Chapter 1 Trade in the Global Economy.pptx

Trade in the Global Economy Prepared by:Fernando QuijanoDickinson State University 1 1 International Trade 2 Migration and Foreign Direct Investment 1 International Trade The Basics of World Trade Export : products sold from one country to another Import: products bought by one country from another Trade balance: the difference between its total value of exports and its total value of imports (usually including both goods and services) Trade surplus and trade deficit: Exports Imports or Exports Imports An iPod Has Global Value. Ask the (Many) Countries That Make It. Who makes the Apple iPod? Apple outsources the entire manufacture of the device to a number of Asian enterprises The iPod, like many other products, is made in several countries by dozens of companies, with each stage of production contributing a different amount to the final value The real value of the iPod doesn’t lie in its parts or even in putting those parts together. The bulk of the iPod’s value is in the conception and design of the iPod 1 International Trade The Basics of World Trade The iPod is valued at about $150 when it leaves the dock in China en route to the United States. It doesn’t really make sense to count the entire $150 iPod as a Chinese export to the United States, as is done in official trade statistics, when only $4 is the value-added in China. The difference between the value of the iPod when it leaves China and the cost of parts and materials purchased in China and imported from other countries. APPLICATION Is Trade Today Different from the Past? FIGURE 1-1 (a) The Changing Face of U.S. Import Industries, 1925–2009 The types of goods imported by the United States has changed drastically over the past 84 years. Is Trade Today Different from the Past? FIGURE 1-1 (b) The Changing Face of U.S. Export Industries, 1925–2009 The types of exported by the United States has also changed drastically over the past 84 years. APPLICATION Map of World Trade FIGURE 1-2 World Trade