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International Trade and Economic Development

Explore the concepts of international trade, export, import, and the advantages and disadvantages they bring. Learn about free trade agreements, the impact of globalization, and the role of organizations like IMF and World Bank. Discuss concerns over income inequality, worker exploitation, and the importance of international cooperation. Consider factors contributing to a nation's wealth and the significance of investing in human capital.

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International Trade and Economic Development

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  1. Warm-up • Make a list of 5 products, services, or ideas you believe we import. • Make a list of 5 products, services, or ideas that you believe we export • Why are some nations wealthy and others not?

  2. Unit VII – The global Economy International Trade, International Economic Development

  3. International Trade • Export – • Goods sold to another country • Import – • Goods bought from another country –

  4. Exports by nation

  5. Advantages of International Trade • Obtaining scarce goods – nations trade for goods that they can otherwise not get on their own • EX – diamonds in the US, commercial aircraft to the rest of the world • Comparative advantage – ability of one country to produce a good more efficiently than another. • Japan makes TV’s better than the US does, so we get our TV’s from them

  6. Advantages of International Trade • Creating jobs – by exporting products, producers expand market and thus can hire more workers

  7. Supporting domestic industries • Tariffs – tax on imports to make them more expensive to buy than domestic goods • Some foreign luxury cars are more expensive than domestic luxury cars • Quotas – limit on the amount of foreign goods imported • Reagan put a limit on Japanese cars in the 1980’s to save American autoworkers

  8. Free Trade Zones • Area where goods may be handled and manufactured without the intervention of customs • Sea ports, international airports,

  9. Free Trade Agreements • WTO – oversees and organizes trade rules, settles trade disputes, and helps developing countries • Criticism • Favors major corporations instead of workers, environment, and poor countries

  10. International Trade as a political Weapon • Embargos – nation’s agree to block trade with a target nation • WWII, embargo against Germany, Japan by USA.

  11. International Trade as a political Weapon • Trade Agreements – reduce or eliminate restrictions between nations to promote free trade

  12. Trade • Balance of trade – difference between value of exports and imports • Trade surplus – exports > imports = making money • Trade deficit – exports < imports = losing money

  13. Negatives of a trade deficit • Lower GDP • Higher national debt • Higher unemployment • Lower savings rates

  14. Globalization

  15. Warmup 5/18 • What do you think the term globalization means?

  16. Free Trade Agreements • NAFTA – USA, Mexico, Canada – eliminated barriers to trade between the countries • EU – goods, services, and people can move freely between these countries; uses euro as currency

  17. Free Trade Agreements • IMF – allows countries to donate to money pool and then borrow when they need to meet payments • CAFTA – USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicuragua, Dominican Republic • SEATO – Australia, France, New Zealand, Pakistan, Philippines, Thailand, UK, USA (no longer in effect) • World Bank – provides loans to developing countries

  18. What has the increase in international trade created among nations of the world? • Income inequality

  19. Concerns over international trade • Environmental – difficult to monitor multinational (MNC) businesses b/c of varying environmental regulations • Worker exploitation – MNC’s use nations with cheap labor to increase profit margin’s at expense of worker safety and health.

  20. Internationalism • Nations should cooperate to promote common aims

  21. United Nations (UN) • Environmental – Leaders signed treaties to safeguard animal and plant life and limit global pollution • Income inequality – called on businesses to promote economic development in the countries they operate in.

  22. United Nations (UN) • Human Rights – basic freedoms that all people should enjoy • Universal Declaration of Human Rights – basic rights that all people should have (movement, seek asylum, nationality, property, have a family, etc) • International Tribunals – courts that hear and make judgments on violations of human rights

  23. Nations to choose from • Singapore • Japan • Nigeria • Russia • Argentina

  24. Closing Questions – Why are some nation’s wealthy? • Answer in a few sentences each question on the same sheet of paper as your warm-up and turn in before class ends. • How important are natural resources to a nation’s wealth? • What are the major factors that encourage long-term economic growth? • How does per capita GDP relate to the quality of life? Why is this important? • What do we mean by investment in human capital?

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