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Trade Theory and Foreign Trade

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Faculty of Economics and Management, New building - door n. 352) 2. Organization ... Introduction to foreign trade theory (liberalism, protectionism, autarky) ... – PowerPoint PPT presentation

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Title: Trade Theory and Foreign Trade


1
Trade Theory and Foreign Trade
  • Lecturers
  • Ing. Leopold Tanner, MSc. (Lectures)
  • Ing. Lubo Smutka, Ph.D. (Seminars)
  • Where can you find me?
  • (smutka_at_pef.czu.cz,
  • Faculty of Economics and Management,
  • New building - door n. 352)

2
Organization of subject
  • 14 lectures per semester (in reality only 12) 1
    lecture will take 90 minutes
  • 14 seminars per semester (in reality only 13) 1
    seminar will take only 45 minutes

3
Lectures
  • Introduction to foreign trade theory (liberalism,
    protectionism, autarky)
  • Comparative costs theory (absolute and relative
    costs)
  • Basic theory of foreign trade (historical and
    present development monetarism,
    neokeynesianismus)
  • Levels of integration (free trade zone, customs
    union, economic union, monetary union, political
    union)

4
Lectures
  • European Union historical development (European
    Coal and Steel Community (ECSC), European
    Economic Community (EEC))
  • European Union present and future development
  • EU Lisbon strategy
  • Knowledge economy, national programmes,
    transformation effect

5
Lectures
  • International, regional, and national institution
    of foreign trade (WTO, OECD, WB, IMF, .)
  • Balance of payment and balance of trade
  • Capital/capacity account
  • Equity foreign and portfolio investments
  • Development venture capital
  • Conclusion

6
Seminars
  • Basic terminology of foreign trade,
  • Source of information about foreign trade,
  • Discussion of trade theory and development of
    foreign trade,
  • Presentation of your seminar theses,
  • Seminars will be based mainly on your personal
    activity the main aim of seminars is discussion
    nothing more nothing less

7
Evaluation and Exam
  • Exam consists of three partsgt
  • 1 oral exam (50 )
  • 2 seminar thesis (30 )
  • 3 defence of your thesis (20 )

8
Seminar Thesis
  • You must choose one of the topics, which will be
    discussed during the lectures.
  • You can work individually or in team (4 people in
    one team are maximum)
  • 5 pages per person are minimum (please not more
    then 6 pages per person) (type size 12, line feed
    1,5 , times new roman)
  • In the beginning of our next session we will be
    discussing your topics and composition of your
    teams

9
Seminar Thesis
  • Dead line for your project will be on Monday
    (18th of December 2006)
  • Every group will present its topic during the
    seminars. Number of presentations will depend on
    number of groups.
  • 1 presentation 20 minutes
  • First presentation will be during the 3rd seminar
    (16th of October 2006)

10
How much do you know about the Czech Republic?
  • How much does Czech trade?
  • What are the goods that the Czech Republic trades
    with other countries??
  • What are the Czech Republics top trading
    partners?

11
Top ten imports into the Czech Republic (2005,
www.czso.cz)
12
Top ten exports from the Czech Republic
13
Top ten destinations of the Czech exports
14
Top ten sources of Czech imports
15
Understand the Czech Republics trade patterns
  • What can you say about the Czech Republics trade
    patterns, according to the data presented above?
  • Goods
  • Trading partners
  • Can you explain these patterns? What are the
    determinants?
  • Why does the Czech Republic trade with foreign
    countries so intensively? Couldnt we just do
    everything by ourselves?
  • Why does the Czech Republic import and export
    those goods? Why does the Czech Republic
    seemingly import and export goods listed under
    the same category?
  • Why does the Czech Republic trade so much with
    those countries (EU members, Russia, USA and
    China)?

16
Dont worry if you cant answer all these
questions
  • Because these are the things to be studied in
    this course!

17
Introduction
18
Chapter Organization
  • Introduction
  • What is International Economics About?
  • International Economics Trade and Money

19
Introduction
  • Why study international economics
  • nations are more closely linked
  • through trade in goods and services
  • through flows of money
  • and through investment
  • This course provides the concepts and analytical
    tools to help one understand those complex
    international economic phenomena and policy issues

20
Introduction
Figure 1-1 Exports and Imports as a of U.S.
National Income
21
Introduction
Figure 1-2 Exports and Imports as of National
Income in 1994
22
What is International Economics About?
  • Intl econ. deals with economic interactions
    occurring between nations.
  • The role of governments in regulating intl trade
    and investment is substantial.
  • Intl markets allow governments to discriminate
    against a subgroup of companies.
  • governments also control the supply of currency.
  • There are several issues that recur throughout
    the study of intl economics.

23
What is International Economics About?
  • 1. The Gains from Trade
  • skepticism about imports, esp. those that can be
    produced domestically.
  • however, theory says that countries gain from
    trading with each other.
  • but the cross-country and within-country
    distributions of such gains matter, as
  • Trade might hurt some groups within nations.
  • understand the anti-globalization movement

24
What is International Economics About?
  • 2. The Pattern of Trade
  • Climate/resources may determine trade pattern of
    many primary goods.
  • But what about that of manufacture services?
  • There are two types of trade
  • Inter-industry trade (goods in different
    industries) depends on differences across
    countries.
  • Intra-industry trade (goods in the same
    industries) depends on market size and occurs
    among similar countries.

25
What is International Economics About?
  • 3. How Much Trade?
  • Many governments try to shield certain industries
    from intl competition, thereby restricting
    trade.
  • What are the costs and benefits of protection,
    relative to free trade?
  • Advanced countries
  • Developing countries policies
  • Import substitution
  • export promotion industrialization.

26
What is International Economics About?
  • 4.The Balance of Payments
  • Some countries run large trade surpluses.
  • e.g. 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?
  • 5. Exchange Rate Determination
  • The role of changing exchange rates is at the
    center of international economics.

27
What is International Economics About?
  • 6. International Policy Coordination
  • how to produce an acceptable degree of harmony
    among the international trade and monetary
    policies of different countries without a world
    government?
  • 7. The International Capital Market
  • risks associated with intl capital markets
  • Currency depreciation
  • National default
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