1. 1 ECONOMICS 3150B Fall 2015 Professor Lazar Office: N205J, Schulich flazar@yorku.ca 736-5068

2. 2 Lecture 13: October 27 Ch. 1-4

3. 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. 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. 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 Income104163 Lower Middle1,4581,683 Upper Middle4,9944,767 High Income16,72115,926 Eurozone5,7875,330

6. 6 Overview Structure of Exports (2013) -- % (Tables 20.0 and 20.1) FoodFuelsOres & Metals Manufactures Low IncomeNA Lower Middle1626549 Upper Middle913572 High Income815467 Eurozone107376 World915467

7. 7 Overview Structure of Imports (2013) -- % (Tables 21.0 and 21.1) FoodFuelsOres & Metals Manufactures Low Income1320258 Lower Middle927456 Upper Middle716764 High Income818364 Eurozone1019465 World818466

8. 8 Overview Structure of Economies (2013) -- % of GDP (Tables 22.0 and 22.1) AgricultureIndustry, incl. Manufacturing Services Low Income332146 Lower Middle173251 Upper Middle73756 High Income22574 Eurozone22574 World32670

9. 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

10. Overview Exports as % of GDP, 1980-2014 (Tables 23, 24) 10 19801990200020102014 Low Income NA13.919.822.924.0 Lower Middle 16.917.226.126.025.8 Upper Middle 13.519.126.329.128.0 High19.919.324.828.030.1 EU24.425.434.337.840.1 Greece19.214.723.622.133.0 World19.019.225.128.029.8

11. 11 Overview Regional destinations of merchandise exports NAS&CAEuropeCISAfricaMEAsia NA49%8%17%1%2%3%21% S&CA24261913323 Europe72713339 CIS6152192315 Africa17336012424 ME9112131053 Asia173 23453

12. 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. 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. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. Overview: Exports – volume and value growth and terms of trade, 2003-2013 (Table 28) VolumeValueTerms of trade China13.916.4-2.9 US4.614.81.0 Germany2.26.0-0.8 France-0.63.3-1.2 Japan2.64.2-4.7 UK-0.74.2-0.1 S. Korea7.514.8-1.7 Nether.3.37.8-0.7 Italy-0.14.7-0.8 Russia1.113.28.4 VolumeValueTerms of trade Singapore6.39.3-1.2 Canada-0.44.10.9 Switz.5.08.2-1.2 India9.318.23.9 Spain2.46.6-1.1 Belgium1.35.3-0.6 Mexico4.08.10.4 Saudi A.1.513.36.4 Australia3.214.35.7 Thailand5.511.1-0.3 20

21. Overview: Imports – volume and value growth, 2003-2013 (Table 29) VolumeValue US1.14.9 China10.416.3 Germany2.16.5 Japan1.17.9 France-0.34.9 UK-0.74.3 S. Korea5.710.8 Canada2.46.2 Netherlands2.57.8 Italy-1.24.4 VolumeValue India15.920.7 Singapore5.710.0 Russia11.915.7 Belgium1.25.8 Spain-1.53.7 Mexico3.97.6 Switzerland2.67.1 Brazil10.617.5 Australia5.710.7 Thailand6.112.0 21