Warm-up

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?