国际经济学英文版章节ppt课件.ppt

2,Foundations of ModernTrade Theory: Comparative Advantage,Introduction,Basis for tradeWhy do nations export and import?Terms of tradeGains from international tradeSpecific to production and consumption,Modern Trade Theory Historical Development,The MercantilistsConcern: Regulation of domestic and international affairs to promote national interestsSolution: Strong foreign-trade sectorFavorable trade balanceAdvocated government regulation of trade,Historical Development,Criticism of Mercantilist policies David Humes price-specie-flow doctrineFavorable trade balance possible only in the short run; over time it would automatically be eliminatedAdam Smiths “The Wealth of Nations”Challenged the static view of wealthDynamic viewInternational trade increases the level of productivity within a country, which in turn increases world output,Continued,Why Nations Trade?Absolute Advantage,Adam Smith Free trade and international division of laborCost differences govern movement of goodsProductivities of factor inputs represent the major determinant of production costDetermination of competitiveness from the supply side of the marketConcept of cost: Labor theory of valueLabor is the only factor of production and is homogeneousCost depends on labor requirements,Why Nations Trade?,Principle of absolute advantage Import goods in which a nation has an absolute cost disadvantageExport those goods in which it has an absolute cost advantage(Example: Table 2.1),Continued,Back,Why Nations Trade?,David Ricardo: Comparative advantageMutually beneficial trade can occur even when one nation is absolutely more efficient in the production of all goodsLess efficient nation: Specialize in and export the good in which it is relatively less inefficientMore efficient nation: Specialize in and export that good in which it is relatively more efficientExamples of comparative advantages (Table 2.2),Continued,Back,Why Nations Trade?,Assumptions of Ricardos model:World consists of two nations, each using a single input to produce two commoditiesLabor is the only input Labor can move freely among industries within a nation but is incapable of moving between nationsLevel of technology is fixed for both nationsCosts do not vary with level of production and are proportional to the amount of labor used,Continued,Why Nations Trade?,Assumptions of Ricardos model (cont.):Perfect competition prevails in all marketsFree trade occurs between nationsTransportation costs are zeroFirms make production decisions to maximize profits; consumers maximize satisfaction through consumption decisionsThere is no money illusionTrade is balanced, no flows of money between nationsComparative-advantage principle (Table 2.3),Continued,Back,Production Possibilities Schedules,Used to explain comparative advantage Shows production combinations of two goods when all factor inputs are used most efficiently Illustrates the maximum output possibilitiesMarginal rate of transformation (MRT) Amount of one product a nation must sacrifice to get one additional unit of the other productHypothetical production possibilities schedules for the U.S and Canada: (Figure 2.1),Back,Trading Under Constant-Cost Conditions,Principle of comparative advantage under constant opportunity costsBasis for trade and direction of tradeGains from tradeTwo reasons for constant costs:Factors of production are perfect substitutes for each otherAll units of a given factor are of the same quality,Trading Under Constant-Cost Conditions,Basis for trade and direction of tradeRelative costs (Figure 2.1)Point A U.S: 40 autos and 40 bushels of wheat Point Al Canada: 40 autos and 80 bushels of wheatRelative cost of producing an additional auto 0.5 bushels of wheat for the United States 2 bushels of wheat for CanadaDirection of tradeUnited States specializing in and exporting autos Canada specializing in and exporting wheat,Continued,Trading Under Constant-Cost Conditions,Production gains from specializationRefer (Figure 2.1)United States moves from production point A to B, totally specializing in auto productionCanada totally specializes in wheat production by moving from Al to BlSummary of production gains (Table 2.4a),Continued,Back,Trading Under Constant-Cost Conditions,Consumption gains from trade (Figure 2.1)Specialization and tradeAchieve consumption points outside domestic production possibilities schedulesTerms of trade: Rate at which its export product is traded for the other countrys export product Determines the set of posttrade consumption points Defines the relative prices at which two products are traded Trading possibilities line: Line tt represents the international terms of trade for both countries,Continued,Trading Under Constant-Cost Conditions,Consumption gains from trade (Figure 2.1)Trade triangle: The triangle BCD (Bl Cl Dl for Canada) showing the U.S. Exports (along the horizontal axis), Imports (along the vertical axis), and Terms of trade (the slope)Consumption gains from trade for each country and the world as a whole (Table 2.4b)Complete specializationException: One of the countries is too small to supply the other with all of its needs,Continued,Trading Under Constant-Cost Conditions,Distributing the gains from tradeDomestic cost conditions (Figure 2.2)Domestic cost ratios set the outer equilibrium terms of tradeDomestic cost-ratio line: The no-trade boundaryInternational terms of trade has to be better than or equal to the rate defined by domestic price lineRegion of mutually beneficial trade is bounded by cost ratios,Continued,Back,Trading Under Constant-Cost Conditions,Equilibrium terms of tradeMills theory of reciprocal demandWithin the outer limits of the terms of trade, the actual terms of trade is determined by the relative strength of each countrys demand for the other countrys product (Figure 2.2) Importance of being unimportantLarger nation attains fewer gains from trade while the smaller nation attains