Part One: Introduction to International Trade
Chapter 1: Trade in the Global Economy
1.1 International Trade
The Basics of World Trade
Map of World Trade
Trade Compared to GDP
Barriers to Trade
1.2 Migration and Foreign Direct Investment
Map of Migration
Map of Foreign Direct Investment
1.3 Conclusions
Part Two: Patterns of International Trade
Chapter 2: Trade and Technology: The Ricardian Model
2.1 Reasons for Trade
2.2 Ricardian Model
The Home Country
The Foreign Country
Application: Comparative Advantage in Apparel, Textiles, and Wheat
2.3 Determining the Pattern of International Trade
International Trade Equilibrium
Solving for Wages Across Countries
Application: Labor Productivity and Wages
2.4 Solving for International Prices
Home Export Supply Curve
Foreign Import Demand Curve
International Trade Equilibrium
Application: The Terms of Trade for Primary Commodities
2.5 Conclusions
Chapter 3: Gains and Losses from Trade in the Specific-Factors Model
3.1 The Specific-Factors Model
The Home Country
The Foreign Country
Overall Gains from Trade
Application: How Large are the Gains from Trade?
3.2 Earnings of Labor
Determination of Wages
Change in Relative Price of Manufactures
Application: Manufacturing and Services in the U.S.: Employment and Wages across Sectors
Application: Trade Adjustment Assistance Programs: Financing the Adjustment Costs of Trade
3.3 Earnings of Capital and Land
Determining the Payments to Capital and Land
Numerical Example
What It All Means
Application: Prices in Agriculture
3.4 Conclusions
Chapter 4: Trade and Resources: The Heckscher-Ohlin Model
4.1 Heckscher-Ohlin Model
Assumptions of the Heckscher-Ohlin Model
Application: Are Factor Intensities the Same Across Countries?
No Trade Equilibrium
Free Trade Equilibrium
Testing the Heckscher-Ohlin Theorem: Leontiefs Paradox
4.2 Effect of Trade on Factor Prices
Effect of Trade on the Wage and Rental
Determination of the Real Wage and Real Rental
Changes in the Real Wage and Rental: Numerical Example
Application: Opinions Toward Free Trade
Comparing the Wage and Rental Across Countries
4.3 Extending the Heckscher-Ohlin Model
Many Goods, Factors and Countries
Differing Productivities Across Countries
Extending the Heckscher-Ohlin Theorem
Application: Why Did India Import Cotton Textiles?
4.4 Conclusions
Appendix: The "Sign Test" in the Heckscher-Ohlin Model
Chapter 5: Movement of Labor and Capital Between Countries
5.1 Movement of Labor Between Countries
Effect of Immigration in the Short Run: the Specific Factors Model
Application: Immigration to the New World
Application: Immigration to the U.S. and Europe Today
Other Effects of Immigration in the Short Run
Effects of Immigration in the Long Run
Application: The Effects of the Mariel Boat Lift on Industry Output in Miami
Application: Immigration and U.S. Wages, 1990-2004
5.2 The Movement of Capital Between Countries: Foreign Direct Investment
Application: Acquisition Investment into the United States
Greenfield Investment
FDI In the Short Run: the Specific Factors Model
FDI In the Long Run
Application: The Effect of FDI on Rentals and Wages in Singapore
5.3 Gains from Labor and Capital Flows
Gains from Immigration
Application: Gains from Migration
Gains from Foreign Direct Investment
5.4 Conclusions
Part Three: New Explanations for International Trade
Chapter 6: Increasing Returns to Scale and Imperfect Competition
6.1 Basics of Imperfect Competition
Monopoly Equilibrium
Demand with Duopoly
6.2 Trade Under Monopolistic Competition
Equilibrium without Trade
Equilibrium with Free Trade
6.3 Empiricals of Monopolistic Competition and Trade
Gains and Adjustment Costs for Canada
Gains and Adjustment Costs for Mexico
Gains and Adjustment Costs for the United States
Summary of NAFTA
Intra-industry Trade
The Gravity Equation
Application: The Gravity Equation for Canada and the United States
Trade within Canada
6.4 Imperfect Competition with Homogeneous Products: The Case of Dumping
A Model of Product Dumping
Numerical Example of Dumping
Reciprocal Dumping
Numerical Example of Reciprocal Dumping
6.5 Conclusions
Chapter 7: Foreign Outsourcing of Goods and Services
Application: Is Trade Today Different From the Past?
