BEChapter3课件.ppt

Chapter 3 Trade and Investment Environment Part IInternational Trade How would you define international trade? International trade can be defined as the exchange of goods and services produced in one country for those produced in another country. REASONS FOR INTERNATIONAL TRADE 1) Resource reasons The uneven distribution of resources around the world is one of the basic reasons why nations began and continue to trade with each other. (1) Favorable climatic conditions and terrain Resource reasons (2) Natural resources (3) Skilled workers (4) Capital resources (5) Favorable geographic location and transport costs (6) Insufficient production 2) Economic reasons In addition to getting the products they need, countries also want to gain economically by trading with each other. 3)Political reasons One country might trade with another country in order to support the latter’s government which upholds the same political doctrine.  4)Patterns of demand Even if there are no differences among countries in their capacities at producing goods, consumption preference may make exchange become possible. 5)Innovation or Style (fashion) Even though a country produces enough goods, such as cars, at reasonable costs to meet its demands, it may still import cars from other countries for innovation or variety of style. Evolution of Trade Theory Theories of International Trade 1. Classical Theories of Trade The trade theory Mercantilism formed the foundation of economic thought from about 1500-1800. The theory held that a country’s wealth was measured by its holdings of treasure, usu. in the form of silver and gold. Therefore countries should export more than they import and, if successful, would receive the value of their trade surpluses in the form of gold from the countries that ran deficits. The Theory of Absolute advantage by Adam Smiths in The Wealth of Nations The theory holds that a commodity will be produce