International Trade: Theory and Policy

Cover
Title Page
Copyright
Brief Contents
Contents
Preface
Chapter 1. Introduction
What Is International Economics About?
The Gains from Trade
The Pattern of Trade
How Much Trade?
Balance of Payments
Exchange Rate Determination
International Policy Coordination
The International Capital Market
International Economics: Trade and Money
Part 1: International Trade Theory
Chapter 2. World Trade: An Overview
Who Trades with Whom?
Size Matters: The Gravity Model
Using the Gravity Model: Looking for Anomalies
Impediments to Trade: Distance, Barriers, and Borders
The Changing Pattern of World Trade
Has the World Gotten Smaller?
What Do We Trade?
Service Offshoring
Do Old Rules Still Apply?
Summary
Chapter 3. Labor Productivity and Comparative Advantage: The Ricardian Model
The Concept of Comparative Advantage
A One-Factor Economy
Production Possibilities
Relative Prices and Supply
Trade in a One-Factor World
Determining the Relative Price after Trade
Box: Comparative Advantage in Practice: The Case of Usain Bolt
The Gains from Trade
A Note on Relative Wages
Box: Economic Isolation and Autarky Over Time and Over Space
Misconceptions about Comparative Advantage
Productivity and Competitiveness
Box: Do Wages Reflect Productivity?
The Pauper Labor Argument
Exploitation
Comparative Advantage with Many Goods
Setting Up the Model
Relative Wages and Specialization
Determining the Relative Wage in the Multigood Model
Adding Transport Costs and Nontraded Goods
Empirical Evidence on the Ricardian Model
Summary
Chapter 4. Specific Factors and Income Distribution
The Specific Factors Model
Box: What is a Specific Factor?
Assumptions of the Model
Production Possibilities
Prices, Wages, and Labor Allocation
Relative Prices and the Distribution of Income
International Trade in the Specific Factors Model
Income Distribution and the Gains from Trade
The Political Economy of Trade: A Preliminary View
The Politics of Trade Protection
Trade and Unemployment
Case Study: U.S. Manufacturing Employment and Chinese Import Competition
Box: The Trump Trade War
International Labor Mobility
Case Study: Immigration and the U.S. Economy
Summary
Appendix To Chapter 4: Further Details on Specific Factors
Marginal and Total Product
Relative Prices and the Distribution of Income
Chapter 5. Resources and Trade: The Heckscher-Ohlin Model
Model of a Two-Factor Economy
Prices and Production
Choosing the Mix of Inputs
Factor Prices and Goods Prices
Resources and Output
Effects of International Trade between Two-Factor Economies
Relative Prices and the Pattern of Trade
Trade and the Distribution of Income
Case Study: North-South Trade and Income Inequality
Skill-Biased Technological Change and Income Inequality
Box: The Declining Labor Share of Income and Capital-Skill Complementarity
Factor-Price Equalization
Empirical Evidence on the Heckscher-Ohlin Model
Trade in Goods as a Substitute for Trade in Factors: Factor Content of Trade
Patterns of Exports between Developed and Developing Countries
Implications of the Tests
Summary
Appendix To Chapter 5: Factor Prices, Goods Prices, and Production Decisions
Choice of Technique
Goods Prices and Factor Prices
More on Resources and Output
Chapter 6. The Standard Trade Model
A Standard Model of a Trading Economy
Production Possibilities and Relative Supply
Relative Prices and Demand
The Welfare Effect of Changes in the Terms of Trade
Box: U.S. Consumer Gains from Chinese Imports
Determining Relative Prices
Economic Growth: A Shift of the RS Curve
Growth and the Production Possibility Frontier
World Relative Supply and the Terms of Trade
International Effects of Growth
Case Study: Has the Growth of Newly Industrialized Economies Hurt Advanced Nations?
Box: The Exposure of Developing Countries to Terms of Trade Shocks and the COVID-19 Pandemic
Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD
Relative Demand and Supply Effects of a Tariff
Effects of an Export Subsidy
Implications of Terms of Trade Effects: Who Gains and Who Loses?
International Borrowing and Lending
Intertemporal Production Possibilities and Trade
The Real Interest Rate
Intertemporal Comparative Advantage
Summary
Appendix To Chapter 6: More on Intertemporal Trade
Chapter 7. External Economies of Scale and the International Location of Production
Economies of Scale and International Trade: An Overview
Economies of Scale and Market Structure
The Theory of External Economies
Specialized Suppliers
Labor Market Pooling
Knowledge Spillovers
External Economies and Market Equilibrium
External Economies and International Trade
External Economies, Output, and Prices
External Economies and the Pattern of Trade
Trade and Welfare with External Economies
Box: Holding the World Together
Dynamic Increasing Returns
Interregional Trade and Economic Geography
Box: The City and the Street
Summary
Chapter 8. Firms in the Global Economy: Export and Foreign Sourcing Decisions and Multinational Enterprises
The Theory of Imperfect Competition
Monopoly: A Brief Review
Monopolistic Competition
Monopolistic Competition and Trade
The Effects of Increased Market Size
Gains from an Integrated Market: A Numerical Example
The Significance of Intra-Industry Trade
Case Study: Automobile Intra-Industry Trade within ASEAN-4: 1998–2002
Firm Responses to Trade: Winners, Losers, and Industry Performance
Performance Differences across Producers
The Effects of Increased Market Size
Trade Costs and Export Decisions
Dumping
Case Study: Antidumping as Protectionism
Multinationals and Foreign Direct Investment
Patterns of Foreign Direct Investment Flows around the World
Case Study: COVID-19 and Foreign Direct Investment Flows around the World
Foreign Direct Investment and Foreign Sourcing Decisions
The Horizontal FDI Decision
The Foreign Sourcing Decision
The Outsourcing Decision: Make or Buy
Box: Whose Trade Is It?
