International economics

Last updated

International economics is concerned with the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them. It seeks to explain the patterns and consequences of transactions and interactions between the inhabitants of different countries, including trade, investment and transaction. [1]


International trade

Scope and methodology

The economic theory of international trade differs from the remainder of economic theory mainly because of the comparatively limited international mobility of the capital and labour. [6] In that respect, it would appear to differ in degree rather than in principle from the trade between remote regions in one country. Thus the methodology of international trade economics differs little from that of the remainder of economics. However, the direction of academic research on the subject has been influenced by the fact that governments have often sought to impose restrictions upon international trade, and the motive for the development of trade theory has often been a wish to determine the consequences of such restrictions.[ citation needed ]

The branch of trade theory which is conventionally categorized as "classical" consists mainly of the application of deductive logic, originating with Ricardo's Theory of Comparative Advantage and developing into a range of theorems that depend for their practical value upon the realism of their postulates. "Modern" trade analysis, on the other hand, depends mainly upon empirical analysis.[ citation needed ]

Classical theory

The theory of comparative advantage provides a logical explanation of international trade as the rational consequence of the comparative advantages that arise from inter-regional differences - regardless of how those differences arise. Since its exposition by David Ricardo [7] the techniques of neo-classical economics have been applied to it to model the patterns of trade that would result from various postulated sources of comparative advantage. However, extremely restrictive (and often unrealistic) assumptions have had to be adopted in order to make the problem amenable to theoretical analysis.[ citation needed ]

The best-known of the resulting models, the Heckscher-Ohlin theorem (H-O) [8] depends upon the assumptions of no international differences of technology, productivity, or consumer preferences; no obstacles to pure competition or free trade and no scale economies. On those assumptions, it derives a model of the trade patterns that would arise solely from international differences in the relative abundance of labour and capital (referred to as factor endowments). The resulting theorem states that, on those assumptions, a country with a relative abundance of capital would export capital-intensive products and import labour-intensive products. The theorem proved to be of very limited predictive value, as was demonstrated by what came to be known as the "Leontief Paradox" (the discovery that, despite its capital-rich factor endowment, America was exporting labour-intensive products and importing capital-intensive products [9] ) Nevertheless, the theoretical techniques (and many of the assumptions) used in deriving the H–O model were subsequently used to derive further theorems.[ citation needed ]

The Stolper–Samuelson theorem, [10] which is often described as a corollary of the H–O theorem, was an early example. In its most general form it states that if the price of a good rises (falls) then the price of the factor used intensively in that industry will also rise (fall) while the price of the other factor will fall (rise). In the international trade context for which it was devised it means that trade lowers the real wage of the scarce factor of production, and protection from trade raises it.[ citation needed ]

Another corollary of the H–O theorem is Samuelson's factor price equalisation theorem which states that as trade between countries tends to equalise their product prices, it tends also to equalise the prices paid to their factors of production. [11] Those theories have sometimes been taken to mean that trade between an industrialised country and a developing country would lower the wages of the unskilled in the industrialised country. (But, as noted below, that conclusion depends upon the unlikely assumption that productivity is the same in the two countries). Large numbers of learned papers have been produced in attempts to elaborate on the H–O and Stolper–Samuelson theorems, and while many of them are considered to provide valuable insights, they have seldom proved to be directly applicable to the task of explaining trade patterns. [12]

Modern analysis

Modern trade analysis moves away from the restrictive assumptions of the H-O theorem and explores the effects upon trade of a range of factors, including technology and scale economies. It makes extensive use of econometrics to identify from the available statistics, the contribution of particular factors among the many different factors that affect trade. One example of such an econometric model is the gravity equation. The contributions of differences of technology have been evaluated in several such studies. The temporary advantage arising from a country's development of a new technology is seen as contributory factor in one study. [13]

Other researchers have found research and development expenditure, patents issued, and the availability of skilled labor, to be indicators of the technological leadership that enables some countries to produce a flow of such technological innovations [14] and have found that technology leaders tend to export hi-tech products to others and receive imports of more standard products from them. Another econometric study also established a correlation between country size and the share of exports made up of goods in the production of which there are scale economies. [15] The study further suggested that internationally traded goods fall into three categories, each with a different type of comparative advantage:

There is a strong presumption that any exchange that is freely undertaken will benefit both parties, but that does not exclude the possibility that it may be harmful to others. However (on assumptions that included constant returns and competitive conditions) Paul Samuelson has proved that it will always be possible for the gainers from international trade to compensate the losers. [16] Moreover, in that proof, Samuelson did not take account of the gains to others resulting from wider consumer choice, from the international specialisation of productive activities - and consequent economies of scale, and from the transmission of the benefits of technological innovation. An OECD study has suggested that there are further dynamic gains resulting from better resource allocation, deepening specialisation, increasing returns to R&D, and technology spillover. The authors found the evidence concerning growth rates to be mixed, but that there is strong evidence that a 1 per cent increase in openness to trade increases the level of GDP per capita by between 0.9 per cent and 2.0 per cent. [17] They suggested that much of the gain arises from the growth of the most productive firms at the expense of the less productive. Those findings and others [18] have contributed to a broad consensus among economists that trade confers very substantial net benefits, and that government restrictions upon trade are generally damaging.

