chapter 28 international trade and public policy

chapter 28 international trade and public policy - CHAPTER...

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CHAPTER 28 International Trade and Public Policy
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Chapter Twenty-Eight 2 of 27 Lecture Outline 1. Benefits from specialisation and trade a. comparative advantage b. the employment effects of free trade 2. How governments restrict free trade: protectionist policies a. import bans b. import quotas and voluntary export restraints c. import tariffs d. responses to protectionist policies 3. Rationale for governments to impose protectionist policies 4. Definition of and responses to dumping FYR
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Trade Balance Trade deficit The excess of imports over exports Trade surplus The excess of exports over imports                 Chapter Twenty-Eight                  3 of 27
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Singapore’s Trade Balance as a Share of  GDP, 1980-2005 Chapter Twenty-Eight 4 of 27 FYR
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             Chapter Twenty-Eight 5 of 27 Sources of Comparative  Advantage Individual level Inborn talent Education Training Experience National level Natural resources Cultural factors Institutions
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MB MC The Effect of Globalisation on the Demand for Workers in Two Industries Employment Real Wage Employment Importing industry Exporting industry S textiles D textiles w N textiles S software D software N software Initially, wages are equal. D’ textiles w textiles N’ textiles Demand for workers in importing industry (textiles) declines, lowering wages and employment. D’ software w’ software N’ software Demand for workers in exporting industry (software) increases, raising wages and employment. Chapter Twenty-Eight 6 of 27
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What Do You Think? Why would it be difficult to reduce wage inequality by stopping globalisation? What could be done to reduce the impact of globalisation on wage inequality? Why has the gap between the wages of less- skilled and higher-skilled workers widened in recent years? Chapter Twenty-Eight 7 of 27
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MB MC The Effect of Skill-Biased Technological Change on Wage Inequality
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Technological change that is biased in favour of skilled workers will increase wage inequality. Chapter Twenty-Eight 9 of 27
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What Do You Think? Should we try to slow technological change to reduce wage inequality?                Chapter Twenty-Eight                 10 of 27
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Chapter Twenty-Eight 11 of 27 Protectionist Policies Four common import-restriction policies are: Import ban Import quota: A government-imposed limit on the quantity of a good that can be imported. Import licenses
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chapter 28 international trade and public policy - CHAPTER...

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