Case Study: Shipping Jobs Overseas? Offshoring and Labor Market Outcomes in Germany
Consequences of Multinationals and Foreign Outsourcing
Summary
Appendix To Chapter 8: Determining Marginal Revenue
Part 2: International Trade Policy
Chapter 9. The Instruments of Trade Policy
Basic Tariff Analysis
Supply, Demand, and Trade in a Single Industry
Effects of a Tariff
Measuring the Amount of Protection
Costs and Benefits of a Tariff
Consumer and Producer Surplus
Measuring the Costs and Benefits
Case Study: Winners and Losers of the Trump Trade War
Box: Tariffs and Retaliation
Other Instruments of Trade Policy
Export Subsidies: Theory
Box: The Unfriendly Skies: Settling the Longest Running Trade Dispute
Import Quotas: Theory
Case Study: Tariff-Rate Quota Origin and its Application in Practice with Oilseeds
Voluntary Export Restraints
Local Content Requirements
Box: Healthcare Protection with Local Content Requirements
Other Trade Policy Instruments
The Effects of Trade Policy: A Summary
Summary
Appendix To Chapter 9: Tariffs and Import Quotas in the Presence of Monopoly
The Model with Free Trade
The Model with a Tariff
The Model with an Import Quota
Comparing a Tariff and a Quota
Chapter 10. The Political Economy of Trade Policy
The Case for Free Trade
Free Trade and Efficiency
Additional Gains from Free Trade
Rent Seeking
Political Argument for Free Trade
National Welfare Arguments against Free Trade
The Terms of Trade Argument for a Tariff
The Domestic Market Failure Argument against Free Trade
How Convincing Is the Market Failure Argument?
Income Distribution and Trade Policy
Electoral Competition
Collective Action
Box: Politicians for Sale: Evidence from the 1990s
Modeling the Political Process
Who Gets Protected?
International Negotiations and Trade Policy
The Advantages of Negotiation
International Trade Agreements: A Brief History
The Uruguay Round
Trade Liberalization
Administrative Reforms: From the GATT to the WTO
Benefits and Costs
Box: Settling a Dispute—and Creating One
Case Study: Testing the WTO’s Metal
The End of Trade Agreements?
Box: Do Agricultural Subsidies Hurt the Third World?
Preferential Trading Agreements
Box: Free Trade Area Versus Customs Union
Box: Brexit
Case Study: Trade Diversion in South America
The Trans-Pacific Partnership
Summary
Appendix To Chapter 10: Proving That the Optimum Tariff Is Positive
Demand and Supply
The Tariff and Prices
The Tariff and Domestic Welfare
Chapter 11. Trade Policy in Developing Countries
Import-Substituting Industrialization
The Infant Industry Argument
Promoting Manufacturing through Protection
Case Study: Export-Led Strategy
Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization
Trade Liberalization since 1985
Trade and Growth: Takeoff in Asia
Box: India’s Boom
Summary
Chapter 12. Controversies in Trade Policy
Sophisticated Arguments for Activist Trade Policy
Technology and Externalities
Imperfect Competition and Strategic Trade Policy
Box: A Warning From Intel’s Founder
Case Study: When the Chips Were Up
Globalization and Low-Wage Labor
The Anti-Globalization Movement
Trade and Wages Revisited
Labor Standards and Trade Negotiations
Environmental and Cultural Issues
The WTO and National Independence
Case Study: A Tragedy in Bangladesh
Globalization and the Environment
Globalization, Growth, and Pollution
The Problem of “Pollution Havens”
The Carbon Tariff Dispute
Trade Shocks and Their Impact on Communities
Summary
Mathematical Postscripts
Postscript to Chapter 5: The Factor-Proportions Model
Factor Prices and Costs
Goods Prices and Factor Prices
Factor Supplies and Outputs
Postscript to Chapter 6: The Trading World Economy
Supply, Demand, and Equilibrium
Supply, Demand, and the Stability of Equilibrium
Effects of Changes in Supply and Demand
Economic Growth
A Transfer of Income
A Tariff
Postscript to Chapter 8: The Monopolistic Competition Model
Merchandise Trade Flows with the United States (in 2018 U.S. dollars)
Gross National Product per Capita (in 2019 U.S. dollars)
Index
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W