Factor price equalisation

Nevertheless, there have been widespread misgivings about the effects of international trade upon wage earners in developed countries. Samuelson's factor price equalisation theorem indicates that, if productivity were the same in both countries, the effect of trade would be to bring about equality in wage rates. As noted above, that theorem is sometimes taken to mean that trade between an industrialised country and a developing country would lower the wages of the unskilled in the industrialised country. However, it is unreasonable to assume that productivity would be the same in a low-wage developing country as in a high-wage developed country. A 1999 study has found international differences in wage rates to be approximately matched by corresponding differences in productivity. [19] (Such discrepancies that remained were probably the result of over-valuation or under-valuation of exchange rates, or of inflexibilities in labour markets.) It has been argued that, although there may sometimes be short-term pressures on wage rates in the developed countries, competition between employers in developing countries can be expected eventually to bring wages into line with their employees' marginal products. Any remaining international wage differences would then be the result of productivity differences, so that there would be no difference between unit labour costs in developing and developed countries, and no downward pressure on wages in the developed countries. [20]

Terms of trade

There has also been concern that international trade could operate against the interests of developing countries. Influential studies published in 1950 by the Argentine economist Raul Prebisch [21] and the British economist Hans Singer [22] suggested that there is a tendency for the prices of agricultural products to fall relative to the prices of manufactured goods; turning the terms of trade against the developing countries and producing an unintended transfer of wealth from them to the developed countries.

Their findings have been confirmed by a number of subsequent studies, although it has been suggested that the effect may be due to quality bias in the index numbers used or to the possession of market power by manufacturers. [23] The Prebisch/Singer findings remain controversial, but they were used at the time—and have been used subsequently—to suggest that the developing countries should erect barriers against manufactured imports in order to nurture their own "infant industries" and so reduce their need to export agricultural products. The arguments for and against such a policy are similar to those concerning the protection of infant industries in general.[ citation needed ]

Infant industries

The term "infant industry" is used to denote a new industry which has prospects of gaining comparative advantage in the long-term, but which would be unable to survive in the face of competition from imported goods. This situation can occur when time is needed either to achieve potential economies of scale , or to acquire potential learning curve economies. Successful identification of such a situation, followed by the temporary imposition of a barrier against imports can, in principle, produce substantial benefits to the country that applies it—a policy known as "import substitution industrialization". Whether such policies succeed depends upon the governments’ skills in picking winners, with reasonably expectations of both successes and failures. It has been claimed that South Korea's automobile industry owes its existence to initial protection against imports, [24] but a study of infant industry protection in Turkey reveals the absence of any association between productivity gains and degree of protection, such as might be expected of a successful import substitution policy. [25]

Another study provides descriptive evidence suggesting that attempts at import substitution industrialisation since the 1970s have usually failed, [26] but the empirical evidence on the question has been contradictory and inconclusive. [27] It has been argued that the case against import substitution industrialisation is not that it is bound to fail, but that subsidies and tax incentives do the job better. [28] It has also been pointed out that, in any case, trade restrictions could not be expected to correct the domestic market imperfections that often hamper the development of infant industries. [29]

Trade policies

Economists’ findings about the benefits of trade have often been rejected by government policy-makers, who have frequently sought to protect domestic industries against foreign competition by erecting barriers, such as tariffs and import quotas, against imports. Average tariff levels of around 15 per cent in the late 19th century rose to about 30 percent in the 1930s, following the passage in the United States of the Smoot–Hawley Tariff Act. [30] Mainly as the result of international agreements under the auspices of the General Agreement on Tariffs and Trade (GATT) and subsequently the World Trade Organization (WTO), average tariff levels were progressively reduced to about 7 per cent during the second half of the 20th century, and some other trade restrictions were also removed. The restrictions that remain are nevertheless of major economic importance: among other estimates, [31] the World Bank estimated in 2004 that the removal of all trade restrictions would yield benefits of over $500 billion a year by 2015. [32] [ needs update ]

The largest of the remaining trade-distorting policies are those concerning agriculture. In the OECD countries government payments account for 30 per cent of farmers’ receipts and tariffs of over 100 per cent are common. [33] OECD economists estimate that cutting all agricultural tariffs and subsidies by 50% would set off a chain reaction in realignments of production and consumption patterns that would add an extra $26 billion to annual world income. [34] [ full citation needed ]

