Introduction To International Economy

Question 1

What is international economy?

Answer 1

The international economy is the economic interaction between countries.

Question 2

How is the study of international economics spread?

Answer 2

Between
1. the international trade that extends microeconomics to open economies
2. the international finance that employs macroeconomic analysis

Question 3

What is the scope of International Trade?

Answer 3

1. To describe and predict the patterns of
   •production
   •trade
   •investment
   across countries
2. Study the effects of trade on the level and distribution of income within the country and across countries.
3. Study the effects of
   • regionalism ( regional trading blocs)
   • potential effect of multilateral trade negotiations conducted by WTO

Question 4

What is the scope of International Finance ?

Answer 4

1. Studies the effects of financial flows between countries
2. The effects of these flows on exchange rates and the B. O. P
3. The role of international institutions such as IMF and the implications of the different exchange rate regimes.

Question 5

How is the international economics growing in importance?

Answer 5

1. Integration of the international economic markets.
2. Businesses, consumers and governments all are affected by what is happening internationally.
3. Local businesses are competing with foreign products.
4. Local businesses are selling their products to consumers in other countries.
5. Telecommunications and internet have expanded markets even further.

Question 6

Which is the best way to understand the rise in traded goods internationally and how?

Answer 6

1.World exports as a % of world GDP.
2.Over the past ten years from 1970 - 2008, world exports as a % of world GDP has increased from 10% in 1970 to 30% in 2008.

Question 7

Which is the another indicator of World Interconnectedness?

Answer 7

FDI

Question 8

What is FDI

Answer 8

FDI is the foreign ownership of the productive activities, affecting a country economically.

Question 9

How has the World Inward FDI Stocks 1980 - 2007 ( as a% of World GDP) shows the growth in FDI?

Answer 9

There has been an increase from 5% in 1980, World Inward FDI Stocks as a percentage of World GDP, to 25% in 2007.

Question 10

What are the reasons behind the steady growth in international trade and the investments?

Answer 10

1. Dissolution of the trade barriers after the Great Depression of 1930s.
2. The creation of GATT after the second world war, conducted frequent negotiations to bring down the tariffs on imported goods.

Question 11

What is the number of negotiations held between 1948 - 1994 n GATT?

Answer 11

8

Question 12

Why was the Uruguay Round (1994) of GATT Negotiation important?

Answer 12

The tariffs on import reduction amongst the GATT member nations incorporated Liberalization promises in 1994.

Question 13

What did liberalization from the Uruguay Round meant?

Answer 13

1. Liberalization of agriculture and service markets among the GATT member nations.
2. The liberalisation of many quota systems such as the - multi-fibre agreement in clothing.
3. Adherence to certain mini. Standards to intelectual property rights such as
   • patents
   • trademarks
   • copyrights

Question 14

What is WTO?

Answer 14

World Trade Organization
A forum for
• discussing trade matters
• to bring out ways for settling trade disputes among countries.

Question 15

What is the another form of push for trade liberalisation?

Answer 15

The regional free trade agreements ( around 200 regional trade agreemens around the world been announced in WTO).

Question 16

With whom are the regional trade agreements been negotiated with ?

Answer 16

1. The neighbouring countries.
2. Major trading partners with reference to open trade and investment.