Class notes # 11

Class notes # 11 - INTERNATIONAL TRADE 1. Objectives...

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INTERNATIONAL TRADE 1. Objectives Introduce economic theories of international trade Discuss the politics of international trade Study major features of international trade policies and international dispute settlement 2. Competitive trade theory Two countries can be made better off by exporting those goods they produce relatively more efficiently than another country, and by importing goods that they produce relatively less efficiently. This is true even when one country has an absolute advantage in the production of both goods. That matters is a country’s comparative advantage Example 1: A computer programmer and an accountant Example 2: China and the US. One country is going to have a comparative advantage always with two goods to other country. According to this logic, there should be no restrictions on trade. Yes, they exist. Why? 3. Some Instruments of Trade Policy Tariffs: taxes on imports Import Quotas: Limit on the amount of a good allowed into the country Exports subsidies: payment by the government to exporters Informal barriers: red tape barriers, regulations International Trade agreements try to overcome domestic temptations A couple of years back there was a dispute between China and US over Halloween
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This note was uploaded on 11/29/2010 for the course PSC 222 taught by Professor Jing during the Spring '10 term at Rochester.

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Class notes # 11 - INTERNATIONAL TRADE 1. Objectives...

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