Applications of International Trade Theory

List of Figures
List of Tables
Acknowledgements

1. International Trade: Theory and Application
1.0 An Overview of the Global Economy
1.1 World Trade by Region
1.2 What Is Globalization?
1.3 China’s Increasing Trade Openness and the Implications for World Trade
1.4 Conclusion

2. The Pure Theory of International Trade: Supply
2.0 Introduction
2.1 The Mercantilist View
2.2 Absolute Advantage
2.3 Comparative Advantage
2.4 Comparative Advantage and the Developing Countries
2.5 An Enquiry into the Revealed Comparative Advantage of Trinidad and Tobago
2.6 Conclusion
Appendix 2.1: Measuring Revealed Comparative Advantage (RCA)

3. Terms of Trade
3.0 Introduction
3.1 Net Barter Terms of Trade
3.2 Trends in the Terms of Trade of Trinidad and Tobago
3.3 Income Terms of Trade
3.4 Comparing the Income Terms of Trade (YTT) and the Net Barter Terms of Trade (NBTT)
3.5 Comparing the Terms of Trade of CARICOM Countries
3.6 Illustration of the Two Factor Terms of Trade: Single and Double Factoral
3.7 The Transfer Problem and the Terms of Trade
3.8 Conclusion

4. Gains from Trade in Neoclassical Theory
4.0 The Concept of Opportunity Cost
4.1 Indifference Curves
4.2 Budget Line
4.3 Consumer Equilibrium
4.4 The Price Consumption Curve and the Demand Curve
4.5 Factor Intensity of a Production Process
4.6 General Equilibrium in a Closed Economy (Autarky)
4.7 Gains from Trade
4.8 Decomposing the Gains from Trade
4.9 Specialization and Export Concentration in Trinidad and Tobago
4.10 Foreign Countries and Gains from Trade
4.11 Conclusion

5. Offer Curves
5.0 Introduction
5.1 Offer Curves and the Equilibrium Terms of Trade
5.2 Factors Influencing a Shift of the Offer Curve
5.3 Conclusion

6. A Basis for Trade: The Factor Proportion Hypothesis
6.0 Introduction
6.1 The Heckscher-Ohlin Theorem: Two Countries, Two Factors, Two Commodities
6.2 The Heckscher-Ohlin (H/O) Theorem: Factor Proportions Are Key to Trade Patterns
6.3 The Factor Price Equalization Theorem
6.4 Intra-CARICOM Single Market and Economy (CSME) Nurses’ Salaries and the Factor Price Equalization
6.5 The Stolpher-Samuelson Theorem
6.6 Growth and Changing Factor Endowments in Trinidad and Tobago
6.7 Empirical Evidence on the Classical Model
6.8 Tests of the Heckscher-Ohlin (H/O) Model
6.9 Reconciling the Leontief Paradox
6.10 Conclusion

7. Alternative Theories of Trade and Intra-Industry Trade
7.0 Introduction
7.1 Imitation Gap Theories of Trade
7.2 Product Cycle Hypothesis
7.3 Increasing Returns, Imperfect Competition and International Trade
7.4 Engel Effects
7.5 Linder’s Representative Demand Hypothesis
7.6 Intra-Industry Trade
7.7 Marginal Intra-Industry Trade
7.8 Conclusion

8. Economic Growth and International Trade
8.0 Introduction
8.1 The Pre-growth Scenario
8.2 The Production Effects of Growth
8.3 Labour Growth and Capital Accumulation over Time
8.4 Technical Progress, Trade and Welfare
8.5 The Dutch Disease
8.6 The Dutch Disease and Deindustrialization
8.7 Empirical Investigation of the Dutch Disease and Deindustrialization in the Trinidad and Tobago Economy
8.8 Immiserizing Growth
8.9 The Rybczynski Theorem: Growth of Production Alone
8.10 Conclusion

9. International Factor Flows: Foreign Direct Investment
9.0 Introduction
9.1 The Significance of FDI Flows
9.2 Welfare Effect of International Capital Flows
9.3 Determinants of FDI Flows
9.4 FDI and Economic Growth
9.5 FDI Flows in Other CARICOM States
9.6 Does FDI Lead to Economic Growth?
9.7 FDI and Wage Inequality in Developing Countries
9.8 Wage Inequality in Trinidad and Tobago
9.9 Conclusion

10. International Flows of Factors of Production: Labour
10.0 Introduction
10.1 Labour Movement between Countries
10.2 Motives for International Labour Migration: Reflections on the Migration of Nurses from CARICOM
10.3 Persistence of Push/Pull Factors into the Medium and Long Term
10.4 Foreign Population Characteristics in Developed Countries
10.5 World Remittance Flows
10.6 Conclusion

11. Tariffs
11.0 Some Introductory Definitions
11.1 Economic Effects of a Tariff
11.2 The Specific Tariff in the Small-Country Case
11.3 The Welfare Effects of Tariffs
11.4 General Equilibrium Effects of a Tariff in a Small Economy
11.5 The Prisoner’s Dilemma and International Trade
11.6 Arguments for Tariffs and Their Theoretical Validity
11.7 Effective Tariffs
11.8 A Large Country and Tariffs That Improve Its Terms of Trade
11.9 Tariffs That Reduce Welfare
11.10 Tariffs That Improve Welfare
11.11 Tariffs and Tariff Retaliation
11.12 The Optimal Tariff
11.13 Conclusion

Appendix 11.1: CARICOM and the Common External Tariff
Appendix 11.2: CARIFORUM–EC Economic Partnership Agreement
Appendix 11.3: Economic Effects of Dumping
Appendix 11.4: General Equilibrium Illustration of the Infant Industry Argument

12. Other Non-Tariff Instruments of Trade Policy
12.0 Introduction
12.1 Import Subsidies
12.2 Export Subsidies
12.3 Export Tax in a Small Country
12.4 Economic Effect of a Quota
12.5 The Effect of a Quota on the Terms of Trade of a Large Country
12.6 Voluntary Export Restraint (VER) and the Terms of Trade
12.7 Lerner Symmetry Theorem
12.8 Conclusion

Notes
References
Answer Key
Index