Quotas prompt foreign suppliers to raise their prices toward the domestic level of the importing country. That relieves some of the competitive pressure on domestic suppliers, and both they and the foreign suppliers gain at the expense of a loss to consumers, and to the domestic economy, in addition to which there is a deadweight loss to the world economy. When quotas were banned under the rules of the General Agreement on Tariffs and Trade (GATT), the United States, Britain and the European Union made use of equivalent arrangements known as voluntary restraint agreements (VRAs) or voluntary export restraints (VERs) which were negotiated with the governments of exporting countries (mainly Japan)—until they too were banned. Tariffs have been considered to be less harmful than quotas, although it can be shown that their welfare effects differ only when there are significant upward or downward trends in imports. [35] Governments also impose a wide range of non-tariff barriers [36] that are similar in effect to quotas, some of which are subject to WTO agreements. [37] A recent[ when? ] example has been the application of the precautionary principle to exclude innovatory products.

International finance

Scope and methodology

The economics of international finance does not differ in principle from the economics of international trade, but there are significant differences of emphasis. The practice of international finance tends to involve greater uncertainties and risks because the assets that are traded are claims to flows of returns that often extend many years into the future. Markets in financial assets tend to be more volatile than markets in goods and services because decisions are more often revised and more rapidly put into effect. There is the share presumption that a transaction that is freely undertaken will benefit both parties, but there is a much greater danger that it will be harmful to others.[ citation needed ]

For example, mismanagement of mortgage lending in the United States led in 2008 to banking failures and credit shortages in other developed countries, and sudden reversals of international flows of capital have often led to damaging financial crises in developing countries. And, because of the incidence of rapid change, the methodology of comparative statics has fewer applications than in the theory of international trade, and empirical analysis is more widely employed. Also, the consensus among economists concerning its principal issues is narrower and more open to controversy than is the consensus about international trade.[ citation needed ]

Exchange rates and capital mobility

A major change in the organisation of international finance occurred in the latter years of the twentieth century, and economists are still debating its implications. At the end of the Second World War, the national signatories to the Bretton Woods Agreement had agreed to maintain their currencies each at a fixed exchange rate with the United States dollar ($), and the United States government had undertaken to buy gold on demand at a fixed rate of $35 per ounce. In support of those commitments, most signatory nations had maintained strict control over their nationals’ use of foreign exchange and upon their dealings in international financial assets.

But in 1971 the United States government announced that it was suspending the convertibility of the dollar, and there followed a progressive transition to the current regime of floating exchange rates in which most governments no longer attempt to control their exchange rates or to impose controls upon access to foreign currencies or upon access to international financial markets. The behaviour of the international financial system was transformed. Exchange rates became very volatile and there was an extended series of damaging financial crises. One study estimated that by the end of the twentieth century there had been 112 banking crises in 93 countries, [38] another that there had been 26 banking crises, 86 currency crises and 27 mixed banking and currency crises, [39] many times more than in the previous post-war years.

In making an influential case for flexible exchange rates in the 1950s, Milton Friedman had claimed that if there were any resulting instability, it would mainly be the consequence of macroeconomic instability, [40] but an empirical analysis in 1999 found no apparent connection. [41]

Neoclassical theory had led them to expect capital to flow from the capital-rich developed economies to the capital-poor developing countries - because the returns to capital there would be higher. Flows of financial capital would tend to increase the level of investment in the developing countries by reducing their costs of capital, and the direct investment of physical capital would tend to promote specialisation and the transfer of skills and technology. However, the eventual outcome of these policies was not what had been expected. Theoretical considerations alone cannot determine the balance between those benefits and the costs of volatility, and the question has had to be tackled by empirical analysis.

A 2006 working paper from the International Monetary Fund offers a summary of the empirical evidence. The authors found little evidence either of the benefits of the liberalisation of capital movements, or of claims that it is responsible for the spate of financial crises. They suggest that net benefits can be achieved by countries that are able to meet threshold conditions of financial competence but that for others, the benefits are likely to be delayed, and vulnerability to interruptions of capital flows is likely to be increased. [42]

Policies and institutions

Although the majority of developed countries now have "floating" exchange rates, some of them – together with many developing countries – maintain exchange rates that are nominally "fixed", usually with the US dollar or the euro. The adoption of a fixed rate requires intervention in the foreign exchange market by the country's central bank, and is usually accompanied by a degree of control over its citizens’ access to international markets.[ citation needed ]

Some governments have abandoned their national currencies in favour of the common currency of a currency area such as the "Eurozone" and some, such as Denmark, have retained their national currencies but have pegged them at a fixed rate to an adjacent common currency. On an international scale, the economic policies promoted by the International Monetary Fund (IMF) have had a major influence, especially upon the developing countries.

