)
Factor Proportions: The Heckscher-Ohlin Model	80	(8)
Two Challenges to the Heckscher-Ohlin Model	88	(10)
Why Trade Arises among Similar Countries	98	(12)
Segmented Markets as an Explanation for Trade	110	(10)
What Could Trigger the Direction of Specialization?	120	(9)
Dislocation and Intraindustrial Trade	129	(1)
Conclusion	130	(1)
Vocabulary and Concepts / Questions	130	(2)
Notes	132	(5)
Tariffs, Quotas, and VERs	137	(50)
Tariffs	138	(7)
Analysis of Tariffs: Their Effects	145	(18)
Quotas and Their Economic Effects	163	(10)
Voluntary Export Restraints	173	(7)
Appendix: The Terms-of-Trade Effect in General Equilibrium	180	(2)
Vocabulary and Concepts / Questions	182	(1)
Notes	183	(4)
The Face of Modern Protectionism	187	(54)
Subsidy and Tax Issues	188	(8)
Administrative Protection	196	(7)
Technical, Health, Safety, and Environmental Standards	203	(13)
How Can Distortions To Trade Be Compared?	216	(2)
Playing the Protectionist Instruments	218	(16)
Conclusion	234	(1)
Vocabulary and Concepts / Questions	235	(1)
Notes	236	(5)
The Political Economy of Trade Barriers	241	(58)
A Short History of Trade Policy	242	(11)
The Uruguary Round and the World Trade Organization	253	(13)
Why Do Countries Persist in Protectionism?	266	(4)
The Arguments for Trade Barriers	270	(22)
Conclusion	292	(1)
Vocabulary and Concepts / Questions	292	(2)
Notes	294	(5)
Unfair Trade Practices	299	(40)
Dumping	301	(19)
Subsidies	320	(7)
Other Unfair Trade Practices	327	(5)
Conclusion	332	(1)
Vocabulary and Concepts / Questions	333	(1)
Notes	334	(5)
National Trade Policies	339	(52)
Managed Trade	340	(2)
Strategic Trade Policy	342	(14)
Japanese Use of a National Trade Strategy	356	(10)
Adjusting to Trade as a National Strategy	366	(8)
Trade Sanctions	374	(9)
Vocabulary and Concepts / Questions	383	(1)
Notes	384	(7)
Economic Integration	391	(60)
The Types of Economic Integration	392	(3)
The Great Debate: Trade Creation or Trade Diversion	395	(6)
Dynamic Effects of Economic Integration	401	(3)
A Checklist of Conditions for Welfare Improvement	404	(1)
The Major Examples of Economic Integration	405	(22)
Very Large PTAs	427	(3)
PTAs with a Rich Patron	430	(4)
Regional Trade Arrangements in the LDCs	434	(3)
Foreign Trade Zones: Little Bits of Free Trade	437	(3)
Conclusion	440	(1)
Vocabulary and Concepts / Questions	441	(1)
Notes	442	(9)
PART TWO INTERNATIONAL MACROECONOMICS: SAVING, GROWTH, AND FINANCE
Saving, Investment, and the Trade Balance	451	(42)
How Can Countries Have Trade Imbalances?	452	(2)
The Three Real Imbalances: Imports-Exports, Saving-Investment, and Output-Absorption	454	(11)
Financial Markets: Borrowing and Lending	465	(4)
Trade Imbalances as Problems and Symptoms	469	(10)
Total Investment Equals Total Saving	479	(1)
The International Capital Market and National Saving	479	(1)
Government Saving and Trade Deficits: The Twin Deficit Question	480	(4)
Private Saving	484	(3)
Conclusion	487	(1)
Appendix: Where to Find the Numbers	488	(1)
Vocabulary and Concepts / Questions	489	(2)
Notes	491	(2)
The Balance of Payments	493	(28)
Why Study the Balance of Payments?	493	(1)
What a Balance-of-Payments Statement Shows	494	(1)
Balance-of-Payments Accounting	494	(3)
The Structure of the Balance of Payments	497	(8)
Using Balance-of-Payments Statements as Analytical Tools	505	(10)
