Lec 2
H-O Theory
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More abundant a factor, lower the relative cost.
Different countries have different factor endowments.
The Leontief Paradox (1953)
Tested H-O Theory using US data for 1947.
USA is relatively abundant in capital, so according to H-O The
FDI
Foreign direct investment (FDI) is an investment made by a company/individual
in one country in business interests in another country, in the form of either
establishing business operations (Greenfield) or acquiring business assets in the
other countr
Lec4
Levels of economic integration:
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Free trade area (NAFTA)
Customs union
Common market
Economic union (EU)
Political union
Case for regional integration:
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Stimulates economic growth in countries
Countries specialise in those goods/services efficientl
Sem 1
Seminar teacher: Siriwan ([email protected])
Group Coursework 30%
(2 elements: group case study presentation (30%) & 2000 word report, 6th Dec (70%)
Exam 70%
Invisible hand Adam Smith
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Unintended social benefits of individual actions
Lec3
Trade Policy
In 2006 the EU introduced tariffs on Chinese (16%) and Vietnamese (10%) shoe imports. They
viewed these as anti-dumping policies (due to unfair competition).
Tariffs the oldest form of trade policy. Specific tariffs refer to fixed tariff
Externalities are known as the third party effects evolving from
the production and consumption of goods and services in which
the third party does not receive any appropriate consumption.
Externalities are the root to market failure if the pricing system
