Exercises

Introduction

Motivation

Trade explained by different valuation of G&S derived of: taste, technology or production factors, firm characteristics...

Static benefits of trade

1. Specialization (different relative prices)

2. Change in production and consumption structure

Dynamic benefits of trade– Higher growth rate and welfare

1.  Scale economies

2.  Increase in competition -> efficiency, lower prices, variety, quality

3.  Access to new technology

Consequences of trade

1.  Increase in the production of G&S with greater comparative advantage and in the use of the productions factors in which the country is more intensive.

2.  Change in consumption / increase in welfare.

Theory

Gains from trade

Relative prices different in the RW than in the country

Theories 

• Absolute advantage (Adam Smith) (1776). An Inquiry into the Nature and Causes of the Wealth of Nations

• Comparative advantage (David Ricardo) David Ricardo's The Principles of Trade and Taxation

Understand David Ricardo's principle of comparative advantage Britannica 

Comparative advantage Marginal Revolution University / Comparative advantage2 MRU

Investopedia Video: Explaining Comparative Advantage

Comparative Advantage Kahn Ac. / Ventaja comparativa Kahn Ac.

• Relative factor endowments (Heckscher y Ohlin) Interregional and international trade, 1933

Vertical differentiation

Revealed Comparative Advantage Index

• New theory of international trade (Krugman, Melitz)

Horizontal differentiation

Imperfect competition

Economies of scale

Monopolistic competition

Product differentiation

Tastes

Competitive advantage is a broader business concept that describes the attributes, resources, or strategies that enable a firm to outperform its competitors in the market. While comparative advantage focuses on the relative efficiency between countries (or sectors or firms) in producing goods, competitive advantage encompasses factors like innovation, quality, branding, and cost leadership that help a firm secure a superior position within its industry. 

Indicators

Exporters are more productive.

Economic integration

GATT general agreement on tariffs and trade (1947)

OMC (164 countries)

A most-favored-nation (MFN) clause requires a country to provide any concessions, privileges, or immunities granted to one nation in a trade agreement to all other World Trade Organization member countries. Equal treatment

Exceptions

-        Integration agreements

-        Developing countries (tariff reductions to all developing countries)

Trade creation and trade diversion.

1. Trade Creation: Trade creation happens when the customs union causes a member country to replace a relatively high-cost domestic producer with a lower-cost producer from within the union.

2. Trade Diversion:  Trade diversion occurs when the customs union causes the home country to switch from buying a cheaper good from a non-member to a more expensive good from a member, simply because the latter now faces no tariff while the former still does.

Data

Distribution of trade

Geographic distribution

• Trade concentration in developed countries (2/3 of trade inside the region)

• Increasing presence of developing (mainly Asia)

• Increase in the trade between the south

• Specialization

• Manufacturing but increasing role of services especially in developed countries. High intra industry trade. Primary good problems (Price variability-uncertainty, deterioration of terms of trade, technological improvement

• Developing Agriculture and lower level of intra industry trade

• Agricultural and extractive exports lower growth than manufacturing exports. Services higher growth  (e.g. digital provided services) (growth rates depends on income elasticity)

• Services content in manufacturing exports is increasing

Problems of specializing in raw or agricultural materials:

• Variability of international prices (consequences on macroeconomic stability)

• Deterioration of the real terms of trade (export prices vs. import prices)

• Difficulties in the accumulation of technological capabilities.

Global Value Chains

Trade in value-added and global value chains: country statistical profiles

Country profiles

Other effects of international trade:

• Inequality

• Polution (green whahing)

• Labour explotation

• ...

Practice

Exercises

1- Exercise FDI

Using data from OECD

• Compare FDI flows and stocks for one country. Explain why the are not exactly related (stock  (t+1) = stock (t) + flow

• Which countries has more stock. Use this data

2- Exercise Trade and FDI

Using this data from UNCTAD select one country and

• Calculate trade openess

• Compare remitances with FDI

3- Exercise Trade and competitiveness

Use WITS to obtain merchandise trade (exports, imports), tariff and non-tariff (NTM) data, perform tariff cut simulation and analyze trade competitiveness of countries.

4- Read and summarize

Summarize the topics and trends of the 4 latest Global Trade Update - UNCTAD

Learn more

Documents

•  Charting Globalization’s Turn to Slowbalization After Global Financial Crisis & The peak of globalisation myth  & Which nation(s) drove globalisation’s peak?

• What are the six facts you need to know about the future of trade?

• History of the multilateral trading system

• A tale of two globalizations: gains from trade and openness 1800-2010 

• Has Globalisation Really Peaked for Europe? ECIPE

• Global Trade Update - UNCTAD

• Is Globalization Dead?

A brief history of globalization | World Economic Forum 

Statistics

• Examen estadístico del comercio mundial WTO

• World Integrated Trade Solutions Cadenas globales de valor OECD 

• World Integrated Trade Solution (WITS) | Data on Export, Import, Tariff, NTM

• IMF Data Mapper

• The Atlas of Economic Complexity Visualize global trade data and economic growth opportunities for every country

• The Observatory of Economic Complexity | OEC Access monthly 2021 data for the world's largest economies. Explore the trade patterns of provinces cities and states, such as Bavaria in Germany, Beijing in China, or California in the United States.

• World Trade Monitos CPB

Globalisation dashboard

 Is Globalization Dead? | Davos | #WEF22 - YouTube 

https://www.imf.org/en/Publications/WEO/weo-database/2021/October

World Economic Outlook Database: October 2021

The World Economic Outlook (WEO) database contains selected macroeconomic data series from the statistical appendix of the World Economic Outlook report, which presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups and in many individual countries.The WEO is released in April and September/October each year.

www.imf.org

 Data and Tools for Trade and Global Value Chains Analyses

https://www.visualcapitalist.com/mapped-foreign-direct-investment-by-country/

 https://www.visualcapitalist.com/the-importance-of-fdi-and-why-it-must-be-revived/

Policy and Theory of International Trade

Challenges and Opportunities in International Business

Sociology: Comprehensive Edition

https://geerth

ofstede.com/

Pendiente.

https://www.intelligenteconomist.com/economic-systems/

https://worldjusticeproject.org/about-us/overview/what-rule-law

https://worldjusticeproject.org/rule-of-law-index/

https://www.weforum.org/stories/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/

ETICA:

https://courses.lumenlearning.com/suny-internationalbusiness/chapter/reading-global-business-ethics/

https://milnepublishing.geneseo.edu/good-corporation-bad-corporation/chapter/10-corruption-in-international-business/

https://milnepublishing.geneseo.edu/good-corporation-bad-corporation/chapter/1-corporations-and-their-social-responsibility/

https://www.prosperity.com/

CSR - RSC

https://milnepublishing.geneseo.edu/good-corporation-bad-corporation/

International Business

https://courses.lumenlearning.com/suny-internationalbusiness/

https://www.strategyand.pwc.com/gx/en/insights/2002-2013/make-or-buy/strategyand-make-or-buy-sound-decision-making.pdf

Travel Times from London in 1914 created by John George Bartholomew 

https://transportgeography.org/

https://unctad.org/system/files/official-document/rmt2024_en.pdf

https://www.investopedia.com/articles/forex/021114/exchange-rate-risk-economic-exposure.asp

https://www.internations.org/

https://www.expatica.com/global/

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