The IMF was set up in 1944 to encourage international cooperation on monetary matters, to stabilise exchange rates and create an international payments system. Its principal activity is the payment of loans to help member countries to overcome balance of payments problems, mainly by restoring their depleted currency reserves. Their loans are, however, conditional upon the introduction of economic measures by recipient governments that are considered by the Fund's economists to provide conditions favourable to recovery.

Their recommended economic policies are broadly those that have been adopted in the United States and the other major developed countries (known as the " Washington Consensus ") and have often included the removal of all restrictions upon incoming investment. The Fund has been severely criticised by Joseph Stiglitz and others for what they consider to be the inappropriate enforcement of those policies and for failing to warn recipient countries of the dangers that can arise from the volatility of capital movements.

International financial stability

From the time of the Great Depression onwards, regulators and their economic advisors have been aware that economic and financial crises can spread rapidly from country to country, and that financial crises can have serious economic consequences. For many decades, that awareness led governments to impose strict controls over the activities and conduct of banks and other credit agencies, but in the 1980s many governments pursued a policy of deregulation in the belief that the resulting efficiency gains would outweigh any systemic risks. The extensive financial innovations that followed are described in the article on financial economics.

One of their effects has been greatly to increase the international inter-connectedness of the financial markets and to create an international financial system with the characteristics known in control theory as "complex-interactive". The stability of such a system is difficult to analyse because there are many possible failure sequences. The internationally systemic crises that followed included the equity crash of October 1987, [43] the Japanese asset price collapse of the 1990s [44] the Asian financial crisis of 1997 [45] the Russian government default of 1998 [46] (which brought down the Long-Term Capital Management hedge fund) and the 2007-8 sub-prime mortgages crisis. [47] The symptoms have generally included collapses in asset prices, increases in risk premiums, and general reductions in liquidity.[ citation needed ]

Measures designed to reduce the vulnerability of the international financial system have been put forward by several international institutions. The Bank for International Settlements made two successive recommendations (Basel I and Basel II [48] ) concerning the regulation of banks, and a coordinating group of regulating authorities, and the Financial Stability Forum, that was set up in 1999 to identify and address the weaknesses in the system, has put forward some proposals in an interim report. [49]


Elementary considerations lead to a presumption that international migration results in a net gain in economic welfare. Wage differences between developed and developing countries have been found to be mainly due to productivity differences [19] which may be assumed to arise mostly from differences in the availability of physical, social and human capital. Economic theory indicates that the movement of a skilled worker from a place where the returns to skill are relatively low to a place where they are relatively high should produce a net gain, although it would tend to depress the wages of skilled workers in the recipient country).[ citation needed ]

There have been many econometric studies intended to quantify those gains. A Copenhagen Consensus study suggests that if the share of foreign workers grew to 3% of the labour force in the rich countries there would be global benefits of $675 billion a year by 2025. [50] However, a survey of the evidence led a House of Lords committee to conclude that any economic benefits of immigration to the United Kingdom are relatively small. [51] Evidence from the United States also suggests that the economic benefits to the receiving country are relatively small, [52] and that the presence of immigrants in its labour market results in only a small reduction in local wages. [52]

From the standpoint of a developing country, the emigration of skilled workers represents a loss of human capital (known as brain drain), leaving the remaining workforce without the benefit of their support. That effect upon the welfare of the parent country is to some extent offset by the remittances that are sent home by the emigrants, and by the increased skill and education with which some of them return. One study introduces a further offsetting factor to suggest that the opportunity to migrate fosters enrolment in education thus promoting a "brain gain" that can counteract the lost human capital associated with emigration. [53] However, these factors can be counterweighed on their turn depending on the intentions that remittances are used for. As evidence from Armenia suggests, instead of acting as a contractual tool, remittances have a potential for recipients to further incentivize emigration by serving as a resource to alleviate the migration process. [54]

Whereas some studies suggest that parent countries can benefit from the emigration of skilled workers, [55] generally it is emigration of unskilled and semi-skilled workers that is of economic benefit to countries of origin, by reducing pressure for employment creation. Where skilled emigration is concentrated in specific highly skilled sectors, such as medicine, the consequences are severe and even catastrophic in cases where 50% or so of trained doctors have emigrated. The crucial issues, as recently acknowledged by the OECD, is the matter of return and reinvestment in their countries of origin by the migrants themselves: thus, government policies in Europe are increasingly focused upon facilitating temporary skilled migration alongside migrant remittances.

Unlike movement of capital and goods, since 1973 government policies have tried to restrict migration flows, often without any economic rationale. Such restrictions have had diversionary effects, channeling the great majority of migration flows into illegal migration and "false" asylum-seeking. Since such migrants work in unskilled industries for lower wages and often zero social insurance costs, the gain from labour migration flows is actually higher than the minimal gains calculated for legal flows; accompanying side-effects are significant, however, and include political damage to the idea of immigration, lower unskilled wages for the host population, and increased policing costs alongside lower tax receipts.


