University
of Washington
Geography
349
Autumn
2010
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.
What is the "old"
international division of labor? What is the New
International Division of Labor (NIDL)?
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.
What are the basic
effects of economic integration? (Why is it called "economic
integration"?) What is factor
price equalization?
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 benefits of establishing multilateral trade
agreements? 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)?
Why do Ahearn et al.
feel that the current pattern of international trade balances is not
sustainable? What adjustment measures to they suggest?
copyright
James
W. Harrington, Jr.
revised 26 October 2010
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