1. Reid McWilliams David Ricardo

2. DAY 1 (Prep for Video)  International Trade  ISI vs. EOI  Arguments for Free Trade  Arguments against it  Subsidies  Current Negotiations DAY 2  Free Trade Video

3.  The exchange of goods and services between nations CIA World Factbook

4.  50% of World trade  Developed Developed  35% of World trade  Developed Developing  15% of World trade:  Developing Developing

5.  Developed Countries  Technology (High tech goods) ▪ Airplanes and computers  Developing Countries  Basic Textiles and Food ▪ Cloth, Rice, Wheat, etc.

6.  ISI – a policy aimed to attempt to reduce its foreign dependency through the local production of industrialized products.  EOI – aims to speed up the industrialization process of a country through exporting goods in which the given nation has a comparative advantage.  Anyone?  The ability of a country to produce a particular good or service at a lower opportunity cost than another country  Which one demonstrates free trade principles?  What are some advantages and disadvantages to each of these policies?

7.  Advantages  Tariffs on imported goods (usually high)  Helps domestic companies  Disadvantages  Decreased competition  Growth Rate slower than EOI ▪ (The Life You Can Save)  Reliant on government to retain its policies

8.  Advantages  Allows specialization in products YOU are good at because of location, population, etc.  Strong export base allows for global competition and eventually, ▪ diversification of economy. ▪ GDP growth  Disadvantages  Reliant on demand for their specialty

9.  Comparative Advantage  Countries help each other out.  But, it is also about productivity ▪ Who can produce the most amount of one good without sacrificing too much of the other good?  Heckscher and Olin Trade Theory ▪ Simplified: Countries have comparative advantages in goods for which the required factors of production are abundant locally. ▪ Therefore, developing countries will have a comparative advantage in unskilled, labor-intensive products.

10.  Economies of Scale  The increase in efficiency of production as the number of goods being produced increases.  Particularly used between developed countries to determine comparative advantage.  Product Differentiation  Another way to determine comparative advantage between developed countries.  Apple or Windows? All helps to lower overall retail price.

11.  Income Inequality  more export opportunities would raise wages of those primarily producing export goods while increased competition from imports would tend to decrease wages of workers producing substitutable goods domestically.  Increased Unemployment  Low-skilled / Labor-intensive jobs can be exported abroad where employees can be paid less.

12.  Free Trade Agreement between Canada, the United States, and Mexico  Controversial – Americans worried that low-skilled jobs would be exported to Mexico  U.S. – Korea Free Trade Agreement  Let Korea have our beef and cars.

13.  http://www.econ.yale.edu/alumni/reunion99/cline.htm http://www.econ.yale.edu/alumni/reunion99/cline.htm  http://www.fas.org/sgp/crs/row/RL34330.pdf http://www.fas.org/sgp/crs/row/RL34330.pdf  http://shopfloor.org/2010/11/u-s-exports-jobs-depend-on-all-three-pending-trade- agreements/16253 http://shopfloor.org/2010/11/u-s-exports-jobs-depend-on-all-three-pending-trade- agreements/16253  http://www.youtube.com/watch?v=xRJZWfqWcs0 http://www.youtube.com/watch?v=xRJZWfqWcs0  http://aflcionc.org/blog/ http://aflcionc.org/blog/  http://www.census.gov/indicator/www/ustrade.html http://www.census.gov/indicator/www/ustrade.html  http://www.blurtit.com/q605605.html http://www.blurtit.com/q605605.html  http://webcache.googleusercontent.com/search?q=cache:RUlPFLuCPX8J:www.reuter s.com/article/idUSTRE56L1B220090722+world+exports+total+2009&cd=8&hl=en&ct= clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:RUlPFLuCPX8J:www.reuter s.com/article/idUSTRE56L1B220090722+world+exports+total+2009&cd=8&hl=en&ct= clnk&gl=us  http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm  http://www.ask.com/wiki/Import_substitution_industrialization http://www.ask.com/wiki/Import_substitution_industrialization  http://www.ask.com/wiki/Export-oriented_industrialization http://www.ask.com/wiki/Export-oriented_industrialization  http://answers.yahoo.com/question/index?qid=20100301144640AAc04YG http://answers.yahoo.com/question/index?qid=20100301144640AAc04YG  http://www.econ.rochester.edu/Faculty/jones/Palgrave_Jones_on_Heckscher_Ohlin.p df http://www.econ.rochester.edu/Faculty/jones/Palgrave_Jones_on_Heckscher_Ohlin.p df  http://www.nytimes.com/2010/11/12/world/asia/12prexy.html?_r=1&scp=1&sq=us%20 korea%20free%20trade%20agreement&st=cse http://www.nytimes.com/2010/11/12/world/asia/12prexy.html?_r=1&scp=1&sq=us%20 korea%20free%20trade%20agreement&st=cse  http://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_model http://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_model  http://www.investopedia.com/terms/e/economiesofscale.asp http://www.investopedia.com/terms/e/economiesofscale.asp  http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement

14.  Global Economics - Global Exchange: Free Trade & Protection Video  http://www.youtube.com/watch?v=xRJZWfq Wcs0 http://www.youtube.com/watch?v=xRJZWfq Wcs0