INTERNATIONAL TRADE Flashcards
WHAT IS INTERNATIONAL TRADE?
When g+s being exchanged across national/regional borders.
Fundamental+politicized aspect of IPE->bc states trying max ben + min costs in their economies.
Can lead to growth, industrial development, job creation, higher incomes-> can also have opposite effect—>trade pow tool distributing wealth and power w/i and bet states
THE ECONOMIC LOGIC OF FREE INTERNATIONAL TRADE
Occurs when there is an open trading system w/ minimal gov regulation of private commercial exchanges.
A Smith and D Riccardo+ FT encourages specialization-> leading to efficient use scarce resources, increase in glob output, lower prices g+s, greater well-being
COMPARATIVE ADVANTAGE
The ability of indi or group to carry out a particular ec activity more efficiently than another activity-> through the specialization of that activity-> gives the company the ability to sell g+s at lower price than competitors and realize stronger sales margins.
Specialization=NB bc accommodates every country into glob syst.
Opportunity Costs=the sacrifice in prod less of a good to increases the production of another-> works in system of negotiation and trade agreements (who gets to trade what)
Production Possibility Frontier=what is the best thing to choose at a particular time->the decision
THE LAW OF COMPARATIVE ADVANTAGE
Countries should specialize in the g+s they prod most efficiently->they then exchange this for the products they prod less efficiently.
Proponents of international trade argue that through free trade and specialisation all countries will ben from improved consumption and national well-being.
Theory is limited->bc syst dynamic.:countries will call for the reversal of trade agreements
PROTECTIONISM
Number of strategic+socio-pol considerations force gov to override ec logic (specialisation, efficiency and openmarket)+adapt protectionist trade measures->to limit imports
When protectionist measures occur the socio-ec position is in trouble (eg Brexit)
For purp of protecting nat sec and sovereignty->eg Russia using Europes dependence on their gas as a weapon
A response to trade
Used when there pressure from dom interest groups in globally uncompetitive sectors-> seeking to protect mark share, jobs and livelihoods.
For health and safety concerns
TYPES OF PROTECTIONIST MEASURES
Tariffs: serve as a revenue for gov to leverage on prod of g+s if imported->tax imposed imports
Non-Tariff Barrier: mostly the World Trade Organisation-> measures used by states to circumvent free trade commitments and to control imports—>import quotas, health and sanitary and technical standards, domestic and export subsidies
