University of Washington
Geography 349
Autumn 2009
PREPARING
FOR THE FIRST IN-CLASS TEST
Basically, everything from my online
notes, as elaborated in class, and the written exercises is reasonable
material for the test: if I thought it was important enough to
write about it myself or to have you write about it, it's important
enough for a test. Here are some specific issues and questions.
You might want to take a look at Test 1 from
earlier years.
I'll ask you for a little empirical
memorization, from Dicken's Chapter 2.
Specifically, I think you should leave this course knowing which 3
countries are the world's largest producers of agricultural products,
manufactured goods, and services; the rank of the United States
in world exports and world imports of agricultural products,
merchandise trade,
and traded services; and which two countries have the world's
largest bilateral trade flow.
Of course, a major purpose of the
course is to be able to make sense of these trade flows, so I might ask you to
explain -- to make sense of -- those patterns by using any
(combination) of the trade "theories" (frameworks or explanations)
we've studied.
I want you to be able to interpret a
trade-balance table, and to understand the relationship among
components of the economy (see examples of these online). Don't bother to memorize any of
the numbers presented online; if I want you to work with such a
table, I'll provide the table.
I have repeatedly referred to a key
relationship between trade balances and capital flows; what is
that relationship? How is that relationship manifested on a table
of a country's international accounts?
Be very conversant with the
neoclassical theory of international trade. (The online notes
and DRS Ch. 6 are especially helpful; but I've referred to
other resources as well). Why is it a "normative" theory?
Why is it a "deductive" theory? What basic question does it try
to answer? How does it answer that question? As you explain
this, make use of (and be able to define, if I ask) terms such as
"opportunity costs," "comparative advantage," "factor
proportions," and "gains from trade." What are some of the key
assumptions of this approach? (These are not the simplifying
assumptions we used, such as only 2 countries, 2 products, and 2
factors; or the absence of transportation costs -- those are not
the key assumptions, and we can make full use of this model
without those
assumptions). Understand
the concept
of factor price equalization, and the limits to it in practice.
What is the Leontief
paradox? What was paradoxical about Leontief's
findings? Understand three ways to resolve the paradox.
Have a basic understanding of the product
life cycle of international trade and investment, and how it might
help explain the Leontief paradox.
How does "new trade theory"
modify the basic neoclassical model?
I will very likely ask you to
interpret and to make use of our formula
G1 = (A1/B2)(C2/C1)
- a1/b1. There's no need to memorize that
set of letters and numbers: I'd give you that, and I'd tell you
that a & b are products, 1 & 2 are countries, etc. What you're responsible for is the interpretation of these ratios and of each term -- and
being able to use the formula.
Be able to define the key forms
of trade barriers. DRS Ch. 7
is also useful.
Be able to speak to the different
arguments for trade barriers, from the online
notes and DRS Ch. 7.
Know the three
key institutions of multilateral
trade liberalization, and the levels
of regional economic integration
which are allowed by the WTO despite the MFN provision of the
WTO. (Clement et al. pp. 47-54 and Dicken pp. 180-204 are very helpful). Be able to distinguish
trade creation from
trade diversion (and here).
Dadush
& Nielson suggest what elements of an "unfinished agenda" for
multilateral trade negotiation?
What are the major factors that influence changes in the value of a currency?
How does each influence operate (e.g., in what direction is the
influence)?
copyright
James W. Harrington, Jr.
revised 27 October 2009