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Questions tagged [international-trade]

International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications.

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Correct way to measure Defence budget of a country like India [closed]

I read that defence budget of the country is 2-3% of GDP, but isnt GDP irrelevant when we are talking about expenditure? Shouldn't it be in a ratio of military import/total import?
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264 views

What are the factors that drive openness in developed vs developing countries

My questions are: What are the factors (both positive and negative) that drive openness in a country? Do they differ between developed (e.g USA) and developing (e.g China) countries? Will these ...
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What sectors would be most affected positively or negatively by Trump´s trade agreement renegotiations?

One of Trump´s stated policies is that he will renegotiate the trade agreements with China and the Canada and México (NAFTA). This renegotiation might go well in which maybe the US gets freer access ...
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110 views

Container-shipping industry

Why is the container-shipping industry in a downturn? Investments in container-shipping, oil production and drilling—sectors suffering severe, concurrent downturns—are no longer the safe bets they ...
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Eric Reinert's conspiracy theory?

After read Eric Reinert's "How Rich Countries Got Rich ... and Why Poor Countries Stay Poor", I've got the question: Reinert theory is: Rich West countries are investing to advanced branches at ...
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In a trade imbalance does the importing country's currency become more valuable?

Suppose that country A buys freely from country B, but B uses steep tarriffs to block its citizens from buying from A. In that case country A's currency will pile up in B. Other things being equal, ...
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40 views

Financial integration and connection between savings and investment

I'm having some difficulty to understand the following sentence:«(...) there's a tight connection between domestic savings and investments at the national level, but very little when we look at the ...
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2answers
472 views

Can a closed economy flourish?

I was wondering if it is possible to run a country based only on domestic economy and not to enter the world economy. Basically, if certain economy of a certain country fails and poses threat to world ...
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Do trade policies have to change after Brexit?

Being part of the EU is surely not the only way to participate in a free trade market. Could the UK continue with the same policies despite not being part of the EU?
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67 views

Formula for feasibility for production versus import

Is there a formula that can tell us whether it's better for a country to produce something inside (creating tariffs & regulations, subsidies) or it is better to import (lowering tariffs, etc)? ...
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Public Records for multinational publicly traded companies

I want to get data on the locations of the operations of major multinational oil companies such as Shell and BP and how much money and output those operations have for the purpose of studying market ...
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1answer
267 views

How does an import driven economy function?

Can a country's economy,where everything is imported from other countries, solely depend on the income from its retail industry?
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253 views

Labor as a commodity

Can anyone enlighten me if there are economic theories where labor is considered as a commodity like cloth and wine in the Ricardo theory, so that it can be exported and imported similarly to other ...
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378 views

Is a 'Brexit' really that bad?

There seems to be a lot of fear that a Brexit will have a very bad impact on both the European and the British economy. Why would this be, does a Brexit imply that there will be less trade between EU-...
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Are Trade Blocs regionalism rather than Globalisation

While studying globalisation, The subject of Trade Blocs was brought up, with hindsight, I wondered, aren't Trade Blocs fostering regionalism (as in devotion to the interests of one's own region) as ...
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298 views

Omitted variables in gravity model

I'm trying to construct a gravity model for EU trade flows using a panel dataset, but am suffering from what appears to be a persistent omitted variable problem. My residuals display a queer log-like, ...
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3answers
130 views

Russian ruble drop in value due to low oil prices

http://www.americanactionforum.org/research/impact-falling-oil-prices-russian-financing/ Based on the above article, the author states that "For budgeting, this favors the oil exporter, because a ...
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36 views

Why would investors from other countries want to invest in a country with a large CA deficit?

According to my textbook, the current account and financial account must balance; therefore, a country w/ at large CA deficit will need to fund this by a financial account surplus (i.e. they need to ...
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33 views

Differences between international and national creditors

When considering a nations debt, how does it affect the nation whether its debt is held by national or international creditors? If there is preference does this translate into different prices for the ...
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83 views

Why would Switzerland, with its export-driven economy, worry about weakening against the dollar?

I was reading about the SNB's decision to abandon the peg in 2015, and among the various articles I read, one from CNBC quoted the SNB president saying the following "The euro has depreciated ...
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49 views

Which currency is preferred when countries with different currencies purchase imports/sell exports?

For example, when a company in the United States sells goods to a company or distributor in China, does the U.S. company accept payment in yuan (which it then exchanges for dollars on the currency ...
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2answers
273 views

What percentage of UK imports/exports were with the EU in the economic year 2015-2016?

With the referendum over whether or not the UK should leave the EU or not I am interested to know what percentage of UK trade is made up of trade within the EU (Imports & exports). I am aware ...
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Why shouldn't the relative prices change in the Heckscher-Ohlin model?

I'm having trouble with the Rybczynski theorem. Let's say there's a migration to the domestic economy, increasing the Labor endowment. It states that the production of the good that uses labor more ...
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What are some famous examples of infant industries that failed?

The Japanese and Korean car and steel industries are often touted as examples of successful infant industries. I'm trying to find some famous examples of failed infant industries. (They don't seem ...
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Cloth, Corn and Gold: James Stuart Mill example

I don't quite get James Stuart Mill's example of cloth, corn and gold in "Elements of Political Economy". He supposes that 20 yards of cloth takes the same amount of effort to make as 4 quarters of ...
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376 views

Why does only relative price and not absolute price matter in international trade models?