most of the gains,Continued,Trading Under Constant-Cost Conditions,Terms-of-trade estimatesCommodity terms of trade (barter terms of trade)Improvement: Rise in export prices relative to import prices over a time period Deterioration: Rise in import prices relative to export prices over a time period Commodity terms of trade for selected countries (Table 2.5),Continued,Back,Dynamic Gains from Trade,Effect of trade on growth rate and thus on the volume of additional resources Higher output and income resulting in savings and consequent investments Better supplier match for importsEconomies of large-scale productionIncreased competitionImpact on productivity, quality, and prices,Global Competition,Productivity gains for US Iron Ore workersIncreased competitive pressure on U.S. iron ore producers in the 1980sWorkers agreed to changes in work rules that enhanced labor productivity,Changing Comparative Advantage,Comparative advantage can vanish if productivity growth lagsPressure on producers to reinvent themselvesCase: Semiconductor industry in the U.S.Production possibilities schedules, for computers and automobiles, of the U.S. and Japan under constant opportunity cost (Figure 2.3),Back,Trading Under Increasing-Cost Conditions,Increasing opportunity costsConcave production possibilities schedule (Figure 2.4)Principle of diminishing marginal productivitySupply factors as well as demand factors have to be considered,Back,Increasing-Cost Trading Case,Process of specialization continues in both nations (Figure 2.5) until:The relative cost of autos is identical in both nationsU.S. exports of autos precisely equal Canadas imports of autos, and conversely for wheatProduction gains from specialization (Figure 2.6a) Consumption gains from trade (Figure 2.6b),Back,Back,Partial Specialization,Reason for partial specializationIncreasing costs constitute a mechanism that forces costs in two trading nations to convergeWhen cost differentials are eliminated, the basis for further specialization ceases to existHighly probable that both nations will produce some of each good,Impact of Trade on Jobs,Standard trade theoryExtent to which an economy is open:Influences the mix of jobs Can cause dislocation in certain areas or industriesHas little effect on the overall level of employment,Impact of Trade on Jobs,Principle of comparative advantageTrade influences the mix of jobs Shifting of workers and capital to more productive industriesData suggests little impact on the overall number of jobs (Figure 2.6),Continued,Back,Comparative Advantage Extended to Many Products,More than two productsRank goods by degree of comparative cost (Example: Figure 6.7)Each country exports the product(s) in which it has the greatest comparative advantageEach country imports the product(s) in which it has greatest comparative disadvantageCutoff point between exports and importsDepends on the relative strength of international demand for the various products,Back,Comparative Advantage Extended to Many Countries,More than two CountriesAdvantageous for a country to enter into multilateral trading relationships (Figure 2.8)Surpluses with trading partners that buy its exportsDeficits with trading partners that supply low-cost items importedBilateral agreements that balance exports and imports would:Reduce volume of trade and specialization Hinder movement of resources to their highest productivity,Back,Exit Barriers,Exit barriers hinder the necessary market adjustmentsVarious cost conditions make lengthy exit a rational response Case: U.S. steel industryNature of labor costs and benefitsPenalties for terminating contractsExpenses associated with writing off assetsEnvironmental costs Low realization on sale of assets,Empirical Evidence on Comparative Advantage,Empirical support for Ricardos theory British economist G.D.A. MacDougall (1951) Tested the prediction that nations export goods in which their labor productivity is relatively high20 of 25 industries fit the predicted patternStudies by Balassa and SternStephen GolubExamined the relationship between relative unit labor costs (the ratio of wages to productivity) and trade (Figure 2.9),Back,Empirical Evidence on Comparative Advantage,Ricardos theory: LimitationsLabor is not the only factor inputAllowance should be made for production and distribution costs where appropriateDifferences in product quality also explain trade patterns in certain industries,Continued,Comparative Advantage: Job Outsourcing,Movement of factors of production around the globe Weakens comparative advantageDevelopments that caused major changes:Strong educational systems produce skilled workers in developing nations, who work at lower cost Internet technology New political stability that permits free movement of technology and capitalAmerican workers will encounter direct world competition at almost every job category,Advantages of Outsourcing,Reduced costs and increased competitivenessCreation of new export requirementsRepatriated earningsOther contentions:U.S. companies will become less competitive if they cannot outsource jobsThis will weaken the economy and threaten more jobsJob losses tend to be temporary Creation of new industries and products leading to more lucrative jobs for Americans,Outsourcing and the U.S. Automobile Industry,Ford Motor CompanyEarly days: Assembly lineEmergence of competition and increased sophistication requirementsNumber of tasks outgrew number of operations in a plantOutsourcing of non-core tasksExternal suppliers contribute about 70 percent of a Ford vehicle Reduction in costs and improvement in quality,Burdens of Outsourcing,Loss of jobs Declining demand for low-skilled American workersShift of demand for high-skilled workers to cheaper substitutes in AsiaRisks to wagesDeclining wages of low-skilled workers both in real terms and relative to the wages of skilled workersMeasures to lessen the adverse effects of people suffering job losses,