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International Economics PDF

495 Pages·2021·10.773 MB·English
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This is a special edition of an established title widely used by colleges and GLOBAL GLOBAL universities throughout the world. Pearson published this exclusive edition for the benefit of students outside the United States and Canada. If you EDITION EDITION purchased this book within the United States or Canada, you should be aware EG DL that it has been imported without the approval of the Publisher or Author. ITO IOB A NL James Gerber’s International Economics offers an introduction to both macro and micro I n components of international economics. Using real-life applications and examples, the text t e makes economic theory and policy accessible to diverse groups of students, including those r pursuing economics specialization as well as non-specialization courses. This equips students n with an understanding of the entire spectrum of international economics without requiring a t the use of higher-level mathematics. In addition, the text has a flexible approach, which i o includes self-contained chapters and comprehensive coverage, allowing instructors to adapt n its concepts to a wide range of syllabi. a l New To This Edition E c • New – Chapter 4 now incorporates a comprehensive discussion of the gravity model of o trade. This discussion finds it as the most accurate one for predicting trade flows between n countries. o m • New – Five new case studies, including ones on the collapse of Thailand’s currency in 1997–1998 and Brexit, highlight and build on core concepts and help students see theories i c in action. s • New and Updated – Topics on the latest key economic trends and events, including the role of economic institutions, the analysis of international economic policies, and the recent history of the world economy, supplement economic theory with real-world applications. EE DI G I TH Available separately for purchase is MyLab Economics for International Economics, the teaching IOT and learning platform that empowers instructors to personalize learning for every student. NH International Economics When combined with Pearson’s trusted educational content, this optional suite helps deliver the desired learning outcomes. G e EIGHTH EDITION r b e r JAMES GERBER CVR_GERB3998_08_GE_CVR_Ashford.indd All Pages 10/03/22 1:51 PM International Economics James Gerber San Diego State University E I G H T H E D I T I O N G L O B A L E D I T I O N Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong Tokyo • Seoul • Taipei • New Delhi • Cape Town • São Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan A01_GERB3998_08_GE_FM.indd 1 09/03/2022 20:52 Cover Image by Aun Puttipong/Shutterstock Pearson Education Limited KAO Two KAO Park Harlow CM17 9NA United Kingdom and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited, 2023 The rights of James Gerber to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled International Economics, 8th Edition, ISBN 978-0-13-689241-0 by James Gerber, published by Pearson Education © 2022. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. For information regarding permissions, request forms, and the appropriate contacts within the Pearson Education Global Rights and Permissions department, please visit www.pearsoned.com/permissions. This eBook is a standalone product and may or may not include all assets that were part of the print version. It also does not provide access to other Pearson digital products like MyLab and Mastering. The publisher reserves the right to remove any material in this eBook at any time. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN 10: 1-292-43399-X ISBN 13: 978-1-292-43399-8 eBook ISBN 13: 9781292434025 Typeset in Times Ten LT Std 10/12 by Straive eBook formatted by B2R Technologies Pvt. Ltd. For Monica and Elizabeth A01_GERB3998_08_GE_FM.indd 3 09/03/2022 20:52 This page is intentionally left blank A01_GERB3998_08_GE_FM.indd 4 09/03/2022 20:52 BRIEF CONTENTS Preface 13 PART 1 Introduction and Institutions 23 Chapter 1 An Introduction to the World Economy 24 Chapter 2 International Economic Institutions Since World War II 40 PART 2 International Trade 63 Chapter 3 Comparative Advantage and the Gains from Trade 64 Chapter 4 Comparative Advantage and Factor Endowments 87 Chapter 5 Beyond Comparative Advantage 117 Chapter 6 The Theory of Tariffs and Quotas 139 Chapter 7 Commercial Policy 161 Chapter 8 International Trade and Labor and Environmental Standards 181 PART 3 International Finance 205 Chapter 9 Trade and the Balance of Payments 206 