Suppose I have two teachers: Adam and Bob. Suppose Adam takes 20 hours to lecture and 30 hours to grade, while Bob takes 100 hours to lecture and 60 hours to grade. In absolute terms, Adam is ...
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362 views

How does one derive relative demand?

Suppose I have two markets, Home and Foreign. Suppose that $$\frac{p_1}{p_2} = \frac{c_2^F}{c_1^F}$$ $$\frac{p_1}{p_2} = \frac{c_2^H}{c_1^H}$$ Supposedly I am supposed to be able to show $$\frac{...
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194 views

In the Ricardian model, why are two out of 3 cases invalid?

I am considering the Ricardian model. There is an economy with two countries $S,T$. Two goods $a,b$. Each country has linear production technology with labor ($\ell$) as only factor of production. $...
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41 views

Is it valid to assume that the international price of consumer durables is constant?

While studying tariffs in International Trade, we often come across a Demand Supply diagram along with a world supply curve that is perfectly elastic. Here we assume that the international or the ...
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2answers
65 views

What interesting insights can be gleaned from specific data on imports and exports.

There is a ton of open data available on how much of a particular good is imported/exported. So, let's say I have 20 years of data on how many tomatoes are imported to each country in Scandinavia? ...
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2answers
5k views

Determining the Relative Price of Trade

I'm pretty sound with the concept behind comparative advantage, but still don't get how to calculate the exchange rate in terms of quantities of each products being exchanged, e.g. 1 apple for 2 cars ...
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185 views

How can foreign protectionism affect local FDI

I am citing an article here: In a speech at the G-20 in Istanbul, TİM’s Mehmet Büyükekşi said, “Protectionism is increasing in every market around the world and it is affecting not only Turkish ...
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1answer
89 views

US trade outpaces GDP

I notice that US exports doubled between 2000 and 2011, imports also increasing greatly, but GDP only grew by 20%. Thus, trade in the United States seems to have grown substantially faster than ...
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35 views

How does Global Saving Glut flood the market with cash?

When I was browsing the internet last night, I read a couple articles on the Global Saving Glut. And many has ascribed it to be a cause of US financial crsis. My question is how so? The articles argue ...
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2answers
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Why does the Balance of Payments have to (more or less) equal zero

It seems to me that the non-reversible transactions included in the current account, and the reversible transactions included in the capital and financial account, are unrelated, and should therefore ...
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4answers
14k views

Why are imports subtracted from GDP?

GDP is a measure of a country's production. $$GDP = C + I + G + X_n$$ $C$ = Consumer Consumption $I$ = Gross Investment $G$ = Government Expenditures $X_n$ = Exports - Imports Exports are what we ...
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1answer
44 views

Yuan to be a reserve currency, IMF is considering [closed]

If yuan becomes a reserve currency, can we expect the petrodollars to be swapped with petroyuans given china's ever increasing mammoth demand for energy resources?
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3answers
435 views

Relationship between trade deficit and borrowing

I have seen lots of essays saying that trade deficit means the nation needs foreign funds to finance their imports. In other words, they need to borrow from the foreigners. However, it sounds very ...
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1answer
165 views

Gravity Equation Interpretation

I have a question about the gravity equation. In the Feenstra textbook, on page 144, it is stated that In the monopolistic competition model [...] the countries are completely specialized in ...
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1answer
1k views

Difference between 'ideal variety' and 'love of variety' - International trade

What really is the difference between the "ideal variety" (Lancaster) of a differentiated product approach and the "love of variety" (Dixit and Stiglitz) approach?
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Want to read more about medical intellectual property and the TPP

I'm trying to find information about the current state of medical IP protection in countries willing to sign the TPP and the change they will go trough and maybe some impact analysis. I was hoping ...
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1answer
43 views

What will I see of the €545 from TTIP?

According to this TTIP paper, a European family of four will see their annual disposable income increase by €545 on average: These gains can also be translated into household disposable income. ...
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141 views

Concept of absolute advantage

Can someone please explain the concept of absolute advantage with an example? I know it has to do with the fact that a nation should produce a commodity that is cheap relative to other commodities but ...
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0answers
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how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth

how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth. I was reading through a textbook and saw that the devaluation of a nation's ...
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2answers
310 views

Ricardo's theory of comparative advantage

The aim of this question is to better explore the mathematical economics model behind Ricardo's theory of comparative advantage and the claims that can be made based on this model. This seems ...
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2answers
2k views

Why does a currency devaluation make a country more attractive for foreign direct investment?

The author of this article says "[the devaluation of the yuan] may also have impact on [foreign direct investment (FDI)] if China becomes a more attractive destination vis-a-vis India". Why is this? ...
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2answers
2k views

Ricardo's theory of comparative advantage for many countries

In textbooks on economics the Ricardo theory of comparative advantages is explained on the example of two countries with two goods. I suppose, there must be generalizations of Ricardo's theory for ...
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1answer
47 views

Data: Trade imbalance at the County level in the US

I am looking for some source of data on trade imbalance at a county level in the US, preferably for years 1990-2007. Does anyone know if such data can be publicly available? Or any paper that have ...
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1answer
51 views

International shipping services count as exports?

A Greek ship owner transports mouse traps from Albania to Japan, making every year ten million Euro in revenue and one million Euro in profits. The total value of the mouse traps he transports every ...