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8/20/2019 LEC 27-28 INTERNATIONAL TRADE.ppt
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PAKISTAN’S EXPORTSPAKISTAN’S EXPORTS
TextilesTextiles
RiceRice
Leather goodsLeather goods Sports goodsSports goods
ChemicalsChemicals
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PAKISTAN’S I!PORTSPAKISTAN’S I!PORTS
Petrole"m prod"ctsPetrole"m prod"cts
!achi#er$!achi#er$ Tra#sportatio# e%"ipme#tTra#sportatio# e%"ipme#t OilOil
TeaTea
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INTERNATIONAL TRA'EINTERNATIONAL TRA'E
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'ESIRE' LEARNIN) O*+ECTI,ES'ESIRE' LEARNIN) O*+ECTI,ES
I# this chapter- .e’ll st"d$/0I# this chapter- .e’ll st"d$/0
Importa#ce o I#ter#atio#al Trade2Importa#ce o I#ter#atio#al Trade2
'iere#ce i# I#ter#atio#al a#d 'omestic'iere#ce i# I#ter#atio#al a#d 'omestic
Trade2Trade2
Reaso#s or i#ter#atio#al trade2Reaso#s or i#ter#atio#al trade2
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3hat are the eco#omic orces that lie3hat are the eco#omic orces that lie
4ehi#d i#ter#atio#al trade54ehi#d i#ter#atio#al trade5
Trade Promotes Speciali6atio# a#dTrade Promotes Speciali6atio# a#d
Speciali6atio# i#creases prod"cti7it$Speciali6atio# i#creases prod"cti7it$
8
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INTERNATIONAL ,S2 'O!ESTICINTERNATIONAL ,S2 'O!ESTIC
TRA'ETRA'E
Three !ai# 'iere#ces/0Three !ai# 'iere#ces/0
Tradi#g Opport"#itiesTradi#g Opport"#ities
So7ereig#t$ o Natio#sSo7ereig#t$ o Natio#s
I#ter#atio#al :i#a#ceI#ter#atio#al :i#a#ce
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TRA'IN) OPP
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SO,EREI)NT@ O: NATIONSSO,EREI)NT@ O: NATIONS
I#ter#atio#al trade i#7ol7es people a#d irmsI#ter#atio#al trade i#7ol7es people a#d irms
o diere#t co"#tries- .here mo#e$ lo.so diere#t co"#tries- .here mo#e$ lo.sacross the 4order- .hich is i# co#trast toacross the 4order- .hich is i# co#trast to
domestic trade2domestic trade2
Sometimes- co"#tries impose trade 4arriersSometimes- co"#tries impose trade 4arriers
li=e taris a#d %"ota i# order to protect theirli=e taris a#d %"ota i# order to protect their
o.# i#d"stries2o.# i#d"stries2
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INTERNATIONAL :INANCEINTERNATIONAL :INANCE
I#ter#atio#al trade e#a4les co"#tries toI#ter#atio#al trade e#a4les co"#tries to
ear# oreig# excha#ge2ear# oreig# excha#ge2
:oreig# excha#ge i# t"r# acilitates:oreig# excha#ge i# t"r# acilitates
i#ter#atio#al trade2i#ter#atio#al trade2
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A4o7e all- it ma=es people to people A4o7e all- it ma=es people to people
i#teractio# possi4le across the glo4e2i#teractio# possi4le across the glo4e2
Th"s- i#ter#atio#al trade promotesTh"s- i#ter#atio#al trade promotes
i#ter#atio#al peace a#d harmo#$2i#ter#atio#al peace a#d harmo#$2
1B
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REASONS :OR INTERNATIONALREASONS :OR INTERNATIONAL
TRA'ETRA'E
'i7ersit$ i# Nat"ral Reso"rces'i7ersit$ i# Nat"ral Reso"rces
'iere#ces i# Tastes'iere#ces i# Tastes
