Introduction to International Economics Why do People Trade? Introduction to International Economics

Reasons People Trade To get resources they don’t have To make money off of resources they have an abundance of or specialize in To take advantage of specialization – allows people within a nation to give up jobs at which people in other nations specialize. This makes us economically interdependent .

International Trade We live in a global economy. International trade is 20 times what it was in 1950 All nations benefit because the amount and variety of worldwide goods increases with international trade. Consumers get more choices, and businesses get more customers, worldwide However, trade requires American businesses to compete with countries around the world

What is international trade? Voluntary exchange of goods and services between individuals and businesses located in different countries. Nations do not trade Individuals representing nations, businesses, and themselves make trading decisions Trade occurs when both parties expect to gain from the trade Opportunity costs and benefits are weighed

Label Search Search the room for clothing and other items that were produced in other countries. Find at least 10 items and write down the item and the country where it was produced. Try to find a different product than what other people have already used. Maximize the total products.

Questions 1. Analyze your list carefully. What are some reasons why these countries specialize in the production of these items? 2. What patterns do you notice in where the items were produced? 3. When you or someone else buys the clothing or items, who benefits? Explain your answer 4. Do you think trade makes our country more or less dependent on other countries for the things we want? 5. Do you think it is good or bad to be dependent on other countries for the things we buy? Explain.

What do we sell and buy? Items we export Services Foods and Beverages Industrial supplies and materials Capital Goods Civil aircraft and engine parts Computers and parts Automobiles Consumer Goods Items we import Foods and Beverages Industrial supplies and materials Petroleum and products Capital Goods Civil aircraft and engine parts Computers and parts Automobiles Consumer Good

What are the home countries of the firms that produce these products? Nestle Bumble Bee Tuna Shell Volvo Lipton Sony Baskin-Robbins Tropicana Burger King TV Guide Firestone CBS Television Ragu Vaseline Nike Bayer Aspirin Hardee’s Adidas Levi Strauss Alka-Seltzer

What are the home countries of the firms that produce these products? Nestle Switzerland Bumble Bee Tuna United States Shell Netherlands Volvo Sweden Lipton Sony Japan Baskin-Robbins Tropicana Burger King TV Guide Firestone CBS Television Ragu Great Britain Vaseline Netherlands/ Great Britain Nike Bayer Aspirin Germany Hardee’s Adidas Levi Strauss Alka-Seltzer

U.S. Major Trading Partners Canada Japan Mexico United Kingdom South Korea Germany Taiwan Netherlands OPEC Singapore China Brazil Australia Eastern Europe France Belgium Hong Kong Italy Venezuela Africa

Regional Trade Associations (Blocs)