ECO 358International Economics

• Professor Malamud• BEH 502• 895 – 3294 Fax: 895 – 1354• Email: bernard.malamud@unlv.edu • Website: http://faculty.unlv.edu/bmalamud

International Economics: The Way the World Works

Objectives:Facts:

the world’s economies and relations between themPrinciples:

Trade flowsCapital flows

Currency exchange ratesAdvantages and disadvantages of fixed and floating rates

Issues:Globalization: Is The World Flat ?!?!

ProtectionRebalancing

International Interdependencies

• Trade: goods, services, raw materials, energy• Finance: exchange rates, foreign debt, foreign

investment (fdi and portfolio investment)• Business: multinational enterprises (MNEs), global

production• Migration: flows of skilled workers, unskilled

workers, family members

World In Recession Unemployment Rate

Country 2007 2009

United States 4.6% 10.5%Japan 3.8% 5.5%Britain 5.3% 7.8%Canada 6.0% 8.5%

EU 9.3%France 7.9% 10.0%Germany 9.0% 7.6%Italy 6.2% 7.4%Spain 8.3% 19.3%

Brazil 9.3% 8.1%Russia 5.9% 9.9%India 7.2% 7.2%China 4.0% 9.0% (1/09)

Trade in goods and services (percent of gdp)

Country % of GDP, 2002 % of GDP, 2006 Exports Imports Exports Imports

Netherlands 53 46 71 63Canada 37 33 46 40Germany 31 25 40 35South Korea 27 26 43 40Norway 31 18 45 28France 22 21 26 27United Kingdom 18 21 26 30United States 9 13 11 15Japan 10 8 11 10

Macro Facts: Trade Deficit, Goods & Services

Today’s Report

Macro Facts: Merchandise Trade Deficit

-7.00

-6.00

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

Balance on Unilateral Transfers

Balance on ServicesBalance on Income

Balance on Merchandise Trade

Balance on Current Account

US Current Account TransactionsBalances as % of GDP, 1960 - 2008

Eurozone 16• Germany• France• Italy• Netherlands• Belgium• Luxembourg

• Austria• Ireland• Spain• Finland• Portugal• Greece

• Slovenia• Cyprus• Malta• Slovakia

Trade Issues• If one country gains, must the other lose?

• Think comparative advantage.

• Do imports reduce employment?• Do tariffs/quotas/restrictions save jobs?

• When might they?

• Should weak domestic industries be subsidized?• Is a trade deficit “bad”? Is a surplus “good”?• Does “fair trade” mean that our exports to a

country will equal our imports from it?