International Trade

Chapter 17 Key Terms Absolute Advantage Comparative Advantage Balance of Trade Trade Surplus Trade Deficit

Absolute advantage: the ability of a nation to make a product at a lower cost than another nation Comparative advantage: the ability of a nation to make a product at an opportunity cost that is lower than another nation

Balance of trade: the relationship between a nation’s imports and exports Trade surplus: when exports are greater than imports or if EX > IM = Trade Surplus Trade deficit: when imports are greater than exports or if EX < IM = Trade Deficit

Name some exclusive clubs GPC Mensa http://www.mensa.org/ The Yellowstone Club

NAFTA EU WTO Protectionism > “Buy American” G7 elite 8 country organization form to promote global economic growth. France is the founding member. US, Germany, Canada, Italy, UK, Japan and Russia

Economics of Oil

OPEC (12 members) Founded by Iraq to control oil supply Organization is essentially a monopoly Its formation drove up oil prices

12 member countries Algeria Angola Ecuador Iran Iraq Kuwait Libya Nigeria Qatar Saudi Arabia United Arab Emirates Venezuela

Strait of Hormuz Strait-narrow body of water that connects two larger bodies of water 20% of all oil About 80% of all trade in the area Persian Gulf Gulf of Oman Chokepoint

Chokepoints Chokepoints are narrow channels along widely used global sea routes, some so narrow that restrictions are placed on the size of vessel that can navigate through them. They are a critical part of global energy security due to the high volume of oil traded through their narrow straits.

http://www.reuters.com/video/2012/01/05/whats-at-stake-strait-of-hormuz-by-the-n?videoId=228011127

Opec Nations (Green)

The Middle East

Road to Prosperity

1. Bottom-up law: law had to become flexible and allow individuals (common people) to hold property rights; fundamental turning point for mankind; power shifted from castles on the hilltop to villages and people below. 2. Business Law: Group of laws that governs business situations and transactions. Allows for the formation of the modern business organization (the corporation) which, in time, allowed for greater division of labor, wider trade and globalization to emerge. 3. Cabin rights: built upon the property. Another way to improve the land and claim it 4. Corn rights: corn grew from here to there, which established a property right from here to there. Growing corn was an improvement on the property, which helped to confer legitimacy on one's control of the land. 5. Document Act: standard form so everybody takes away a symbol, or a representation of the act; a legal deed to document, in writing, a property transaction. A certification of somebody being owner. (Also, the beginning of written law.) 6. laws from the people: a legal system that springs from the people, reflecting their customs and beliefs. The people's law (as distinct from legislation).

7. Property revolution: for centuries less than three percent of mankind had owned almost all of the world's land. Once people started getting legal title to their land, a profound shift occurred. It became easier for common people to trade their property, invest in it and use it for collateral to build businesses. 8. Property rights: Legally recognizes control and use of some property by an individual; property titles (documents that define property rights) ensure the individual has a legal right to: defend the property and exclude others from using it, sell or trade the property for currency or another type of holding, and define its extent and boundaries relative to other property. 9. Speech Act: members of the community come together to create a "public memory" that certifies a transaction has taken place.

10. Spoken law: resolves all conflicts through adjudications ("referee") that are accepted at each village, commonly disputes about property. 11. Tomahawk rights: symbol to declare possession of land, usually created through a hatch mark on a tree or nearby object. 12. Top-down law: power as it was in most of the world up until about 200 years ago; a few people had all of the control, made all the laws. 13. Written law: creation of documents is an important step forward in recording a variety of transactions; to establish property rights, protect assets, and to connect people to expanded markets outside of their village, and eventually to connect people with national and global markets.

Progression from feudalism to middle class Feudalism > top down Shift occurs as people gain right to own land Industrialization fuels grow of working class/ middle class