The World Deficit	515	(2)
Conclusion	517	(1)
Vocabulary and Concepts / Questions	518	(1)
Notes	519	(2)
Income and Price Effects	521	(26)
Income and Price Changes	522	(7)
Income Effects	529	(4)
Some International Implications	533	(7)
Price and Income: Two Intriguing Cases	540	(4)
Conclusion	544	(1)
Vocabulary and Concepts / Questions	545	(1)
Notes	546	(1)
Interest Rates, Prices, and Foreign Exchange	547	(32)
The Foreign Exchange Market	548	(9)
The Vast Sums Traded	557	(1)
Interest Rate Parity	558	(3)
The Longer Run: Price Levels and Purchasing Power Parity	561	(5)
International and Domestic Financial Markets	566	(9)
Conclusion	575	(1)
Vocabulary and Concepts / Questions	576	(1)
Notes	577	(2)
Money in the Global Economy	579	(32)
Three Ways of Looking at Money's Relation to Real Output	580	(3)
Modeling the Effects of the Money Supply	583	(1)
Markets for Funds and Markets for Liquidity	584	(1)
Monetary Policy	585	(1)
National Money Supplies and Global Flows	585	(7)
The Role of Money in Correcting Serious Balance-of-Payments Difficulties	592	(5)
The Problem of Large Capital Flows	597	(5)
Monetary and Fiscal Policy Together	602	(5)
Conclusion	607	(1)
Vocabulary and Concepts / Questions	607	(2)
Notes	609	(2)
Exchange Rate Adjustment	611	(34)
What Countries Really Do	612	(2)
The Role of the Exchange Rate in Adjusting to Payments Difficulties	614	(15)
Exchange Control	629	(2)
The Once-and-for-all Devaluation after Great Inflation	631	(2)
Revaluation (Upward Valuation)	633	(1)
Price Sensitivity: What Happens When Price Effects Work Slowly	634	(6)
Exchange Rate Changes and the EXIN Model	640	(2)
Conclusion	642	(1)
Vocabulary and Concepts / Questions	642	(2)
Notes	644	(1)
International Financial Markets	645	(32)
The Functions of Financial Markets	645	(2)
The Advantages of Large Markets	647	(2)
An Overview of the International Markets	649	(5)
Eurodollars, T-accounts, and Monetary Expansion	654	(1)
Derivative and Swap Markets	655	(13)
Continuing Changes in the International Capital Market	668	(3)
Implications of the Changes	671	(2)
Conclusion	673	(1)
Vocabulary and Concepts / Questions	673	(2)
Notes	675	(2)
International Monetary Institutions (I)	677	(32)
The International System under the Gold Standard	678	(7)
The 1920s: Pegged Exchange Rates	685	(6)
The Great Depression	691	(1)
The Bretton Woods System: 1947-1973	691	(9)
Reserve Currencies	700	(1)
Special Drawing Rights	701	(3)
Borrowing: Swap Lines	704	(1)
The End of the Bretton Woods System	704	(1)
The Bretton Woods System: An Assessment	705	(1)
Vocabulary and Concepts / Questions	706	(2)
Notes	708	(1)
International Monetary Institutions (II)	709	(44)
The Oil Crises	710	(3)
Floating Exchange Rates	713	(4)
The Debt Crises	717	(24)
Currencies and Governments: How Many Currencies?	741	(7)
Deja Vu All Over Again	748	(2)
Vocabulary and Concepts / Questions	750	(1)
Notes	751	(2)
Multinational Firms, Foreign Direct Investment, and Globalization	753	(28)
Foreign Direct Investment and the Multinational firm	754	(3)
FDI in Recent Years	757	(5)
The Theory of Foreign Direct Investment	762	(9)
Possible Reasons for the Recent Increase in FDI	771	(1)
Extent of the Firm's Freedom from Market Constraints	772	(2)
Issues MNFs Raise	774	(3)
Conclusion	777	(1)
Vocabulary and Concepts / Questions	778	(1)
Notes	779	(2)
Index	781