University
of
Washington | Tacoma
Geography
349
Winter
2014
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.
Refer back to RP1.
> Which countries were the 5 largest
merchandise exporters in 2012?
> How would you explain the changes in the
list of largest exporters in 1948 (immediately
following World War II) and 2012?
> Which countries were the 5 largest service
exporters in 2012?
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 "fordism"?
How was it reflected in the major flows of
international trade during the postwar
period? What aspects of contemporary trade
patterns are the result of post-fordism?
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 -- see the 14 and 16 January
assignments in the syllabus).
> 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).
> If you rely on this theory, what group(s)
within a country should benefit if that country
moves from autarky (no trade) toward free
trade? What group(s) within a country
should be harmed?
> 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)?
Identify three sources of political opposition
to trade liberalization.
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.
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. Be able to distinguish
trade
creation
from
trade
diversion (also see here).
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 2
February 2014
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