Warm-up Make a list of 5 products, services, or ideas you believe we import. Make a list of 5 products, services, or ideas that you believe we export Why are some nations wealthy and others not?

Unit VII – The global Economy International Trade, International Economic Development

International Trade Export – Goods sold to another country Import – Goods bought from another country –

Exports by nation

Advantages of International Trade Obtaining scarce goods – nations trade for goods that they can otherwise not get on their own EX – diamonds in the US, commercial aircraft to the rest of the world Comparative advantage – ability of one country to produce a good more efficiently than another. Japan makes TV’s better than the US does, so we get our TV’s from them

Advantages of International Trade Creating jobs – by exporting products, producers expand market and thus can hire more workers

Supporting domestic industries Tariffs – tax on imports to make them more expensive to buy than domestic goods Some foreign luxury cars are more expensive than domestic luxury cars Quotas – limit on the amount of foreign goods imported Reagan put a limit on Japanese cars in the 1980’s to save American autoworkers

Free Trade Zones Area where goods may be handled and manufactured without the intervention of customs Sea ports, international airports,

Free Trade Agreements WTO – oversees and organizes trade rules, settles trade disputes, and helps developing countries Criticism Favors major corporations instead of workers, environment, and poor countries

International Trade as a political Weapon Embargos – nation’s agree to block trade with a target nation WWII, embargo against Germany, Japan by USA.

International Trade as a political Weapon Trade Agreements – reduce or eliminate restrictions between nations to promote free trade

Trade Balance of trade – difference between value of exports and imports Trade surplus – exports > imports = making money Trade deficit – exports < imports = losing money

Negatives of a trade deficit Lower GDP Higher national debt Higher unemployment Lower savings rates

Globalization

Warmup 5/18 What do you think the term globalization means?

Free Trade Agreements NAFTA – USA, Mexico, Canada – eliminated barriers to trade between the countries EU – goods, services, and people can move freely between these countries; uses euro as currency

Free Trade Agreements IMF – allows countries to donate to money pool and then borrow when they need to meet payments CAFTA – USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicuragua, Dominican Republic SEATO – Australia, France, New Zealand, Pakistan, Philippines, Thailand, UK, USA (no longer in effect) World Bank – provides loans to developing countries

What has the increase in international trade created among nations of the world? Income inequality

Concerns over international trade Environmental – difficult to monitor multinational (MNC) businesses b/c of varying environmental regulations Worker exploitation – MNC’s use nations with cheap labor to increase profit margin’s at expense of worker safety and health.

Internationalism Nations should cooperate to promote common aims

United Nations (UN) Environmental – Leaders signed treaties to safeguard animal and plant life and limit global pollution Income inequality – called on businesses to promote economic development in the countries they operate in.

United Nations (UN) Human Rights – basic freedoms that all people should enjoy Universal Declaration of Human Rights – basic rights that all people should have (movement, seek asylum, nationality, property, have a family, etc) International Tribunals – courts that hear and make judgments on violations of human rights

Nations to choose from Singapore Japan Nigeria Russia Argentina

Closing Questions – Why are some nation’s wealthy? Answer in a few sentences each question on the same sheet of paper as your warm-up and turn in before class ends. How important are natural resources to a nation’s wealth? What are the major factors that encourage long-term economic growth? How does per capita GDP relate to the quality of life? Why is this important? What do we mean by investment in human capital?

ExpressPoll 5/18/ :10:58 AM