The term globalization has acquired a variety of meanings, but in economic terms it refers to the move that is taking place in the direction of complete mobility of capital and labour and their products, so that the world's economies are on the way to becoming totally integrated. The driving forces of the process are reductions in politically imposed barriers and in the costs of transport and communication (although, even if those barriers and costs were eliminated, the process would be limited by inter-country differences in social capital).

It is a process that has ancient origins[ citation needed ], which has gathered pace in the last fifty years, but which is very far from complete. In its concluding stages, interest rates, wage rates and corporate and income tax rates would become the same everywhere, driven to equality by competition, as investors, wage earners and corporate and personal taxpayers threatened to migrate in search of better terms. In fact, there are few signs of international convergence of interest rates, wage rates or tax rates. Although the world is more integrated in some respects, it is possible to argue that on the whole it is now less integrated than it was before the first world war, [56] and that many middle-east countries are less globalised than they were 25 years ago. [57]

Of the moves toward integration that have occurred, the strongest has been in financial markets, in which globalisation is estimated to have tripled since the mid-1970s. [58] Recent research has shown that it has improved risk-sharing, but only in developed countries, and that in the developing countries it has increased macroeconomic volatility. It is estimated to have resulted in net welfare gains worldwide, but with losers as well as gainers. . [59]

Increased globalisation has also made it easier for recessions to spread from country to country. A reduction in economic activity in one country can lead to a reduction in activity in its trading partners as a result of its consequent reduction in demand for their exports, which is one of the mechanisms by which the business cycle is transmitted from country to country. Empirical research confirms that the greater the trade linkage between countries the more coordinated are their business cycles. [60]

Globalisation can also have a significant influence upon the conduct of macroeconomic policy. The Mundell–Fleming model and its extensions [61] are often used to analyse the role of capital mobility (and it was also used by Paul Krugman to give a simple account of the Asian financial crisis [62] ). Part of the increase in income inequality that has taken place within countries is attributable - in some cases - to globalisation. A recent IMF report demonstrates that the increase in inequality in the developing countries in the period 1981 to 2004 was due entirely to technological change, with globalisation making a partially offsetting negative contribution, and that in the developed countries globalisation and technological change were equally responsible. [63]


Globalisation is seen as contributing to economic welfare by most economists – but not all. Professor Joseph Stiglitz [64] of the School of International and Public Affairs, Columbia University has advanced the infant industry case for protection in developing countries and criticised the conditions imposed for help by the International Monetary Fund. [65] Professor Dani Rodrik of Harvard [66] has noted that the benefits of globalisation are unevenly spread, and that it has led to income inequalities, and to damaging losses of social capital in the parent countries and to social stresses resulting from immigration in the receiving countries. [67] An extensive critical analysis of these contentions has been made by Martin Wolf, [68] and a lecture by Professor Jagdish Bhagwati has surveyed the debate that has taken place among economists. [69]

