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International Economics Theory and policy (8 Edition);Chapter 1Introduction;Preview;4;5;1.1 What Is International Economics About?;What Is International Economics About? (cont.);Fig. 1-1: Exports and Imports as a Percentage of U.S. National Income;Fig. 1-2: Exports and Imports as Percentage of National Income in 2005;1.2 Gains from Trade(why there is trade between nations);Gains from Trade (cont.);Gains from Trade (cont.);Gains from Trade (cont.);1.3 Patterns of Trade (how to trade);The Effects of Government Policies on Trade (Trade Policies);The Effects of Government Policies on Trade (cont.);Chapter 2Part Ⅰ;
1. Who Trade with Whom?
Explain with The Gravity Model(引力模型:在其他条件不变的情况下,两国间的贸易规模和两国GDP成正比,与两国间的距离成反比)
;Tij = A x Yi x Yj /Dij
where
Tij is the value of trade between country i and country j
A is a constant
Yi the GDP of country i
Yj is the GDP of country j
Dij is the distance between country i and country j
;Fig. 2-2: The Size of European Economies, and the Value of Their Trade with the United States;Other things beside size matter and distance for trade:;3) Multinational corporations: corporations spread across different nations import and export many goods between their divisions.
4) Borders: crossing borders involves formalities that take time and perhaps monetary costs like tariffs.
These implicit and explicit costs reduce trade.
The existence of borders may also indicate the existence of different languages (see 2) or different currencies, either of which may impede trade more.
;Fig. 2-3: Economic Size and Tradewith the United States;2. The changing Pattern of World Trade
World trade is a moving target. The direction and composition of world trade is quite different today from what it was a generation ago. The followings are some of the main trends:
1) The world has gotten smaller
The negative effect of distance on trade according to the gravity models is significant, but it has grown smaller over time due to modern transportatio
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