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ebook download (eBook PDF) International Trade 4th Edition by Robert C Feenstra all chapter
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INTERNATIONAL
TRADE
Vice President, Editorial, Social Sciences: Charles Linsmeier
Senior Vice President, Editorial and Production: Catherine Woods
Marketing Manager: Andrew Zierman
Marketing Assistant: Morgan Ratner
Publisher: Shani Fisher
Acquisitions Editor: Tom Digiano
Development Editors: Jane Tufts and Bruce Kaplan
Media Editor: Lindsay Neff
Media Producer: Andrew Vaccaro
Director of Content Management Enhancement: Tracey Kuehn
Managing Editor: Lisa Kinne
Project Editor: Edgar Doolan
Director of Design, Content Management: Diana Blume
Senior Design Manager: Vicki Tomaselli
Cover and Interior Designer: Kevin Kall
Permissions Manager: Jennifer MacMillan
Senior Production Supervisor: Stacey B. Alexander
Composition: MPS Limited
Printing and Binding: LSC Communications
Cover and Title Page Image: DigitalVision Vectors/Getty Images
ISBN-13: 978-1-319-06890-5
First printing
Worth Publishers
One New York Plaza
Suite 4500
New York, NY 10004-1562
www.macmillanlearning.com
About the Authors
Robert C. Feenstra and Alan M. Taylor are Professors of Economics at the University
of California, Davis. They each began their studies abroad: Feenstra received his B.A.
in 1977 from the University of British Columbia, in Canada, and Taylor received his
B.A. in 1987 from King’s College, Cambridge, in England. They trained as
professional economists in the United States, where Feenstra earned his Ph.D. in
economics from MIT in 1981 and Taylor earned his Ph.D. in economics from Harvard
University in 1992. Feenstra has been teaching international trade at the undergraduate
and graduate levels at UC Davis since 1986, where he holds the C. Bryan Cameron
Distinguished Chair in International Economics. Taylor teaches international finance
and macroeconomics, macroeconomics, and economic history at UC Davis, where he
also holds appointments as Director of the Center for the Evolution of the Global
Economy and Professor of Finance in the Graduate School of Management.
Both Feenstra and Taylor are active in research and policy discussions in
international economics. They are research associates of the National Bureau of
Economic Research, where Feenstra directed the International Trade and Investment
research program from 1992 to 2016. They have both published graduate level books in
international economics: Offshoring in the Global Economy and Product Variety and
the Gains from Trade (MIT Press, 2010) by Robert C. Feenstra, and Global Capital
Markets: Integration, Crisis and Growth (Cambridge University Press, 2004) by
Maurice Obstfeld and Alan M. Taylor. Feenstra received the Bernhard Harms Prize
from the Institute for World Economics, Kiel, Germany, in 2006, and delivered the
Ohlin Lectures at the Stockholm School of Economics in 2008. Taylor was awarded a
Guggenheim Fellowship in 2004 and was a Houblon-Norman/George Fellow at the
Bank of England in 2009–2010.
Feenstra lives in Davis, California, with his wife, Gail. They have two grown
children, Heather and Evan, and a grandson, Grant. Taylor also lives in Davis, with his
wife, Claire, and has two young children, Olivia and Sebastian.
To our parents
Brief Contents
PART 1 Introduction to International Trade
Chapter 1 Trade in the Global Economy
Index
Preface
Why a New Approach Was Needed
We live in an age in which globalization is more than ever an integral part of our lives.
When we undertook the writing of our text, we looked at the existing texts and saw that
the dramatic economic developments of recent years had not been incorporated into a
newly written undergraduate text, and felt the time was ripe to incorporate fresh
theories and perspectives, an emphasis on empirical studies, and other up-to-date
approaches into the study of international economics. With this book, we have
expanded the vision of international economics to encompass the latest theory and
events in the world today.
We have taught the chapters of this book many times, and have benefited from the
feedback of professors at colleges and universities in the United States and throughout
the world. Like us, they have been enthusiastic about the response from students to our
fresh, accessible, and up-to-the-minute approach, and we hope that you will enjoy the
book, too.
Why Our Book Is Different
Emphasis on Empirical Studies
Many of the topics in this book stand apart from previous textbook treatments because
they reflect recent applied research and data. This research has not only taught us new
lessons about trade and finance, but has also shed new light on existing theories,
sometimes supporting them, sometimes refuting them.
Cutting-Edge Applications
Covering new and expanding ground is part of the exciting challenge of teaching and
learning the international economics of today. Our book provides new material and
examples that are rigorous enough to meet the challenge yet approachable enough to
foster excitement.
▲ Applications (which are integrated into the main text) connect the material that
has been covered to real-world policies, events, and evidence.
▲ Headlines show how topics in the main text relate directly to media coverage
of the global economy.
▲ SIDE BARS illuminate topics that, while not essential, nonetheless provide
deeper understanding of the issues under discussion.