See also


  1. "International Economics - London School of Economics and Political Science".
  2. • James E. Anderson (2008). "international trade theory," The New Palgrave Dictionary of Economics , 2nd Edition.Abstract.
       • Devashish Mitra, 2008. "trade policy, political economy of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • A. Venables (2001), "International Trade: Economic Integration," International Encyclopedia of the Social & Behavioral Sciences , pp. 7843-7848. Abstract.
  3. Maurice Obstfeld (2008). "international finance," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  4. • Giancarlo Corsetti (2008). "new open economy macroeconomics," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Reuven Glick (2008). "macroeconomic effects of international trade," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Mario I. Blejer and Jacob A. Frenkel (2008). "monetary approach to the balance of payments," The New Palgrave Dictionary of Economics, 2nd Edition.
       • Bennett T. McCallum (1996). International Monetary Economics. Oxford. Description.
       • Maurice Obstfeld and Kenneth S. Rogoff (1996). Foundations of International Macroeconomics. MIT Press. Description. Archived 2010-08-09 at the Wayback Machine
  5. As at the JEL classification codes, JEL: F51-F55. Links to article-abstract examples for each subclassification are at JEL Classification Codes Guide JEL:F5 links.
  6. "A note on the scope and method of the theory of international trade" in the appendix of Jacob Viner Studies in the Theory of International Trade : Harper and Brothers 1937]
  7. David Ricardo On the Principles of Political Economy and Taxation Chapter 7 John Murray, 1821. Third edition.(First published: 1817)
  8. The Heckscher-Ohlin Theorem
  9. Wassily Leontief, Domestic Production and Foreign Trade: The American Capital Position Re-examined Proceedings of the American Philosophical Society, vol. XCVII p332 September 1953
  10. Stolper, Wolfgang; Samuelson, Paul (1941). "Protection and Real Wages". Review of Economic Studies. 9 (1): 58–73. doi:10.2307/2967638. JSTOR   2967638.
  11. Samuelson, Paul (June 1949). "International Trade and the Equalization of Factor Prices". The Economic Journal. 58 (230): 163–184. doi:10.2307/2225933. JSTOR   2225933.
  12. See also the Rybczynski theorem, in Rybczyinski, Tadeusz (1955). "Factor Endowments and Relative Commodity Prices". Economica. New Series. 22 (88): 336–341. doi:10.2307/2551188. JSTOR   2551188.
  13. Michael Posner International Trade and Technical Change Oxford Economic Papers 13 1961
  14. • Luc Soete: "A General Test of Technological Gap Trade Theory", Review of World Economics December 1981
       • Raymond Vernon (Ed): The Technology Factor in International Trade National Bureau of Economic Research 1970
  15. Gary Hufbauer: "The Impact of National Characteristics and Technology on the Commodity Composition of Trade in Manufactured Goods" in Vernon op cit 1970
  16. Samuelson, Paul (1939). "The Gains from International Trade". Canadian Journal of Economics and Political Science. 5 (2): 195–205. doi:10.2307/137133. JSTOR   137133.
  17. Nordås, Hildegunn Kyvik; Miroudot, Sébastien; Kowalski, Przemyslaw (2006). "Dynamic Gains from Trade". OECD Trade Policy Working Paper No. 43. OECD Trade Policy Papers. doi: 10.1787/18166873 .
  18. Murray Kemp The Gains from Trade and the Gains from Aid: Essays in International Trade Theory: Routledge 1995
  19. 1 2 Stephen Golub Labor Costs and International Trade American Enterprise Institute: 1999
  20. Martin Wolf Why Globalization Works pages 176 to 180 Yale Nota Bene 2005
  21. Prebisch, Raul (1950). The Economic Development of Latin America and Its Principal Problems (PDF). Santiago: UNECLA.
  22. Singer, Hans (1950). "The Distribution of Gains between Investing and Borrowing Countries". American Economic Review . 40 (2): 473–485. JSTOR   1818065.
  23. Tilton, John. "The Terms of Trade Debate and its Implications for Primary Producers" (PDF). California School of Mines Working Paper.[ permanent dead link ]
  24. Chang, Ha-Joon (September 2002). "Kicking Away the Ladder". Post-Autistic Economics Review. 15. Article 3.
  25. Krueger, Anne; Tuncer, Bilge (1982). "An Empirical Test of the Infant Industry Argument". American Economic Review. 72 (5): 1142–1152. JSTOR   1812029.
  26. Bruton, Henry J. (1998). "A Reconsideration of Import Substitution". Journal of Economic Literature. 36 (2): 903–936. JSTOR   2565125.
  27. Hallak, Juan Carlos; Levisohn, James (2008). "Fooling Ourselves: The Globalization and Growth Debate". In Zedillo, E. (ed.). The Future of Globalization: Explorations in Light of Recent Turbulence . London and New York: Routledge. pp.  209–223. ISBN   978-0-415-77184-9.
  28. Bhagwati, Jagdish; Ramaswami, V. K.; Srinivasan, T. N. (1969). "Domestic Distortions, Tariffs, and the Theory of Optimum Subsidy: Some Further Results" (PDF). Journal of Political Economy. 77 (6): 1005–1010. doi:10.1086/259587. S2CID   154714998.
  29. Baldwin, Robert (1969). "The Case against Infant-Industry Tariff Protection". Journal of Political Economy . 77 (3): 295–305. doi:10.1086/259517. S2CID   154784307.
