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Trade

Trade is the exchange of goods and services between individuals or entities, typically involving buying and selling to meet mutual needs or desires.

Trade Accountings

What does the balance of payments try do to?

How to reasong about trans-natioal economic activity?

7th edition of its Balance of Payments manual (BPM7).

  • Balance of Payments (BoP): The Balance of Payments is a financial statement that records all economic transactions between residents of a country and the rest of the world over a given period.
    • Current Account
    • Capital Account
    • Financial Account
    • Net Errors and Omissions:
Problems with this BOP statistics:  ….

How to use trade as a force multiplier?

  • Or How to use efficiently my reserve currencies? Use reserve currency primarily to import capital goods that increase your ability to generate your own exports. Recursively Import Capital Goods; From Higher Complexity to Lower Complexity in a set of industrial Ecosystems.
  • Provided that you have an Horizon and technical opportunities to become competitive.
  • Imagine building a tree:
    • Capital goods → roots (Let produce more products to import → Lets Produce Some Parts of the Capital Goods at Home; Rinse & Repeat)
    • Early industries → trunk
    • Later industries → branches
    • Consumer goods → fruit
  • You have to invest in roots and trunk first.

Trade Agreements and Global Connectivity

  • How trade agreements affects investment? Since the production chains are multinational; as nation isolated in the global production chains; will find a hard times attracting investments.
  • …

International Relations

  • https://en.wikipedia.org/wiki/Ioannis_Kapodistrias
  • https://es.wikipedia.org/wiki/Doctrina_Estrada
  • Niccolò Machiavelli
  • Cardinal Richelieu
  • Klemens von Metternich
  • Otto von Bismarck
  • George F. Kennan
  • Henry Kissinger
  • Zhou Enlai
  • Talleyrand
  • Halford Mackinder
  • Alfred Thayer Mahan
  • Nicholas J. Spykman
  • Karl Haushofer
  • Zbigniew Brzezinski
  • Robert D. Kaplan
  • Count-Duke of Olivares
  • Prince Eugene of Savoy
  • Frederick the Great
  • Friedrich Ratzel
  • Rudolf Kjellén
  • Karl Haushofer

Models

  • Ricardian Model (David Ricardo, 1817)
  • Heckscher-Ohlin (H-O) Model (Eli Heckscher & Bertil Ohlin, 1919-1933)
  • New Trade Theory (NTT) Models
    • Krugman Model (Paul Krugman, 1979)
    • Melitz Model (Marc Melitz, 2003)
  • Gravity Model of Trade
  • Specific-Factors Model (Ricardo-Viner Model)
  • Brander-Spencer Model (1985)
  • Product Cycle Model (Raymond Vernon, 1966)
  • Small Country Tariff Model
  • Optimal Tariff Theory
  • Customs Union Theory (Viner, 1950)
  • Two-Gap Model (Chenery, 1960s)
  • Dutch Disease Model (Corden-Neary, 1982)

Factor Price Equalization

The Factor Price Equalization theorem states that free trade of goods between countries will lead to the equalization of the prices of production factors (like wages and rents) across those countries, assuming certain conditions such as identical production technologies and factor mobility within but not between countries.

References

  • Stiglitz, Joseph E. "Factor price equalization in a dynamic economy." Journal of political economy 78.3 (1970): 456-488.
  • Deardorff, Alan V. "The possibility of factor price equalization, revisited." Journal of international Economics 36.1-2 (1994): 167-175.

  • Rassekh, Farhad, and Henry Thompson. "Factor price equalization: theory and evidence." Journal of Economic Integration (1993): 1-32.

  • https://www.nber.org/papers/w24886