▲ NEW! Discovering Data problems at the end of each chapter ask students to
seek out, analyze, and interpret real-world data related to chapter topics.
▲ NEW! Work It Out problems at the end of each chapter provide students with
step-by-step assistance, helping develop analytical skills. These problems
each have a live online counterpart in LaunchPad with interactive tutorials.
■ The book is issued in multiple formats, which allows instructors to tailor the
content to their needs and keep costs down for their students:
■ a combined edition (International Economics)
■ two split editions (International Trade and International Macroeconomics)
International Economics, Fourth Edition, Media
LaunchPad features the most author-driven and text-specific content of any integrated
homework system available. In this edition, you will find exciting changes to
LaunchPad, including a collection of new activities designed to augment in-chapter
content and new features to support student learning.
LaunchPad for International Economics, Fourth Edition, includes:
■ Complete e-Book
■ Prebuilt units offer instructors and students ready-made units for study with
LearningCurve quizzes, eBook pages, tutorials, and graded homework for every
chapter. Units are flexible and easy to adapt or expand to suit individual
preferences.
■ LearningCurve’s gamelike quizzing motivates each student to engage with the
course, and its reporting tools help teachers get a handle on where their students
need the most help.
Just as apps are continuously updated and improved, LearningCurve now features the first in a series of
updates to continually improve the user experience.
■ Customizable: instructors can tailor quizzes to the exact content they are teaching
■ Accessible: redone in compliance with WCAG2.0 AA standards for users with
disabilities
▲ New design: emphasizes useful study tools, such as the personalized study plan, links to the e-Book,
and hints to structure student reading
▲ NEW! Work It Out problems offer skill-building activities and tutorials that walk students through
each step of solving an end-of-chapter problem using choice-specific feedback and video explanations
for each step.
■ NEW! Discovering Data Problems expand on the material at the end of each
chapter. The problems provide additional opportunities to directly link the student
to real, up-to-date data to solve topical questions.
■ All teaching resources are available for instructors within LaunchPad. These
resources include animated lecture PowerPoint slides with instructor notes, the
solutions manual, test bank questions, and more.
New in Each Chapter of the Fourth Edition
The opening example in Chapter 1, Trade in the Global Economy, is now the
worldwide opening of the movie Jurassic World in the summer of 2015. There is new
coverage on opening relations with Cuba. A new section called The Future of Trade
discusses free-trade area agreements, and the impact of global climate change, using the
Northern Sea Route example that opened the chapter in the third edition. Finally, there
is new coverage on migration, immigration, and the refugee crisis in Europe.
Chapter 2, Trade and Technology: The Ricardian Model, now describes Jamie
Anderson’s gold medal victory in the Women’s Slopestyle Event at the 2014 Olympics.
Where did her snowboard come from?
Chapter 3, Gains and Losses from Trade in the Specific-Factors Model, now has a
Discovering Data problem on the Trade Adjustment Assistance program.
The refugee crisis in Europe was unfolding in 2015 and is described in Chapter 5,
Movement of Labor and Capital Between Countries. Immigrants coming from Syria
and other war-torn regions have put enormous pressures on the countries of Western
Europe, leading to the policy changes described. There is a new Application called
Immigration into the United States, which includes an examination of the benefits that
immigrants bring to host countries. The Application called The Effects of the Mariel
Boat Lift on Industry Output in Miami has been updated to include the flood of Cuban
people heading to Mexico, and hoping to go from there to the United States after
diplomatic relations between the United States and Cuba resumed.
Chapter 7, Offshoring of Goods and Services, includes a major new section on the
topic of job polarization: what it means, and how and why it occurs. This material
includes three new figures (Figures 7-9, 7-10, and 7-11) that help explain job
polarization in the United States. The chapter concludes with a new section called The
Future of Offshoring and You that discusses what offshoring means for today’s students
and their career choices. This section also features coverage of the phenomenon of
“quicksourcing” and includes a new Headlines titled Mexico: The New China, about
how proximity is becoming more important than lowest wages in deciding where and
how to offshore.
The chapters dealing with trade policy, including Chapter 8, Import Tariffs and
Quotas Under Perfect Competition, Chapter 9, Import Tariffs and Quotas Under
Imperfect Competition, and Chapter 10, Export Policies in Resource-Based and
High-Technology Industries, have been thoroughly revised. Material on United States
and European duties on solar panels from China has been added, and that industry is
discussed as a possible case of infant industry protection, along with auto
manufacturing in China. A new discussion of Chinese export policies for exports of rare
earth minerals includes a new graph showing the effects of export quotas on China
export value, export price, and export quantity. Finally, there is a heavily revised
discussion of Boeing/Airbus World Trade Organization (WTO) disputes.
■ the 2015 end of the Doha Round of the WTO after the WTO countries meeting in
Nairobi, Kenya, failed to reaffirm it.
