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    Carbaugh ch01

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    Daniel Gonzalez Olivares
    The document summarizes key topics from Chapter 1 of the textbook "International Economics" by Robert J. Carbaugh, including: elements of economic interdependence like trade, finance, and multinational corporations; data on exports as a percentage of GDP for various countries; the US's leading trading partners; how interdependence impacts standards of living and economies; how the Asian economic crisis of 1997-98 could impact the US; and definitions of comparative advantage and competitiveness in international trade.

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    Carbaugh ch01

    Uploaded by

    Daniel Gonzalez Olivares
    67 views10 pages
    The document summarizes key topics from Chapter 1 of the textbook "International Economics" by Robert J. Carbaugh, including: elements of economic interdependence like trade, finance, and multinational corporations; data on exports as a percentage of GDP for various countries; the US's leading trading partners; how interdependence impacts standards of living and economies; how the Asian economic crisis of 1997-98 could impact the US; and definitions of comparative advantage and competitiveness in international trade.

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    The document summarizes key topics from Chapter 1 of the textbook "International Economics" by Robert J. Carbaugh, including: elements of economic interdependence like trade, finance, and multinational corporations; data on exports as a percentage of GDP for various countries; the US's leading trading partners; how interdependence impacts standards of living and economies; how the Asian economic crisis of 1997-98 could impact the US; and definitions of comparative advantage and competitiveness in international trade.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    67 views10 pages

    Carbaugh ch01

    Uploaded by

    Daniel Gonzalez Olivares
    The document summarizes key topics from Chapter 1 of the textbook "International Economics" by Robert J. Carbaugh, including: elements of economic interdependence like trade, finance, and multinational corporations; data on exports as a percentage of GDP for various countries; the US's leading trading partners; how interdependence impacts standards of living and economies; how the Asian economic crisis of 1997-98 could impact the US; and definitions of comparative advantage and competitiveness in international trade.

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    You are on page 1of 10

    International Economics

    By Robert J. Carbaugh
    7th Edition
    Chapter 1:
    The international economy
    Elements of interdependence
     Trade: goods, services, raw materials, energy
     Finance: foreign debt, foreign investment, exchange
    rates

     Business: multinational corporations, global production

    Carbaugh, Chap. 1
    2
    Economic interdependence

    Exports of goods and services as percent of


    Gross Domestic Product, 1997
    Country Exports as percent of GDP
    Netherlands 55%
    Norway 41
    Canada 39
    Mexico 31
    South Korea 31
    United Kingdom 29
    Germany 25
    France 25
    United States 12
    Japan 10
    Carbaugh, Chap. 1
    3
    Economic interdependence

    Leading trading partners of the United


    States, 1997
    Value of US Value of US
    Country exports ($ bill.) imports ($ bill.)
    Canada $133 $160
    Japan 68 118
    Mexico 55 76
    United Kingdom 31 31
    South Korea 27 18
    China (incl. Hong Kong) 25 64
    Germany 23 40
    Singapore 17 21
    Belgium/Luxembourg 13 7

    Carbaugh, Chap. 1
    4
    Economic interdependence

    Interdependence: Impact

     Overall standard of living is higher


     Access to raw materials & energy not available at home
     Access to goods & components made less expensively
    elsewhere
     Access to financing and investment not available at home

    Carbaugh, Chap. 1
    5
    Interdependence: Impact
    (cont’d)

     Other impacts - good & bad


     Curtails inflationary pressures at home
     Limits domestic wage increases
     Makes economy vulnerable to external disturbances
     Limits impact of domestic fiscal policy on economy

    Carbaugh, Chap. 1
    6
    The US & the Asian economic
    crisis
     Who could be hurt by the  US firms that sell imports from
    Asian crisis of 1997-98: Asia
     US creditors & investors in  US multinationals wanting
    Asia markets in Asia
     US exporters to Asia  US firms manufacturing in Asia
     US firms that compete with  US firms using components
    Asian imports from Asia
     US workers who compete  US consumers of imports
    with Asian workers

    Carbaugh, Chap. 1
    7
    The US & the Asian economic
    crisis
     Potential macroeconomic effects of the Asian crisis
     US trade balance hurt as exports to the region suffer and
    imports become cheaper
     US economic growth might suffer as a result of Asia’s
    economic decline

    Carbaugh, Chap. 1
    8
    Comparative advantage

    Competitiveness & trade


     Main objective of any nation is to generate high
    and rising standard of living
     No nation can efficiently make everything itself
     International trade allows countries to focus on
    producing what they make efficiently
     Inefficient sectors will be squeezed out
     Sectors open to competition become more
    efficient and productive
    Carbaugh, Chap. 1
    9
    Comparative advantage
    means:

     If the relative cost of making two items is


    different in two countries, each can gain by
    specializing in the one it makes most cheaply -
    each has a comparative advantage in that
    product
     Even countries that make nothing cheaply can
    benefit from specialization

    Carbaugh, Chap. 1
    10

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