Chapter 10 Exchange Rates and Exchange Rate Systems 236 Chapter 11 An Introduction to Open Economy Macroeconomics 272 Chapter 12 International Financial Crises 298 PART 4 Regional Issues in the Global Economy 327 Chapter 13 The United States in the World Economy 328 Chapter 14 The European Union: Many Markets into One 353 Chapter 15 Trade and Policy Reform in Latin America 382 Chapter 16 Export-Oriented Growth in East Asia 409 Chapter 17 China and India in the World Economy 438 Glossary 464 Index 475 Suggested Readings are available at www.pearson.com/uk/ 5 A01_GERB3998_08_GE_FM.indd 5 09/03/2022 20:52 CONTENTS Preface 13 Capital Flows and the Debt of Developing Countries (Chapters 2, PART 1 Introduction and 9, and 12) 36 Latin America and the World Institutions 23 Economy (Chapter 15) 36 Export-Led Growth in East Asia Chapter 1 An Introduction to the (Chapter 16) 37 World Economy 24 China and India in the World Introduction: International Economic Economy (Chapter 17) 37 Integration 24 What Do International Economists Do? 37 Elements of International Economic Vocabulary 38 • Review Questions 38 Integration 25 Chapter 2 International Economic The Growth of World Trade 26 Institutions Since Capital and Labor Mobility 28 World War II 40 Features of Contemporary International Economic Relations 30 Introduction: International Institutions Trade and Economic Growth 32 and Issues Since World War II 40 International Institutions 40 Twelve Themes in International A Taxonomy of International Economics 33 Economic Institutions 41 The Gains from Trade and New Trade Theory (Chapters 3, 4, and 5) 33 The IMF, the World Bank, Wages, Jobs, and Protection and the WTO 41 (Chapters 3, 6, 7, and 8) 34 The IMF and World Bank 41 Trade Deficits (Chapters 9, 11, and 12) 34 The GATT, the Uruguay Round, Regional Trade Agreements and the WTO 43 (Chapters 2, 13, and 14) 34 CASE STUDY: The GATT Rounds 45 The Resolution of Trade Conflicts Regional Trade Agreements 46 (Chapters 2, 7, and 8) 35 Five Types of Regional Trade The Role of International Institutions Agreements 47 (Chapters 2, 8, and 12) 35 CASE STUDY: Prominent Regional Exchange Rates and the Macroeconomy Trade Agreements 47 (Chapters 10 and 11) 35 Regional Trade Agreements and Financial Crises and Global Contagion the WTO 49 (Chapter 12) 36 For and Against RTAs 50 6 A01_GERB3998_08_GE_FM.indd 6 09/03/2022 20:52 Contents 7 The Role of International Economic CASE STUDY: Changing Comparative Institutions 51 Advantage in the Republic of The Definition of Public Goods 52 Korea,  1960–2010 77 Maintaining Order and Reducing Comparative Advantage and Uncertainty 53 “Competitiveness” 79 CASE STUDY: Bretton Woods 54 Economic Restructuring 80 Criticism of International Institutions 56 CASE STUDY: Losing Comparative Sovereignty and Transparency 56 Advantage 82 Ideology 57 Summary 84 • Vocabulary 85 • Implementation and Adjustment Review Questions 85 Costs 58 CASE STUDY: China’s Alternative to the Chapter 4 Comparative Advantage IMF and World Bank: The AIIB 59 and Factor Endowments 87 Summary 60 • Vocabulary 61 • Introduction: The Determinants of Review Questions 61 Comparative Advantage 87 Modern Trade Theory 88 PART 2 International The HO Trade Model 88 Gains from Trade in the HO Model 89 Trade 63 Trade and Income Distribution 92 The Stolper-Samuelson Theorem 93 Chapter 3 Comparative Advantage The Specific Factors Model 95 and the Gains from Trade 64 CASE STUDY: Comparative Advantage Introduction: The Gains from Trade 64 in a Single Natural Resource 97 Adam Smith and the Attack on Empirical Tests of the Theory of Economic Nationalism 64 Comparative Advantage 98 A Simple Model of Production Extensions of the HO Model 99 and Trade 66 The Gravity Model 100 Absolute Productivity Advantage The Product Cycle 100 and the Gains from Trade 66 CASE STUDY: United States–China CASE STUDY: Gains from Trade in Trade 102 Nineteenth-Century Japan 68 Foreign Trade Versus Foreign Comparative Productivity Advantage Investment 103 and the Gains from Trade 69 Off-Shoring and Outsourcing 105 The Production Possibilities Curve 70 CASE STUDY: Mexico’s Participation Relative Prices 71 in Global Value Chains 107 The Consumption Possibilities Curve 71 The Impact of Trade on Wages and Jobs 108 The Gains from Trade 72 CASE STUDY: Do Trade Statistics Give a Domestic Prices and the Trade Price 74 Distorted Picture of Trade Relations? Absolute and Comparative Productivity The Case of the iPhone 3G 110 Advantage Contrasted 75 Migration and Trade 111 Gains from Trade with No Absolute Summary 113 • Vocabulary 114 • Advantage 76 Review Questions 115 A01_GERB3998_08_GE_FM.indd 7 09/03/2022 20:52 