1. International Trade

2. International specialization and trade  Different countries specialize in productions and trade (goods and services)  Italy: clothing  Belgium chocolate  Swiss watches  Japanese electronics  Middle east: oil

3. Absolute advantage  Absolute advantage  The country can produce a given amount of goods and services with far less resources, therefore absolute cost advantage over any country.  Ex: middle east and oil

4. Comparative advantage  That country has a lower opportunity cost to produce goods and services over other countries.  Japanese cars

5. International trade  It enables countries to specialize in the production of different products in which they have an advantage and sell surplus to each other.  It involves sales and transport of goods  Services  Movement of employees

6. Advantages  Allows countries:  to produce more output rather than producing a wider range of products  To benefit from goods and services they do not have or is expensive to produce  Firms can benefit from large-economies of scale  To benefit from the best workforce and NR tech. all over the world

7. Disadvantages:  Increases green gas emission  Makes it easier for multinational companies to move to less develop  Develop countries dominate the world for global NR and force down the prices  This will lead between the poor and rich

8. protectionism  Using trade barriers to protect industries and employment from competition.  Tariff  Taxes on imports  So domestic consumers buy less  Subsidies  Grants given to domestic producers  To reduce the cost of production for the local producers  A quota  limit on the volume of imported goods  Embargo  A ban on certain goods. Even all goods from a certain country

9. Arguments for protection  It helps protect small and industries  It protects jobs  It prevents dumping: protects local businesses from bankruptcy  To protect over-specialization: production will suffer if there is fall in demand for that product

10. Arguments against protection  Other counties will retaliate: by introducing barriers  Example: US and the French Champaign, lumber dispute  any loss of jobs from global competition will only be temporary  Protects insufficient domestic firms: consumers will suffer from high prices  It penalizes developing countries: force down subsidies

11. Trade liberalization  To remove barriers between countries  World Trade Organization  Will help countries to resolve disputes between the member countries.