University
of
Washington | Tacoma
Geography
349
Spring
2012
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, of manufactured goods,
and of services;
> which country is the world's largest exporter of
each type of product;
> which
country is the world's largest importer of
each type of product;
> 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?
(I.e., be able to explain basic trade
theory.) 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).
> In what way(s) might the "real world"
differ from each of those key 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.
What does each of
the three ratios of the gains-from-trade formula
(the formula in red) suggest for government (and
perhaps corporate) policies in a country that
wants to maximize its gains from trade?
[I.e., I’m looking for three policies, each
suggested by one of the three ratios in that
formula.]
Why might the
goal of maximizing exports (e.g., the US
exporting as much beef as it possibly can) call
for different policy from the goal of maximizing
the gains from trade (the US wanting to maximize
the number of cameras it gets in return for each
unit of beef it exports)?
Why might a
country want to maximize exports instead of
maximizing its gains from trade?
Be able to define
the key forms
of trade barriers. DRS Ch. 7 is also useful (but
optional).
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
April 2012
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