1. ECO 358 International Economics Professor Malamud BEH 502 895 – 3294 Fax: 895 – 1354 Email: bernard.malamud@unlv.edubernard.malamud@unlv.edu Website: http://faculty.unlv.edu/bmalamud http://faculty.unlv.edu/bmalamud

2. International Economics: The Way the World Works Objectives: Facts: the world’s economies and relations between them Principles: Trade flows Capital flows Currency exchange rates Advantages and disadvantages of fixed and floating rates Issues: Globalization: Is The World Flat ?!?! Protection Rebalancing

3. International Interdependencies Trade : goods, services, raw materials, energy Finance : exchange rates, foreign debt, foreign investment (fdi and portfolio investment) Business : multinational enterprises (MNEs), global production Migration : flows of skilled workers, unskilled workers, family members

4. World In Recession Unemployment Rate Country20072009 United States 4.6% 10.5% Japan 3.8% 5.5% Britain 5.3% 7.8% Canada 6.0% 8.5% EU 9.3% France 7.9% 10.0% Germany 9.0% 7.6% Italy 6.2% 7.4% Spain 8.3%19.3% Brazil 9.3% 8.1% Russia 5.9% 9.9% India 7.2% 7.2% China 4.0% 9.0% (1/09)

5. Trade in goods and services (percent of gdp) Country % of GDP, 2002 % of GDP, 2006 Exports Imports Exports Imports Netherlands53 4671 63 Canada37 3346 40 Germany 31 25 4035 South Korea27 26 4340 Norway31 18 4528 France22 21 2627 United Kingdom18 21 2630 United States 9 13 1115 Japan10 8 1110

6. Macro Facts: Trade Deficit, Goods & Services

7. Today’s Report

8. Macro Facts: Merchandise Trade Deficit

11. Eurozone 16 Germany France Italy Netherlands Belgium Luxembourg Austria Ireland Spain Finland Portugal Greece Slovenia Cyprus Malta Slovakia

13. Trade Issues If one country gains, must the other lose? Think comparative advantage. Do imports reduce employment? Do tariffs/quotas/restrictions save jobs? When might they? Should weak domestic industries be subsidized? Is a trade deficit “bad”? Is a surplus “good”? Does “fair trade” mean that our exports to a country will equal our imports from it?