8 Contents Chapter 5 Beyond Comparative Analysis of Quotas 152 Advantage 117 Types of Quotas 153 The Effect on the Profits of Foreign Introduction: More Reasons to Trade 117 Producers 153 Intraindustry Trade 118 Hidden Forms of Protection 155 Characteristics of Intraindustry Trade 119 CASE STUDY: Intellectual Property The Gains from Intraindustry Trade 121 Rights and Trade 156 CASE STUDY: United States and Canada Trade 123 Summary 158 • Vocabulary 159 • Review Questions 159 Trade and Geography 124 Geography, Transportation Costs, and CHAPTER 7 Commercial Policy 161 Internal Economics of Scale 124 Introduction: Commercial Policy, CASE STUDY: The Shifting Geography Tariffs, and Arguments for of Mexico’s Manufacturing 125 Protection 161 External Economies of Scale 126 Trade and External Economies 127 Tariff Rates in The World’s Major Traders 162 Industrial Policy 128 Industrial Policies and Market The Costs of Protectionism 164 Failure 129 The Logic of Collective Action 165 Industrial Policy Tools 131 CASE STUDY: Agricultural Subsidies 166 CASE STUDY: Clean Energy Why Nations Protect Their Industries 168 and Industrial Policy 132 Revenue 168 Problems with Industrial Policies 133 The Labor Argument 169 CASE STUDY: Do WTO Rules Prohibit The Infant Industry Argument 170 Industrial Policies? 134 The National Security Argument 170 The Cultural Protection Argument 171 Summary 136 • Vocabulary 137 • Review Questions 137 The Retaliation Argument 172 CASE STUDY: National Security Chapter 6 The Theory of Tariffs Protection and the WTO 172 and Quotas 139 The Politics of Protection in the Introduction: Tariffs and Quotas 139 United States 174 Analysis of a Tariff 139 Antidumping Duties 174 Consumer and Producer Surplus 140 Countervailing Duties 176 Prices, Output, and Consumption 141 Escape Clause Relief 176 Resource Allocation and Income Section 301 177 Distribution 143 National Security Protection 177 CASE STUDY: A Comparison of CASE STUDY: Economic Sanctions 177 Tariff Rates 145 Summary 179 • Vocabulary 180 • Other Potential Costs 147 Review Questions 180 The Large Country Case 148 CHAPTER 8 International Trade and Effective Versus Nominal Rates Labor and Environmental of Protection 149 Standards 181 CASE STUDY: The Uruguay and Doha Rounds 151 Introduction: Income and Standards 181 A01_GERB3998_08_GE_FM.indd 8 09/03/2022 20:52 Contents 9 Setting Standards: Harmonization, Are Current Account Deficits Mutual Recognition, or Separate? 182 Harmful? 224 Labor Standards 184 CASE STUDY: Current Account Deficits in the United States 225 Defining Labor Standards 184 CASE STUDY: Child Labor 185 International Debt 227 Labor Standards and Trade 188 CASE STUDY: Odious Debt 228 Evidence on Low Standards as a The International Investment Position 230 Predatory Practice 189 Summary 231 • Vocabulary 232 • CASE STUDY: The International Review Questions 232 Labour Organization 190 Appendix A: Trade and the Environment 192 Measuring the International Transboundary and Nontransboundary Investment Position 233 Effects 192 Appendix B: CASE STUDY: Trade Barriers and Balance of Payments Data 234 Endangered Species 194 Bureau of Economic Analysis 234 Alternatives to Trade Measures 195 International Financial Statistics 234 Labels for Exports 196 Balance of Payments Statistics 235 Requiring Home Country Standards 197 Appendix C: Increasing International Negotiations 198 A Note on Numbers 235 CASE STUDY: Global Climate Change 199 Summary 201 • Vocabulary 202 • Chapter 10 Exchange Rates and Review Questions 202 Exchange Rate Systems 236 PART 3 International Introduction: Fixed, Flexible, or Finance 205 In Between? 236 Exchange Rates and Currency Trading 237 Chapter 9 Trade and the Balance Reasons for Holding Foreign of Payments 206 Currencies 238 Introduction: The Current Account 206 Institutions 239 The Trade Balance 207 Exchange Rate Risk 240 The Current and Capital Account The Supply and Demand for Foreign Balances 207 Exchange 241 Introduction to the Financial Account 210 Supply and Demand with Flexible Types of Financial Flows 210 Exchange Rates 241 Limits on Financial Flows 216 Exchange Rates in the Long Run 242 CASE STUDY: The Crisis of 2007–2009 Exchange Rates in the Medium and the Balance of Payments 217 Run and Short Run 246 CASE STUDY: The Largest Market The Current Account and the in the World 250 Macroeconomy 218 Fixed Exchange Rates 252 The National Income and Product Accounts 219 CASE STUDY: The End of the Bretton National Savings and Current Woods System 256 Account Balances 222 The Real Exchange Rate 258 A01_GERB3998_08_GE_FM.indd 9 09/03/2022 20:52

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