  30. Blattman, Christopher; Clemens, Michael A.; Williamson, Jeffrey G. (June 2003). "Who Protected and Why? Tariffs the World Around 1870–1938". Harvard Institute of Economic Research Discussion Paper No. 2010. SSRN   431740.
  31. Assessing the Cost of Protection HM Treasury (Annex A of Trade and the Global Economy 2004)
  32. World Bank Global Economic Prospects 2004
  33. "Trends in Market Openness" (PDF). OECD Economic Review. 1999. Archived from the original (PDF) on September 10, 2006.
  34. "The Doha Development Round". OECD. 2006.
  35. Steven Surovic International Trade Theory and Policy Chap 110-4
  36. "David Sumner et al Tariff and Non-tariff Barriers to Trade Farm Foundation 2002" (PDF). Archived from the original (PDF) on 2007-04-23. Retrieved 2009-06-27.
  37. WTO agreements concerning non-tariff barriers WTO 2007
  38. "Finance for Growth: Policy Choices in a Volatile World World Bank May, 2001". Archived from the original on 2009-01-23. Retrieved 2009-06-27.
  39. Eichengreen, Barry; Bordo, Michael (January 2002). "Crises Now and Then: What Lessons from the Last Era of Financial Globalization" (PDF). NBER Working Paper No. 8716. doi:10.3386/w8716.
  40. Milton Friedman "The Case for Flexible Exchange Rates" in Essays in Positive Economics p173 Phoenix Books 1966
  41. Robert Flood and Andrew Rose Understanding Exchange Rate Volatility Without the Contrivance of Macroeconomics IMF/Haas Business School 1999
  42. Ayhan Kose, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei Financial Globalization: A Reappraisal IMF Working Paper WP/06/189 2006
  43. The 1987 Stock Market Crash, Lope 2004
  44. Akihiro and David Woo The Japanese Banking Crisis of the 1990s: Sources and Lessons, IMF Working Paper WP/00/7 2000
  45. Timothy Lane: "The Asian Financial Crisis; What Have We Learned" Finance and development September 1999 IMF
  46. Taimur Baig and Ilan Goldfajn: The Russian Default and Contagion to Brazil IMF Working Paper WP/00/160 200
  47. "Global Risks 2008" World Economic Forum January 2008
      Containing Systemic Risks and Restoring Financial Soundness Global Financial Stability Report International Monetary Fund April 2008
  48. Core Principles of Effective Banking Supervision Basel Committee on Banking Supervision, Bank for International Settlements 2006(Basel 2)
  49. Interim Report of the Working Group on Market and Institutional Resilience, Financial Stability Forum, February 2008
  50. Kym Anderson and Alan Winter: "The Challenge of Reducing International Trade and Migration Barriers", Copenhagen Consensus, 2008
  51. House of Lords Select Committee on Economic Affairs Session 2007-8 HL paper 82, The Stationery Office, London
  52. 1 2 Borjas, George J. (1995). "The Economic Benefits from Immigration" (PDF). Journal of Economic Perspectives . 9 (2): 3–22. doi:10.1257/jep.9.2.3. S2CID   9506404.
  53. Frederic Docquier and Hillel Rapoport Skilled Migration: the Perspective of the Developing Countries
  54. Aleksandr Grigoryan and Knar Khachatryan Remittances and Emigration Intentions: Evidence from Armenia
  55. "Catia Batista, Pedro Vicente and Aitor Lacuesta: "Brain Drain or Brain Gain?Micro: Evidence from an African Success Story", Oxford Economics Papers, August 2007". Archived from the original on 2011-09-26. Retrieved 2009-06-27.
  56. Paul Streeten "Integration, Interdependence, and Globalization" in Finance and Development IMF June 2001
  57. Fred Bergsten “The G-20 and the World Economy” in World Economics Vol 5 Number 3 Page 28 July/September 2004 Archived 2007-07-17 at the Wayback Machine
  58. Paolo Mauro and Jonathan Ostry Who's Driving Financial Globalization? IMF Research Department 2007
  59. IMF Research Department Reaping the Benefits of Financial Globalisation IMF Research Department Discussion Paper 2007
      Martin Evans and Viktoria Hnatkovska International Financial Integration and the Real Economy IMF Staff Papers Vol 54 No 2 2007
  60. Kose, M. Ayhan and Yi, Kei-Mu, The Trade Comovement Problem in International Macroeconomics (December 2002). FRB of New York Staff Report No. 155 SSRN   368201
  61. Frenkel, Jacob; Razin, Assaf (1987). "The Mundell–Fleming Model A Quarter Century Later: A Unified Exposition". International Monetary Fund Staff Papers. 34 (4): 567–620. doi:10.2307/3867191. JSTOR   3867191.
  62. Paul Krugman Analytical Afterthoughts on The Asian Crisis
  63. Subir Lall, Chris Papageorgiou and Petia Topalva Globalization and Inequality in IMF World Economic Outlook October 2007 Chapter 4
  64. Joseph Stiglitz website Archived 2008-05-09 at the Wayback Machine
      Interview with Joseph Stiglitz Archived 2006-09-27 at the Wayback Machine
  65. Joseph Stiglitz Globalization and its Discontents" Norton 2002
  66. Dani Rodrik's website
  67. Dani Rodrik Has Globalization Gone Too Far?. Institute for International Economics 1997
  68. Martin Wolf Why Globalization Works Yale Nota Bene 2005
  69. Jagdish Bhagwati The Consensus for Free Trade Among economists — has it frayed? Lecture to the World Trade Organization October 8th 2007

