Page 9 - E-NOTE 2-converted

CHAPTER 11: INTERNATIONAL TRADE

DEFINITION/CONCEPT

INTERNATIONAL TRADE: EXCHANGE OF GOODS AND SERVICES BETWEEN
THE PEOPLE OF TWO COUNTRIES
PROTECTIONISM: TRADE RESTRICTION TO PROTECT LOCAL AND INFANT
INDUSTRIES

BALANCE OF PAYMENTS: STATEMENT OF SYSTEMATIC RECORD OF ALL
ECONOMIC TRANSACTION BETWEEN ONE COUNTRY AND THE REST OF THE
WORLD DURING A GIVEN PERIOD OF TIME

BENEFITS OF INTERNATIONAL TRADE

• OBTAIN SPECIALIZATION
• EFFICIENCY PRODUCTION THROUGH COMPETITION
• PREVENT MONOPOLY POWER
• STRENGTHEN THE RELATIONSHIP BETWEEN COUNTRIES
• KNOWLEDGE AND TECHNOLOGICAL SHARING
PROTECTIONISM TOOLS

• TARRIFS
• QUOTA
• EMBARGO
• DUMPING

SIGNIFICANT OF PROTECTIONISM

• PROTECT INFANT AND LOCAL INDUSTRIES
• JOB PROTECTIONISM VS STANDARD OF LIVING VS RETALIATION
• PREVENT DUMPING VS DIVERSIFY ECONOMY
• CHEAP FOREIGN LABOR VS PRODUCTIVITY
• NON-ECONOMIC ARGUMENT

STRUCTURE OF BOP

• CURRENT ACCOUNT
o GOODS
o SERVICES
o TRANSFERS
• CAPITAL AND FINANCIAL ACCOUNT
• ERRORS AND OMISSION
• THE OFFICIAL RESERVES ACCOUNT