'iere#ces i# Costs'iere#ces i# Costs
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'I,ERSIT@ IN NAT
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'I::ERENCES IN TASTES'I::ERENCES IN TASTES
E7e# i all co"#tries .ere e#do.ed .ith sameE7e# i all co"#tries .ere e#do.ed .ith same#at"ral reso"rces a#d ide#tical prod"ctio##at"ral reso"rces a#d ide#tical prod"ctio#
acilities- the$’d ha7e preerred trade d"e toacilities- the$’d ha7e preerred trade d"e to
diere#t tastes2diere#t tastes2 Ex/ Pa=ista# a#d I#dia appear to 4e ide#tical i#Ex/ Pa=ista# a#d I#dia appear to 4e ide#tical i#
ma#$ respects> $et most o Pa=ista#is preerma#$ respects> $et most o Pa=ista#is preer
chic=e# o7er p"lses2chic=e# o7er p"lses2 *oth I#dia a#d Pa=ista# ca# 4e#eit rom m"t"al*oth I#dia a#d Pa=ista# ca# 4e#eit rom m"t"al
trade o chic=e# a#d p"lses2trade o chic=e# a#d p"lses2
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'I::ERENCES IN COSTS'I::ERENCES IN COSTS
Cost actor is perhaps the most importa#t reaso#sCost actor is perhaps the most importa#t reaso#sor trade2or trade2
Co#sider I#tel Compa#$- .hich prod"ces high Co#sider I#tel Compa#$- .hich prod"ces high
e#d Semico#d"ctors has acilities i#
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RECAPIT
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CO!PARATI,E A',ANTA)ECO!PARATI,E A',ANTA)E
PRINCIPLEPRINCIPLE
The pri#ciple holds that a co"#tr$ ca#The pri#ciple holds that a co"#tr$ ca#
4e#eit rom i#ter#atio#al trade e7e# i it is4e#eit rom i#ter#atio#al trade e7e# i it is
a4sol"tel$ more eicie#t or less eicie#ta4sol"tel$ more eicie#t or less eicie#ttha# other co"#tries i# prod"ci#g diere#ttha# other co"#tries i# prod"ci#g diere#t
goods2goods2
Trade- accordi#g to the Comparati7eTrade- accordi#g to the Comparati7e
Ad7a#tage Pri#ciple- pro7ides m"t"al Ad7a#tage Pri#ciple- pro7ides m"t"al
4e#eits to all tradi#g co"#tries24e#eits to all tradi#g co"#tries2
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CO!PARATI,E A',ANTA)ECO!PARATI,E A',ANTA)E
PRINCIPLEPRINCIPLE
It holds that each co"#tr$ .ill 4e#eit i itIt holds that each co"#tr$ .ill 4e#eit i it
speciali6es i# the prod"ctio# a#d export ospeciali6es i# the prod"ctio# a#d export o
those goods that it ca# prod"ce at relati7el$those goods that it ca# prod"ce at relati7el$
lo. cost2 Co#7ersel$- each co"#tr$ .illlo. cost2 Co#7ersel$- each co"#tr$ .ill
4e#eit i it imports those goods .hich it4e#eit i it imports those goods .hich itprod"ces at relati7el$ high cost2prod"ces at relati7el$ high cost2
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I La4or is a4sol"tel$ more prod"cti7e i#I La4or is a4sol"tel$ more prod"cti7e i#
America tha# i# E"rope- 'oes this mea# America tha# i# E"rope- 'oes this mea#
that America .ill import #othi#g5that America .ill import #othi#g5
Is it Eco#omicall$ .ise or E"rope toIs it Eco#omicall$ .ise or E"rope to
protect its mar=ets .ith taris a#d %"otas5protect its mar=ets .ith taris a#d %"otas5
'a7id Ricardo'a7id Ricardo
I#ter#atio#al Speciali6atio# 4e#eits aI#ter#atio#al Speciali6atio# 4e#eits a
#atio#2#atio#2
1
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