1 ECONOMICS 3150B Fall 2015 Professor Lazar Office: N205J, Schulich

2 Lecture 13: October 27 Ch. 1-4

3 International Trade Theory: Objectives Gains from trade Patterns of trade Volumes of trade Intra-corporate vs. inter-corporate/firm Protectionism – trade policies Free trade agreements – NAFTA, GATT, TPP

4 Critique of Traditional Trade Theory Competitive markets – underlying logic flawed Imperfect competition – competitive advantage Role of technology and risk taking – importance of market structure Culture, bureaucracy, hierarchy Politics and power – case of the US Bottom line: trade theory cannot explain Bombaridier in Canada, Airbus in Europe, HSBC, Arcelor-Mittal in India, Emirates, IKEA, Samsung in South Korea, Hon Hai Precision in Taiwan, Nestle in Switzerland, Amazon.com, etc.

5 Overview 2013: –Global GDP: US$ 76.9 T –Global trade in goods and services: US$ 23.3 T World trade (2013) – US$ billions (Table 8) Exports, g&sImports, g&s Low Income Lower Middle1,4581,683 Upper Middle4,9944,767 High Income16,72115,926 Eurozone5,7875,330

6 Overview Structure of Exports (2013) -- % (Tables 20.0 and 20.1) FoodFuelsOres & Metals Manufactures Low IncomeNA Lower Middle Upper Middle High Income Eurozone World915467

7 Overview Structure of Imports (2013) -- % (Tables 21.0 and 21.1) FoodFuelsOres & Metals Manufactures Low Income Lower Middle Upper Middle High Income Eurozone World818466

8 Overview Structure of Economies (2013) -- % of GDP (Tables 22.0 and 22.1) AgricultureIndustry, incl. Manufacturing Services Low Income Lower Middle Upper Middle73756 High Income22574 Eurozone22574 World32670

Overview Industry: mining, manufacturing, construction, electricity, water & gas Services: wholesale & retail trade (incl. hotels & restaurants), transport, government, financial, professional and personal services (education, health care & real estate services) 9

Overview Exports as % of GDP, (Tables 23, 24) Low Income NA Lower Middle Upper Middle High EU Greece World

11 Overview Regional destinations of merchandise exports NAS&CAEuropeCISAfricaMEAsia NA49%8%17%1%2%3%21% S&CA Europe CIS Africa ME Asia

12 Overview World trade – merchandise exports by major product groups (2010) –Total exports: US$14.4 T Agricultural products: $1.362 T (9%) Fuels & mining products: $3.026 T (20%) –Fuels: $2.348 T (16%) Manufactures: $9.962 T (67%) –Iron & steel: $0.421 T (3%) –Chemicals: $1.705 T (12%) –Office & telecom equipment: $1.603 T (11%) –Autos: $1.092 (7%) –Textiles: $0.251 T (2%) –Clothing: $0.351 (2%)

13 Overview Canada’s exports, by product, 2014 (Table 25) –Energy products: $128.8 B (24%) –Motor vehicles & parts: $74.5 B (14%) –Consumer goods: $58.8 B (11%) –Metals & non-metallic mineral products: $57.6 B (11%) –Forestry products & building and packaging materials: $36.9 B (7%) –Commercial services: $58.9 B

14 Overview Canada’s imports, by product, 2014 (Table 26) –Consumer goods: $106.2 B (20%) –Motor vehicle & parts: $90.5 B (17%) –Electronic & electrical equipment & parts: $58.7 B (11%) –Industrial machinery, equipment & parts: $51.0 B (10%) –Metal & non-metallic mineral products: $46.2 B (9%) –Commercial services: $54.2 B

Overview: 23 Largest Countries, Exports as % of GDP, 2014 US14 China23 Japan16 Germany46 France29 UK28 Brazil12 Italy29 Russia29 India24 Canada32 Australia21 Spain32 South Korea51 Mexico33 Indonesia24 Netherlands83 Turkey28 Saudi Arabia48 Switzerland72 Argentina15 Sweden45 Norway38 EU40 15

Overview: 24 Poorest Countries, Exports as % of GDP, 2014 Burundi8 Malawi46 Central African Republic 10 Liberia26 Dem. Rep. Congo33 Niger18 Madagascar30 Guinea28 Ethiopia12 EritreaNA Gambia37 Togo50 Guinea-Bissau16 Uganda20 Mozambique27 Rwanda15 Burkina Faso28 Sierra Leone41 MaliNA Afghanistan6 Nepal12 Benin19 Haiti15 Comoros18 16

Overview: Largest High Tech Exporters, 2013, US$ B (Table 27.1) China560 Germany193 US148 Singapore136 South Korea130 France113 Japan105 Netherlands69 Malaysia60 Switzerland53 Mexico45 Belgium37 Thailand34 Italy30 Canada29 UK24 Ireland22 Czech Rep.21 Philippines20 Austria18 Sweden17 India17

Overview: Largest Receipts for Use of IP, 2013, US$ B (Table 27.1) US133 Japan37 UK20 Switzerland17 Germany14 France12 Sweden7 Netherlands6 Ireland5 South Korea5 Canada4 Italy3 Belgium3 Hungary2 Austria1 18

Overview: Services Balance as % of GDP, 2010 Australia-0.2% Belgium1.5 Canada-1.4 Finland1.2 France0.5 Germany-0.9 Ireland-4.6 Italy-0.6 Japan-0.3 S. Korea-1.1 Luxembourg54.7 Mexico-0.9 Norway-0.5 Portugal3.9 Slovak Rep.-1.2 Spain2.6 Sweden3.4 Switzerland8.8 TurkeyNA RussiaNA UK3.4 US1.0 19

Overview: Exports – volume and value growth and terms of trade, (Table 28) VolumeValueTerms of trade China US Germany France Japan UK S. Korea Nether Italy Russia VolumeValueTerms of trade Singapore Canada Switz India Spain Belgium Mexico Saudi A Australia Thailand

Overview: Imports – volume and value growth, (Table 29) VolumeValue US China Germany Japan France UK S. Korea Canada Netherlands Italy VolumeValue India Singapore Russia Belgium Spain Mexico Switzerland Brazil Australia Thailand