An Introduction To The Business of International Trade

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From the course by University of California, Irvine

Strategic Business Management - Macroeconomics

11 ratings

University of California, Irvine

Strategic Business Management - Macroeconomics

11 ratings

This course weds business strategy with the principles of macroeconomics. It offers valuable a powerful toolbox together with cases and lessons across all major functions of business, management, from finance, operations management, and marketing to human resource management, organizational behavior, statistics, and, of course, business strategy.

From the lesson

International Trade and the Gains (and Losses) From Trade

An Introduction To The Business of International Trade3:30

The Language and Jargon of International Trade11:22

The Theory of Absolute Advantage3:42

Why Comparative Advantage Trumps Absolute Advantage6:55

A Production Possibilities Frontier Analysis of Comparative Advantage9:32

The Economics and Politics of Protectionism, Part One10:35

The Economics and Politics of Protectionism, Part Two8:10

The Pros and Cons of Protectionism7:16

The Limitations of Ricardian Free Trade in the Real World and the Case of China5:42

Meet the Instructors

Dr. Peter Navarro
Professor
Paul Merage School of Business

[MUSIC]

The issue of international trade may be the most important in this election,

where, sir, do you stand?

>> I am all for free trade, when all nations trade freely,

all nations gain and the world will prosper.

>> I am for free trade too, but only if it is fair trade.

If our trading partners use illegal exports, subsidies, or

manipulate their currency, our workers and economy will suffer.

>> You, madame, are not a free trader,

you are simply a protectionist who wants to impose punitive tariffs.

>> Let me remind you, sir, a tariff is not protectionist

if it is used simply to defend our country against unfair trade practices.

>> Well, at least voters will have a clear choice in this election.

>> Many businesses rely on the import of everything from energy and natural

resources to sophisticated assemblies for the manufacturing of their products.

Many more businesses are involved in exporting their products to the world.

And in this modern age, as ships and planes and trains and

trucks move cargo around the world,

trade has become essential to the health and vibrance of the global economy.

That's why, in our next two lessons,

we are going to explore the many dimensions of international trade.

In this lesson we will begin with a quick overview of some of the key

definitions in the language of international trade.

Common terms like tariffs and quotas, to more sophisticated

concepts like mercantilism and countervailing duties.

Once we have established this foundation, we will then move

briskly to an analysis of the two main competing theories of trade.

Theory of Absolute Advantage and the Theory of Comparative Advantage.

Through such analysis we will come to better to understand the various

patterns of trade that we observe in the world.

We will also be able to explore and

dissect the famous gains from trade argument that has been used for

centuries to justify the opening of national markets to global trade.

Through such a dissection, we shall see that the economist

gains from trade argument on behalf of more open international trade

is not quite as simple as many economics textbooks would have us believe.

Instead, we shall learn that while trade can indeed benefit the many,

it can also cause tremendous economic and political disruptions within a society.

Moreover, when some trading nations engage in unfair trade practices

at the expense of their trading partners, the gains from trade argument

tends to turn more into a zero sum gain with clear national winners and

losers, rather that a positive sum gain where all nations win.

[MUSIC]

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