1. ANHUI UNIVERSITY OF FINANCE & ECONOMICS
Chapter 1 Introduction to International Economics
INTERNATIONAL
ECONOMICS
Professor Xu Song
ANHUI UNIVERSITY OF FINANCE & ECONOMICS
(O)

2. Books on International Economics
Dominick Salvatore:
International Economics, 8th ed. 2004
John Wiley & Sons Inc. & Tsinghua Uni. Press
Dennis R. Appleyard & Alfred J. Field. Jr..
International Economics, 6th ed., 2007
The McGraw-Hill, Inc.
Robert J. Carbaugh:
International Economics, 10th ed. 2006
South-Western College Pub.
Paul R. Krugman & Maurice Obstfeld
International Economics, 5th ed. 2000
Addison Wesley & Tsinghua Uni. Press

3. Professor at Fordham Uni. of New York City
Dr. Dominick Salvatore
Professor at Fordham Uni. of New York City

4. Contents 1 Introduction 2 The Law of Comparative Advantage
3 The Standard Theory of International Trade
4 Offer Curves and Terms of Trade
5 Factor Endowments and the H-O Theory
6 Economies of Scale, Imperfect Competition
7 Economic Growth and International Trade
8 Trade Restrictions
9 Nontariff Trade Barriers
10 Economic Integration
11 International Trade and Economic Development
12 International Movement and MNCs

5. Contents of Each Chapter
Six Sections in each chapter
Summary paragraphs
A Look Ahead--- What is to be discussed in the next chapter
Key Terms
Questions for Review Questions
Problems Problems.
Appendix----- More advanced knowledge.

6. Introduction
Chapter 1

7. 1 Introduction Know the importance of international economics
Define the definition of foreign trade dependence
learn the relationship between international trade and the standard of loving
Know the purposes of international economic theories and policies

8. 1 Introduction Interdependence New protectionism Balance of payment
Foreign exchange market
Adjustment in the balance of payments
Open-economy macroeconomics

9. 2 International Economics
Chapter 1 Introduction to International Economics
2 International Economics
It deals with the economic interdependence among nations. It analyzes the flow of goods and services, payments between nations, policies regulating the flow and their effects on national welfare.

10. 2 International Economics
Trade Theory
International
Economics
International
Finance
International
Trade Policy

11. 2.1 International Trade Theory
Heckscher-Ohlin
Stolper-Samuelson
Factor Price Equalisation
Comparative Advantage
Trade
Theory
Rybzcynski
Absolute Advantage
Mercantilism
Immiserising Growth
International Trade and Economic Development

12. 2.2 International Trade Policy
Other Trade
Policies
Regional Trade
Agreements
International
Trade
Policy
Tariffs
International Resource
Movements
Tools of the Trade Policy Analysis

13. 2.3 International Finance
Balance of payments
Foreign exchange markets
International Finance
Open economy macroeconomics

14. 2.4 Purpose to Study International Economics
To analyze the effect of the int’l flow of goods, services and factors on the welfare of domestic consumers.
To examine or forecast how national policies directed at regulating these int’l flows affect domestic welfare.
To form intelligent opinions on these matters.
To predict and explain the economic events in the world.
To understand what is going on in the world and their effects on the world economy.
To have a better job in joint ventures !!! Why ?

15. 3 Assumptions in International Trade
Chapter 1 Introduction to International Economics
3 Assumptions in International Trade
2×2×2 model
No trade restrictions
Perfect mobility of factors within nations and not internationally
Perfect competition
No transportation costs

16. 4 Foreign Trade Dependence
Chapter 1 Introduction to International Economics
4 Foreign Trade Dependence
What is foreign trade dependence? What is the purpose?
How to measure it?
-----The ratio of imports and exports of goods and services of a nation to its GDP.
What nations have the higher degree of foreign export trade dependence?

17. 4.1 Foreign Trade Dependence in Some Nations
1970
1980
1990
1993
Developing countries
India
3.5
5.0
6.0
8.6
Indonesia
11.5
28.1
24.2
23.2
Korea
9.3
27.5
25.6
24.8
Pakistan
4.0
11.1
14.0
12.9
Thailand
10.0
20.1
26.9
29.5
Advanced countries
Japan
9.5
12.3
9.8
Canada
19.8
25.7
22.5
26.6
America
4.2
8.3
7.2
7.4
France
12.5
17.5
17.6
16.5
Germany
18.6
23.8
27.4
19.9
Italy
17.3
15.6
16.9
United Kingdom
15.7
20.5
19.0
19.3
Singapore
180

18. 4.2 Importance of International Trade
Some nations can not survive without foreign trade, such as Japan, Germany, Belgium and others. A nation can not produce all the products it needs, for example, US can not produce coffee, cocoa, tea, scotch and other products, they don't have the climate.
The economies of all nations are closely related to each other.
To improve the standard of living.

19. 4.3 China GDP and Foreign Trade Dependency
Year
GDP
(bill. ￥)
Exp+Imp
(bill. $)
Export
Import
Balance
($)
1997
7477.2
325.16
36.0%
182.79
20.3%
142.37
15.7%
+404.2
1998
7834.5
323.95
33.7%
183.71
19.1%
140.24
14.6%
+434.2
1999
8206.7
360.63
36.4%
194.93
19.7%
165.70
16.7%
+292.3
2000
8944.2
474.30
44.0%
249.20
23.0%
225.09
21.0%
+241.1
2001
9593.3
509.77
45.0%
266.15
24.0%
243.61
+225.4
2002
620.80
50.3%
325.57
26.4%
295.22
23.9%
+303.5
2003
851.21
60%
438.37
31.09%
412.84
29%
+255.4
2004
1154.7
69.3%
593.4
35.6%
561.4
+320.0
2005
15000
1422
80%
762.0
43.0%
660.1
37%
+101.9
2006
24662
1760.7
67%
969.1
36.9%
796.6
30.3%
+177.5
Data source: China Customs

20. 5 Some Questions 1. Import/GDP has _______in recent years in China.
(risen, fallen, remained steady)
(From 15.7 % in 1997 to 37 % in 2005.)
2. Export/GDP has _______in recent years.
(From 20 % in 1997 to 40 % in 2005.)
3. Which nation is our largest trading partner?
( EU:217.3 billion dollars in 2005)
4. Which is the second largest trading partner?
(US: billion dollars in 2005 )

21. 5 Some Questions (2) 5.The purpose of trade is to_______.
a. improve consume well-being. b. create jobs.
6. Work is a ________.
a. cost b.benefit
7. Exports are ________.
8. The objective of international trade is to __________.
a. get goods cheaply b.create jobs
9. NAFTA has had a greatest impact on the _____ of U.S.
a. inflation rate b.unemployment rate

22. THANK YOU !