Chapter3The World of International Trade
Chapter 3 The World of International Trade
AncientSilkRoadtraderoutesacrossEurasiabERMo福eeIndianOcea
Ancient Silk Road trade routes across Eurasia
OutlineInternational Trade>Environment (Agreements and Organizations)·AFrameworkforTradeAnalysisTheSETPSystemMarketldentification>Impediments toTradeTrade IntermediariesComparativeandCompetitiveAdvantageNew Theoriesof International TradeRD
Outline ▪ International Trade ➢Environment (Agreements and Organizations) • A Framework for Trade Analysis ➢The SETP System ➢ Market Identification ➢Impediments to Trade ➢Trade Intermediaries • Comparative and Competitive Advantage • New Theories of International Trade • Real Exchange Rates
International TradeThe impetus for the existence and expansion ofinternational trade is the same as that for anycommercial transaction:value creation.Internationaltrade creates value for both producers andconsumersincreases demand forraisingpricesandvolumesexportableproductsreducingpricesand increasingincreases thesupplyInternationalavailabilityand varietyforforimportableproductsTradeconsumersincreasesthe efficiencyreduces productioncostsofresource allocationand lowers inputcostsEconomiesworldwideof Scale
International Trade ▪ The impetus for the existence and expansion of international trade is the same as that for any commercial transaction: value creation. International trade creates value for both producers and consumers International Trade increases demand for exportable products raising prices and volumes increases the supply for importable products reducing prices and increasing availability and variety for consumers increases the efficiency of resource allocation worldwide reduces production costs and lowers input costs Economies of Scale
InternationalTradeInternational trade leads to increased exposure forbothfirms and countries to theforces intheinternational economy,and disruption andrestructing>Changes inpricesand>increasethe risks of aIncreasedopennesstodemand in export marketsfirm's operationsthe international>Changes inpricesandsupplyinimportedproductseconomicenvironment>reducethestabilityof>Changesinexchangeratesacountry'seconomyLess expensiveorIncreasedcompetitionDisruption and restructinghigher-qualityfordomesticfirmsimportedproducts
▪ International trade leads to increased exposure for both firms and countries to the forces in the international economy, and disruption and restructing. International Trade Increased openness to the international economic environment ➢Changes in prices and demand in export markets ➢Changes in prices and supply in imported products ➢Changes in exchange rates ➢increase the risks of a firm’s operations ➢reduce the stability of a country’s economy Less expensive or higher-quality imported products Increased competition for domestic firms Disruption and restructing