Voyevodins' Library _ "International Business: Competing in the Global Marketplace" / Charles W.L. Hill ... Chapter 4 ... currency speculation, currency swap, currency translation, current account, current account deficit, current account surplus, current cost accounting, current rate method, customs union, D'Amato Act, deferral principle, democracy, deregulation, diminishing returns to specialization, dirty-float system, draft, drawee, dumping, eclectic paradigm, e-commerce, economic exposure, economic risk, economic union, economies of scale, ecu, efficient market, ending rate, ethical systems, ethnocentric behavior, ethnocentric staffing, eurobonds, eurocurrency, eurodollar, European Free Trade Association (EFTA), European Monetary System (EMS), European Union (EU), exchange rate, exchange rate mechanism (ERM), exclusive channels, expatriate failure, expatriate manager, experience curve, experience curve pricing, export management company, Export-Import Bank (Eximbank), exporting, externalities, externally convertible currency, factor endowments Voevodin's Library: currency speculation, currency swap, currency translation, current account, current account deficit, current account surplus, current cost accounting, current rate method, customs union, D'Amato Act, deferral principle, democracy, deregulation, diminishing returns to specialization, dirty-float system, draft, drawee, dumping, eclectic paradigm, e-commerce, economic exposure, economic risk, economic union, economies of scale, ecu, efficient market, ending rate, ethical systems, ethnocentric behavior, ethnocentric staffing, eurobonds, eurocurrency, eurodollar, European Free Trade Association (EFTA), European Monetary System (EMS), European Union (EU), exchange rate, exchange rate mechanism (ERM), exclusive channels, expatriate failure, expatriate manager, experience curve, experience curve pricing, export management company, Export-Import Bank (Eximbank), exporting, externalities, externally convertible currency, factor endowments


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Chapter 4 Outline

Introduction

The opening case illustrates the gains that come from international trade. For a long time the economic policies of the Ghanaian government discouraged trade with other nations. The result was a shift in Ghana's resources away from productive uses (growing cocoa) and toward unproductive uses (subsistence agriculture). The economic policies of the South Korean government encouraged trade with other nations. The result was a shift in South Korea's resources away from uses where it had no comparative advantage in the world economy (agriculture) and toward more productive uses (labor-intensive manufacturing). As a direct result of their policies toward international trade, Ghana's economy declined while South Korea's grew.

This chapter has two goals that are related to the story of Ghana and South Korea. The first is to review a number of theories that explain why it is beneficial for a country to engage in international trade. The second goal is to explain the pattern of international trade that we observe in the world economy. We will be primarily concerned with explaining the pattern of exports and imports of products between countries. The pattern of foreign direct investment between countries will be discussed in Chapter 7.

<< The Gains from Trade--Ghana and South Korea
An Overview of Trade Theory >>