1. Introduction to International Trade
– Crash course intro to international trade

2. International Trade
Exports—goods and services produced in one country and sold to other countries.
Imports—goods and services consumed in a country but which have been purchased from other countries.
Trade Deficit (Surplus)—a country has a trade deficit (surplus) if its imports (exports) exceeds its exports (imports).

3. Index of Openness
Index of Openness—a measure of how much a country participates in international trade; defined as the ratio of a country’s exports to its GDP (or GNP).
Open Economy—a country with a high value of the index of openness.
Closed Economy—a country with a relatively low index of openness.

4. Causes of Differences in Economic Growth of Countries
Quantity and quality of resource endowments, particularly human capital
Investment in plant and equipment (capital)
Political and socioeconomic environment that is stable and conducive to competition

5. Growth of World Exports
What has caused the explosion of world trade?
Reduction in trade barriers
Advances in transportation, communication and technology
Proliferation of trade agreements

6. Geographic Trade Patterns
Developed countries account for the bulk of world trade (largest exporters and importers).
Developed countries trade primarily with each other.
Developing countries rely on developed countries for their export markets.
Countries trade mainly with neighbors.

7. TABLE 1.2 Top Ten Trading Partners of Selected Countries, 2007

8. GLOBALIZATION
Globalization is the term used to convey the idea that international factors are becoming a more important part of the world economy
The simplest measure of globalization is the ratio of exports to GDP
Countries with a high ratio of exports to GDP are generally more open to the world economy than countries with a low ratio

9. GLOBALIZATION
Globalization or the increasing openness of an economy, means changes that are not universally positive
Globalization involves not only the goods and service but the movement of people and money as well
International transactions occur because both parties expect the transaction to improve their welfare