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INTERNATIONAL TRADE

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by

Renz Deocampo

on 5 August 2014

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Transcript of INTERNATIONAL TRADE

INTERNATIONAL TRADE
Products on the International Market
Food
Clothes
Spare parts
Oil
Jewelry
Wine
Stocks
Currencies
Water
Advantages:
~ increase efficiency of trading globally

Specialization - trading with another country that can produce an item if a country cannot produce it

~ allows countries to participate in global economy
THANK YOU!
Group 2
Deocampo, Renz Edmond
Neo-Ricardian Theory

~ input goods are explicitly included
~ analysis is limited to small country cases
International Production Fragmentation Theory

~ allocates a specialized slice or segment of the value of chain of the global production
Models of International Trade
Adam's Smith Model

~ trading taking place on the basis of countries exercising absolute advantage over one another
International Trade
~exchange of goods and services between countries

~allows to expand markets for both goods and services that may not have been available

~previously referred as "trade over long distance"
Gravity Model

~ predicts trade based on the distance between countries and interaction of the countries' economic sizes
Leduna, Wilma Ann
Tesipao, Jenny Rose
Castro, Renzo
Perocho, Johnna Liza
Macapobre, Jenevy
Rodriguez, Anthony
Mohinog, Jerequel Angelo
ECO 1
3:30-4:30
Other Services:

Tourism
Banking
Consulting
Transportation
Disadvantages:
~ capital and labor are less mobile and costly
compared with domestic

~ does not promote local product

~ creates margin for inefficiences
Ricardian Model
~ proposed by David Ricardo
~ focuses on comparative advantage
~ based on the ff: assumptions
* labor is the only primary input to production

* relative radios of labor differ between countries and government
~
Heckscher-Ohlin Model
~ known as H-O model
~ results to countries produce and export
goods that require abundant resources
and import goods that require scarce
resources

Core Assumptions:
* labor and capital flow freely between
sectors
* labor and capital differs
* technology is the same in two countries
* tastes are the same
Theory of International Trade
New Trade Theory

~ considers trade between countries with
similar factor endowment and productivity
levels and multinational production
Ricardian Theory

~ Two-commodity or two-country model

Ricardo-Sraffa Theory

~ constructed in a form to include intermediate
input trade for most general case of many
counties and many goods
Sullani, Janine Joy
Full transcript