Chapter 1 Developing CountriesGrowth, Crisis, and Reform 克鲁格曼 教材.pptVIP

* Chapter 1 Introduction Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Chapter Organization Introduction What is International Economics About? International Economics: Trade and Money The study of international economics has never been as important as it is now. At the beginning of the 21st century, nations are more closely linked through trade in goods and services, through flows of money, and through investment in each others’ economies than ever before. Figure 1-1 shows that international trade for the United States has roughly tripled in importance compared with the U.S. economy as a whole. Introduction Figure 1-1: Exports and Imports as a Percentage of U.S. National Income Introduction Figure 1-2: Exports and Imports as Percentages of National Income in 1994 Introduction The Pattern of Trade (who sells what to whom?) Climate and resources determine the trade pattern of several goods. In manufacturing and services the pattern of trade is more subtle. There are two types of trade: Interindustry trade depends on differences across countries. Intraindustry trade depends on market size and occurs among similar countries. What is International Economics About? How Much Trade? Many governments are trying to shield certain industries from international competition. This has created the debate dealing with the costs and benefits of protection relative to free trade. Advanced countries’ policies engage in industrial targeting. Developing countries’ policies promote industrialization: Import substitution versus export promotion industrialization. What is International Economics About? The Balance of Payments Some countries run large trade surpluses. For example, in 1998 both China and South Korea ran trade surpluses of about $40 billion each. Is it good to run a trade surplus and bad to run a trade deficit? Exchange Rate Determination The role of changin