1. International Economics Growth and Trade
23/11/61
Session 7
Growth and Trade
Aj. Noom Tel

2. Balanced Versus Biased Growth

3. Single Factor Growth

4. Effect on the Country’s Terms of Trade
1. Small Country
The size of trade cannot influence the world price.
1. Large Country
The size of trade can influence the world price.

5. Small Country International prices are not influenced by trade. Equal
Trade Line
Slope =1 S1 C1
Equal

6. S2 S1 C2 C1

8. Wheat are highly demanded in the world market.
Large Country
International prices are influenced by trade.
Wheat are highly demanded in the world market.

9. Wheat are not highly demanded in the world market.

10. What is the main difference between the consumption of these products ?

11. It is possible that expanding a country’s ability to make the products that it exports can actually make the country worse off.
Rate of Return

12. Technology and Trade
New technology is difficult to keep secret, and other countries have an incentive to obtain the technology improvement.
Japan
German
The U.S.

13. The innovating country is initially the exporter of new product, but it eventually becomes an importer.
The U.S.
Importer (Present)
Exporter (Pass)

14. With Technology diffusion, openness to trade affects growth
If a country closes itself to international trade, it probably also cut itself from new technology. This then make the country grow more slowly.