Questions and Answers
What was the primary exchange mechanism during the period of 1870-1913?
What led to the collapse of the gold standard?
What is the current global economic trend since 2009?
What was established during the period of 1945-1980?
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What is a characteristic of the period of 1980-2008?
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What is a consequence of the financial market crisis?
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What is a characteristic of mercantilism?
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What determines the country with an absolute advantage?
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What is an example of an endogenous cause of absolute advantage?
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What happens when countries specialize and export goods for which they have an absolute advantage?
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What is globalization described as?
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What is an indicator of globalization?
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Why do countries gain from trade?
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What are the causes of absolute advantages partly influenced by?
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What is the main purpose of the Atlas of Economic Complexity?
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What is one of the negative aspects of globalization mentioned in the lecture?
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What is the primary goal of mercantilism?
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What is the result of a zero-sum game in international trade?
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What is one of the benefits of globalization mentioned in the lecture?
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What is the primary measurement of wealth in mercantilism?
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What is the concept that suggests that voluntary trade can be a win-win situation?
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Which of the following organizations provides data on international trade?
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What is the primary focus of international economics for businesses?
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What is the structure of the course divided into?
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What is one of the learning objectives of the course?
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What is the duration of the written exam?
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What types of questions can be expected in the written exam?
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What is attached to the exam papers?
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When is the post-exam review?
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What is the primary resource for the course?
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What is the main purpose of international economics for businesses?
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What is one of the aspects of international economics that businesses need to observe?
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Why was it difficult to transport meat and animal fat over long distances before 1895?
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What is the reason why copper has lower transport costs compared to iron ore?
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What happened to the market power of sugar producers?
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What does 'capital export' mean?
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What does 'net' mean in the context of capital export?
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Why do countries export and/or import capital?
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Which country has an absolute advantage in producing cocoa?
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What is the definition of absolute advantage?
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Study Notes
Introduction to International Economics
- International economics is relevant for businesses due to global value chains, foreign competitors, product innovations, and foreign markets and demand.
- Access to financial markets and regulation of trade, production, and prices are essential for businesses.
Structure and Tools of the Course
- The course will cover theoretical building blocks, empirical overviews, and economic tools.
- The course will include exercises, such as check your knowledge, apply your knowledge, and model-based reasoning.
Learning Objectives of the Course
- Understand the gains from trade, patterns of trade, and negative aspects of globalization.
- Analyze barriers to trade and their impact on trade and welfare.
- Familiarize yourself with concepts of international statistics and stylized facts.
- Compare determinants of exchange rates and understand how they affect international businesses.
- Know the institutions that shape world trade and economic integration.
- Make use of models for policy recommendations to reduce current account imbalances and exchange rate fluctuations.
- Learn what managers have to observe in an international context.
Written Exam
- The exam will be offered in July 2024 and January/February 2025, with the same conditions and content.
- The exam will consist of single-choice questions, brief explanations of terms and concepts, short answers, analyses of graphs and tables, calculations, and paraphrase and discussion of statements.
- A formulary will be attached to the exam papers.
Preparation for the Course and Exams
- Slides, handouts, and additional resources will be available via Moodle.
- The course will mainly use Salvatore, D. World, as well as sources from the World Bank, IMF, WTO, and OECD.
A New Phenomenon?
- The phenomenon of globalization has evolved over time, with different phases of globalization and deglobalization.
- The gold standard, protectionism, and two world wars led to the collapse of the gold standard.
- The Bretton Woods regime, improvements in telecommunication and transportation, and the rise of international capital flows and liberalized financial markets have contributed to globalization.
Globalization: Good or Bad?
- Globalization has both positive and negative aspects, including more competition, harmonization of available goods, interdependent production processes, and the free flow of factors.
- The negative aspects include lower incomes, loss of employment, and the spread of crises.
Absolute Advantage
- Mercantilism, a dominant doctrine in the 16th-17th century, saw trade as a zero-sum game, where one country's gain was another country's loss.
- Adam Smith argued that voluntary trade can lead to gains from trade, making it a win-win situation.
- A country has an absolute advantage in the production of a good if it can produce it with the lowest resource input of all countries.
- Absolute advantage can be due to exogenous factors, such as natural resources, or endogenous factors, such as technology and education.
In a Nutshell
- Globalization describes the development of rising economic integration and interdependencies between countries.
- There have been different phases of (de)globalization due to structural changes.
- Indicators help us to describe and analyze globalization and trade.
- Absolute advantage means that a country can produce a good or service with lower resource input than all other countries.
- A country gains from trade if it has an absolute advantage in the production of a good or service and specializes in it.
Exercises
- Understanding statistics: capital export and import, and the concept of "net" in international trade.
- A numerical example of absolute advantages: Ghana and South Korea's production of cocoa and rice.
- Definition of absolute advantage: a country has an absolute advantage in the production of a good if it is more productive, i.e., it can produce it with the lowest resource input of all countries.
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Description
Explore the relevance of international economics for businesses and learn about the structure and tools of the course, covering theoretical, empirical, and economic aspects.
