international econ PPT2

largest

Five ____ trading partners with the U.S. in 2008 were Canada, China, Mexico, Japan, and Germany (Mexico used to be ahead of China).

$550 billion dollars

The total value of imports from and exports to Canada (trade volume) in 2008 was about ____ (up from $500B in 2005)

69%

The largest 15 trading partners with the U.S. accounted for ___ of the value of U.S. trade in 2008.

True

Total Texas exports $207B (16% of all US exports), highest of all states (California 143B, New York 68B) in 2010 (has been the biggest exporter ever since 2002).

Texas exports

___ fell at a slower rate than the US as a whole in 2009 and recovered faster in 2010.

Texas

If ___ were a nation, would rank among top 20 exporting countries

US

Compared to ___, Texas exports a larger share of its output, depends on exports for more of its jobs, sends more sophisticated products overseas and employs higherskilled workers in export-related jobs (FRBD 2007).

True

Top three destinations:

Mexico 73B (35%),

Canada 19B (9%),

China 10B (5%) in 2010

. –Texas lags California and US in diversification across countries (FRBD 2007).

True

Top five industries:

Computers and electronic

parts 39B, Chemicals 39B,

Petroleum

and coal 33B,

Machinery except electrical 26B,

Transportation equipment 19B in 2010

$202B

Total Texas imports ____ in 2004.

$109B from Mexico

Venezuela, Saudi Arabia and China next with $8-9B each

not

Canada ___ in top 10 countries of origin for Texas imports

Germany, U.K., and France.

3 of the top 10 trading partners with the U.S. are the 3 largest European economies: ___,___,____

Germany, U.K., and France.

These countries have the largest gross domestic product (GDP)in Europe

GDP

measures the value of goods and services produced in an economy

directly related

The size of an economy is ____ to the volume of imports and exports.

more goods and services

Larger economies produce ____, so they have more to sell in the export market.

more income from the    goods and services sold

Larger economies generate ___, so they are able to buy more    imports.

Distance

___ between markets influences transportation    costs and therefore the cost of imports and exports.

Distance

____ may also influence personal contact and    communication, which may influence trade.

Cultural affinity:

____if two countries have cultural ties, it is    likely that they also have strong economic ties.

Geography

____: ocean harbors and a lack of mountain    barriers make transportation and trade easier.

Multinational corporations

corporations spread across different nations    import and export many goods between their divisions.

Borders

: crossing borders involves formalities that take time and perhaps    monetary costs like tariffs.

These implicit and explicit costs reduce trade.

   –The existence of ____ may also indicate the    existence of different    languages (see 2) or different    currencies, either of which may impede    trade more.

Extra info nalang yan

In its basic form, the gravity model assumes that only size and distance are important for trade in the following way:

           Tij= A x Yi x Yj/Dij

where :

   Tij is the value of trade between country I and country j

   A is a constant

   Yi the GDP of country i

   Yj is the GDP of country j

   Dij is the distance between country I and country j

Distance and Borders

Estimates of the effect of distance from the gravity model predict that a 1% increase in the distance between countries is associated with a decrease in the volume of trade of 0.7% to 1%.

borders

Besides distance, ___ increase the cost and time needed to trade.

Trade agreements

____ between countries are intended to reduce the formalities and tariffs needed to cross borders, and therefore to increase trade.

gravity model

The ____ can assess the effect of trade agreements on trade: does a trade agreement lead to significantly more trade among its partners than one would otherwise predict given their GDPs and distances from one another?

The U.S.

____ signed a free trade agreement with Mexico and Canada in 1994, the North American Free Trade Agreement (NAFTA)

NAFTA

Because of ____ and because Mexico and Canada are close to the U.S., the amount of trade between the U.S. and its northern and southern neighbors as a fraction of GDP is larger than between the U.S. and European countries

negative effect

The ____ of distance on trade according to the gravity models is significant, but has grown smaller over time due to modern transportation and communication

Technologies that have increased trade:

       –Wheels, sails, compasses, railroads, telegraph,            steam power, automobiles, telephones, airplanes,    computers, fax machines, Internet, fiber optics, personal    digital assistants, GPS satellites…

wars

Political factors, such as ___, can change trade patterns much more than innovations in transportation and communication.

1870 to 1913.

World trade grew rapidly from

1945, 1970

World trade grew rapidly from 1870 to 1913.

Then it suffered a sharp decline due to the two    world wars and the Great Depression.

It started to recover around ___ but did not        recover fully until around ____.

unprecedented heights

Since 1970, world trade as a fraction of world GDP has achieved ____

True

Today, most (about 55%) of the volume of trade is in manufactured products such as automobiles, computers, clothing and machinery.

True

Services such as shipping, insurance, legal fees, and    spending by tourists account for about 20% of the    volume of trade.

   –Mineral products(ex., petroleum, coal, copper) and agricultural products are a relatively small part of trade.

past

In the ____, a large fraction of the volume of trade came from agricultural and mineral products.

Britain

In 1910, ___ mainly imported agricultural and    mineral products, although manufactured products still    represented most of the volume of exports.

U.S

In 1910, the ___. mainly imported and exported    agricultural products and mineral products.

2002

In ___, manufactured products made up most of    the volume of imports and exports for both countries

2001

In ___, about 65% of exports from low-and            middleincome countries were manufactured products,    and only 10% of exports were agricultural products.

changed

Low-and middle-income countries have also ___ the composition of their trade.

1960

In ___, about 58% of exports from low-and    middle income countries were agricultural products    and only 12% of exports were manufactured products.

small role world trade.

Before 1945, multinational corporations (firms with activities in multiple countries) played a _____

one third

Today about ___ of all US exports and 42% of all US imports are sales from one division of a multinational corporation to another.

Offshoring

___ (or outsourcing) occurs when a firm moves its operations to a foreign location. –

Service outsourcing

can occur for services that can be performed and transmitted electronically.

For example, a firm may move its customer service        centerswhose telephone calls can be transmitted    electronically to a foreign location.

•____ is currently not a significant part of trade.

“tradable”

Some jobs are ____ and thus have the potential to be    outsourced.

non tradable

Most jobs are ____ because they need to be done close    to the customer