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International Economics Presented by Abigail Atiwag International economics is a branch of economics that studies the interactions and economic relationships between countries focusing on international trade finance investment globalization and economic policies that impact global markets Key concepts and topics in international economics include International Trade International trade deals with the exchange of goods services and factors of production such as capital and labor across national borders Topics in international trade theory include comparative advantage absolute advantage trade patterns gains from trade trade barriers tariffs quotas non tariff barriers trade agreements free trade agreements customs unions trade policies and trade liberalization Comparative Advantage The concept of comparative advantage developed by David Ricardo states that countries should specialize in producing goods and services where they have a lower opportunity cost relative to other countries This leads to efficient allocation of resources and mutually beneficial trade relationships Absolute Advantage Absolute advantage refers to a country s ability to produce a good or service more efficiently using fewer resources than another country It forms the basis for understanding trade patterns and specialization based on productivity differences Trade Theories Various trade theories explain the determinants of trade patterns and the factors influencing international trade These theories include the Ricardian model Heckscher Ohlin model factor proportions theory new trade theory gravity model of trade and economies of scale theory Trade Policies Trade policies are government interventions that affect international trade flows and trade relationships They include tariffs taxes on imports import quotas subsidies export incentives trade agreements trade negotiations trade remedies anti dumping measures countervailing duties trade retaliation trade promotion and trade protectionism Globalization Globalization refers to the increasing interconnectedness integration and interdependence of economies societies cultures and markets across the world It encompasses international trade investment flows technology diffusion migration cultural exchanges global supply chains and the spread of ideas and information International Finance International finance deals with financial transactions capital flows foreign exchange markets exchange rates and monetary policies in the global context Topics include balance of payments current account capital account exchange rate regimes currency markets foreign direct investment FDI portfolio investment sovereign debt international financial institutions and financial globalization Foreign Exchange Markets Foreign exchange forex markets facilitate the trading of currencies between countries Understanding exchange rates currency appreciation depreciation currency pegs currency interventions exchange rate regimes fixed floating managed float and currency crises is essential in international finance Balance of Payments The balance of payments BoP accounts record a country s transactions with the rest of the world including exports and imports of goods and services financial inflows and outflows capital transfers and changes in official reserves BoP analysis helps assess a country s external position and economic health International Investment International investment involves cross border flows of capital assets and investments between countries It includes foreign direct investment FDI where companies invest in foreign subsidiaries or establish operations abroad as well as portfolio investment in stocks bonds and other financial assets across borders Multinational Corporations MNCs Multinational corporations are companies that operate in multiple countries engaging in international trade investment production and global business activities MNCs play a significant role in global trade supply chains technology transfer innovation and economic development Global Economic Governance Global economic governance refers to the institutions agreements rules and norms that govern international economic relations This includes international organizations such as the World Trade Organization WTO International Monetary Fund IMF World Bank regional development banks trade blocs EU ASEAN economic treaties and global economic forums Trade and Development International economics also addresses issues related to trade and development including the role of trade in promoting economic growth poverty reduction income inequality sustainable development goals SDGs technology transfer capacity building trade related infrastructure and trade facilitation for developing and emerging economies Trade Disputes and Negotiations Trade disputes can arise between countries due to perceived unfair trade practices trade barriers intellectual property rights violations subsidies dumping and other trade related issues Trade negotiations dispute settlement mechanisms and diplomatic efforts are crucial in resolving trade conflicts and maintaining open and fair trade relations Regional Integration Regional integration refers to the process of countries coming together to form regional economic blocs or agreements such as free trade areas customs unions common markets and economic unions Examples include the European Union EU North American Free Trade Agreement NAFTA Association of Southeast Asian Nations ASEAN and Mercosur Understanding international economics is essential for policymakers businesses investors economists and stakeholders involved in global trade finance and economic policy It provides insights into the opportunities challenges dynamics and implications of economic interactions among countries in a globalized world THANK YOU

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SLU ECON 395 - International Economics: Global Trade and Economic Interdependence

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