Related Research Articles

<span class="mw-page-title-main">International trade</span> Exchange across international borders

International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services.

<span class="mw-page-title-main">International Monetary Fund</span> International financial institution

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 190 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of last resort to national governments, and a leading supporter of exchange-rate stability. Its stated mission is "working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world." Established on December 27, 1945 at the Bretton Woods Conference, primarily according to the ideas of Harry Dexter White and John Maynard Keynes, it started with 29 member countries and the goal of reconstructing the international monetary system after World War II. It now plays a central role in the management of balance of payments difficulties and international financial crises. Through a quota system, countries contribute funds to a pool from which countries can borrow if they experience balance of payments problems. As of 2016, the fund had SDR 477 billion.

<span class="mw-page-title-main">Keynesian economics</span> Group of macroeconomic theories

Keynesian economics are the various macroeconomic theories and models of how aggregate demand strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. Instead, it is influenced by a host of factors – sometimes behaving erratically – affecting production, employment, and inflation.

<span class="mw-page-title-main">Free trade</span> Absence of government restriction on international trade

Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold economically liberal positions, while economic nationalist and left-wing political parties generally support protectionism, the opposite of free trade.

<span class="mw-page-title-main">Joseph Stiglitz</span> American economist, professor, and recipient of the Nobel Memorial Prize in Economics

Joseph Eugene Stiglitz is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank. He is also a former member and chairman of the Council of Economic Advisers. He is known for his support for the Georgist public finance theory and for his critical view of the management of globalization, of laissez-faire economists, and of international institutions such as the International Monetary Fund and the World Bank.

This aims to be a complete article list of economics topics:

<span class="mw-page-title-main">Import substitution industrialization</span> Trade and economic policy

Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. The term primarily refers to 20th-century development economics policies, but it has been advocated since the 18th century by economists such as Friedrich List and Alexander Hamilton.

<span class="mw-page-title-main">Protectionism</span> Economic policy of restraining trade between states through government regulations

Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. Opponents argue that protectionist policies reduce trade and adversely affect consumers in general as well as the producers and workers in export sectors, both in the country implementing protectionist policies and, in the countries, protected against.

<span class="mw-page-title-main">Global financial system</span> Global framework for capital flows

The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic action that together facilitate international flows of financial capital for purposes of investment and trade financing. Since emerging in the late 19th century during the first modern wave of economic globalization, its evolution is marked by the establishment of central banks, multilateral treaties, and intergovernmental organizations aimed at improving the transparency, regulation, and effectiveness of international markets. In the late 1800s, world migration and communication technology facilitated unprecedented growth in international trade and investment. At the onset of World War I, trade contracted as foreign exchange markets became paralyzed by money market illiquidity. Countries sought to defend against external shocks with protectionist policies and trade virtually halted by 1933, worsening the effects of the global Great Depression until a series of reciprocal trade agreements slowly reduced tariffs worldwide. Efforts to revamp the international monetary system after World War II improved exchange rate stability, fostering record growth in global finance.

<span class="mw-page-title-main">Balance of payments</span> Difference between the inflow and outflow of money to a country at a given time

In international economics, the balance of payments of a country is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world. These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services.

International political economy (IPE) is the study of how politics shapes the global economy and how the global economy shapes politics. A key focus in IPE is on the distributive consequences of global economic exchange. It has been described as the study of "the political battle between the winners and losers of global economic exchange."

<i>Globalization and Its Discontents</i> 2002 non-fiction book by Joseph E. Stiglitz

Globalization and Its Discontents is a book published in 2002 by the 2001 Nobel laureate Joseph E. Stiglitz. The title is a reference to Freud's Civilization and Its Discontents.

Structural adjustment programs (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their stated purpose is to adjust the country's economic structure, improve international competitiveness, and restore its balance of payments.

<span class="mw-page-title-main">Heckscher–Ohlin model</span> Economic model for international trade

The Heckscher–Ohlin model is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region. The model essentially says that countries export the products which use their relatively abundant and cheap factors of production, and import the products which use the countries' relatively scarce factors.

Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measures may be economy-wide, sector-specific, or industry specific. They may apply to all flows, or may differentiate by type or duration of the flow.

In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.

In economics a spillover is an economic event in one context that occurs because of something else in a seemingly unrelated context. For example, externalities of economic activity are non-monetary spillover effects upon non-participants. Odors from a rendering plant are negative spillover effects upon its neighbors; the beauty of a homeowner's flower garden is a positive spillover effect upon neighbors. The concept of spillover in economics could be replaced by terminations of technology spillover, R&D spillover and/or knowledge spillover when the concept is specific to technology mamagement and innovation economics.

International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications. International trade policy has been highly controversial since the 18th century. International trade theory and economics itself have developed as means to evaluate the effects of trade policies.

<span class="mw-page-title-main">First globalization</span> Worlds first major period of globalization of trade and finance

"First globalization" is a phrase used by economists to describe the world's first major period of globalization of trade and finance, which took place between 1870 and 1914. The "second globalization" began in 1944 and ended in 1971. This led to the third era of globalization, which began in 1989 and continues today.

This glossary of economics is a list of definitions of terms and concepts used in economics, its sub-disciplines, and related fields.