7.1 A Model of Outsourcing
Value Chain of Activities
Changing the Costs of Trade
Application: Change in Relative Wages Across Countries
Change in Relative Wages in the United States
Change in Relative Wages in Mexico
7.2 The Gains from Outsourcing
Simplified Outsourcing Model
Terms of Trade
Application: U.S. Terms of Trade and Service Exports
Application: Impact of Outsourcing on U.S. Productivity
7.3 Outsourcing in Services
The Logic of Service Outsourcing
The Future of U.S. Comparative Advantage
7.4 Conclusions
Part Four: International Trade Policies
Chapter 8: Import Tariffs and Quotas under Perfect Competition
8.1 A Brief History of the World Trade Organization
8.2 The Gains from Trade
Consumer and Producer Surplus
Home Welfare
Home Import Demand Curve
8.3 Import Tariffs in a Small Country
Free Trade in a Small Country
Effect of the Tariff
Why are Tariffs Used?
Application: U.S. Tariffs on Steel
Deadweight Loss due to the Steel Tariff
Response of the European Countries
8.4 Imports Tariffs for a Large Country
Foreign Export Supply
Effect of the Tariff
Application: U.S. Tariffs on Steel Once Again
8.5 Import Quotas
Import Quota in a Small Country
Costs of Import Quotas in the U.S.
Application: China and the Multifibre Arrangement
8.6 Conclusions
Chapter 9: Import Tariffs and Quotas under Imperfect Competition
9.1 Tariffs and Quotas with Home Monopoly
No Trade Equilibrium
Free Trade Equilibrium
Effect of a Home Tariff
Effect of a Home Quota
Application: U.S. Imports of Japanese Automobiles
9.2 Infant Industry Protection
Free Trade Equilibrium
Tariff Equilibrium
Application: Examples of Infant Industry Protection
Protecting the Automobile industry in China
Computers in Brazil
U.S. Tariff on Heavyweight Motorcycles
9.3 Tariffs with Foreign Monopoly
Foreign Monopoly
Application: Import Tariffs on Japanese Trucks
9.4 Policy Response to Dumping
Antidumping Duty
Countervailing Duty
Comparison with Safeguard Tariff
Calculation of Antidumping Duty
Application: Antidumping/ Countervailing Duties versus Safeguard Tariffs
9.5 Conclusions
Chapter 10: Export Subsidies IN Agriculture and High Technology Industries
10.1 WTO Goals on Agricultural Export Subsidies
Agricultural Export Subsidies
Other Matters From the Hong Kong WTO Meeting
10.2 Agricultural Export Subsidies in a Small Home Country
Impact of an Export Subsidy
10. 3 Agricultural Export Subsidies in a Large Home Country Effects of the Subsidy
Application: Who Gains and Who Loses?
10.4 Agricultural Production Subsidies
Effect of a Production Subsidy in a Small Home Country
Effect of a Production Subsidy in a Large Home Country
10.5 High-Technology Export Subsidies
"Strategic" Use of High-Tech Export Subsidies
Effect of at Subsidy to Airbus
Subsidy with Cost Advantage for Boeing
Application: Subsidies to Commercial Aircraft
10.6 Conclusions
Chapter 11: International Agreements: Trade, Labor and the Environment
11.1 International Trade Agreements
The Logic of Multilateral Trade Agreements
Regional Trade Agreements
Trade Creation and Trade Diversion
Numerical Example of Trade Creation and Diversion
Trade Diversion in a Graph
Application: Trade Creation and Diversion for Canada
11.2 International Agreements on Labor Issues
Labor Side Agreement under NAFTA
Other Labor Agreements
11.3 International Agreements on the Environment
Environmental Issues in the GATT and WTO
Does Trade Help or Harm the Environment?
The Tragedy of the Commons
International Agreements on Pollution
Application: The Kyoto Protocol
11.4 Conclusions