BUSI2025 Lecture Notes - Lecture 6: International Trade, Negage, Price Premium
Document Summary
I nt er n at i on a l t r a de: t heor y a n d pr a ct i c e. Export incentives: reduced per unit production costs, use of excess production capacity, pri(cid:272)e pre(cid:373)iu(cid:373) i(cid:374) foreig(cid:374) (cid:373)arket isk spreadi(cid:374)g. Import incentives: cheaper supplies, additions to product line, reducing risk in the supply chain. After wwii: strong growth in world trade volume (manufactures) Since 1980s: strong growth in services trade, approximately 29% of total world trade in 2016 (wto, International trade influences level of world output (gdp: higher growth in international trade = higher growth in world output. All countries fall on a continuum of trade interdependencies: high dependence at one end (mainly small nations e. g. singapore, netherlands, high independence at the other end (autarky) e. g. north korea, myanmar, bhutan, cuba) Issues: neighbouring countries trade more, but not on competing products e. g. indonesia and.