■ the Trans-Pacific Trade Partnership (TPP, the free-trade agreement among 12
countries that border the Pacific Ocean) that was formally signed on February 4,
2016, but has yet to be ratified by the United States Congress and other
governments. The contents and controversies surrounding TPP are discussed.
■ the Transatlantic Trade and Investment Partnership (TTIP), which would establish
free trade between the United States and the European Union.
■ the COP21 Paris agreement (the international climate agreement negotiated in Paris
in December 2015), with associated material on the Kyoto Protocol.
Chapter 12 (Chapter 1), The Global Macroeconomy, has been fully updated with
global macroeconomic data as of 2016. The discussion of institutions and economic
performance is enhanced by a new Headline by Dani Rodrik: Is There a New
Washington Consensus?
Chapter 14 (Chapter 3), Exchange Rates I: The Monetary Approach in the Long
Run, has completely updated data and features; in particular, an updated Headline, The
Big Mac Index, with the latest burger-based calculations of purchasing power parity.
Chapter 15 (Chapter 4), Exchange Rates II: The Asset Approach in the Short Run,
has completely updated data and features more end-of-chapter FRED data
manipulation.
Chapter 16 (Chapter 5), National and International Accounts: Income, Wealth, and
the Balance of Payments, has completely updated data, including the latest tabulations
for the United States, and it features a Discovering Data problem in which students
download and analyze incoming data from the Bureau of Economic Analysis (BEA)
website covering the U.S. national accounts and balance of payments accounts.
Chapter 20 (Chapter 9), Exchange Rate Crises: How Pegs Work and How They
Break, has updated data on reserve accumulation and operations by the Chinese central
bank, and a new Discovering Data problem with data from countries with fixed
exchange rates.
Chapter 21 (Chapter 10), The Euro, has been thoroughly updated with current
economic and political developments in the ongoing crisis in Europe and the Eurozone,
especially regarding Brexit.
Topics and Approaches
Reviewers and class testers have enthusiastically supported the topics we have
included in our presentation. Topics covered in International Economics and in
International Trade include the offshoring of goods and services (Chapter 6); tariffs
and quotas under imperfect competition (Chapter 9); and international agreements on
trade, labor, and the environment (Chapter 11). These topics are in addition to core
chapters on the Ricardian model (Chapter 2), the specific-factors model (Chapter 3),
the Heckscher–Ohlin model (Chapter 4), trade with increasing returns to scale and
imperfect competition (Chapter 6), import tariffs and quotas under perfect competition
(Chapter 8), and export subsidies (Chapter 10).
Chapters in International Economics and in International Macroeconomics
include the gains from financial globalization (Chapter 17 in the combined edition;
Chapter 6 in the International Macroeconomics split edition), fixed versus floating
regimes (Chapter 19/Chapter 8), exchange rate crises (Chapter 20/Chapter 9), and the
euro (Chapter 21/Chapter 10). These topics are in addition to core chapters on foreign
exchange markets and exchange rates in the short run and the long run (Chapters 13–
15/Chapters 2–4), the national and international accounts (Chapter 16/Chapter 5), the
open economy IS–LM model (Chapter 18/Chapter 7), and a chapter on various applied
topics of current interest (Chapter 22/Chapter 11).
In writing our chapters we have made every effort to link them analytically. For
example, although immigration and foreign direct investment are sometimes treated as
an afterthought in international economics books, we integrate these topics into the
discussion of the trade models by covering the movement of labor and capital between
countries in Chapter 5. Specifically, we analyze the movement of labor and capital
between countries in the short run using the specific-factors model, and explore the
long-run implications using the Heckscher–Ohlin model. Chapter 5 therefore builds on
the models that the student has learned in Chapters 3 and 4, and applies them to issues
at the forefront of policy discussion.
In the macroeconomics section from International Economics or International
Macroeconomics this analytical linking is seen in the parallel development of fixed and
floating exchange rate regimes from the opening introductory tour in Chapter 12
(Chapter 1 in the split edition), through the workings of exchange rates in Chapters 13–
15 (Chapters 2–4), the discussion of policy in the IS–LM model of Chapter 18 (Chapter
7), to the discussion of regime choice in Chapter 19 (Chapter 8). Many textbooks
discuss fixed and floating regimes separately, with fixed regimes often treated as an
afterthought. But given the widespread use of fixed rates in many countries, the rising
macro weight of fixed regimes, and the collapse of fixed rates during crises, we think it
is more helpful for the student to grapple with the different workings and cost-benefit
trade-offs of the two regimes by studying them side by side. This approach also allows
us to address numerous policy issues such as the implications of the trilemma and the
optimal choice of exchange rate regime.
In addition to expanding our coverage to include up-to-date theory and policy
applications, our other major goal is to present all the material—both new and old—in
the most teachable way. To do this, we ensure that all of the material presented rests on
firm and up-to-the-minute empirical evidence. We believe this approach is the right
way to study economics, and it is our experience, shared by many instructors, that
teaching is more effective and more enlivened when students can see not just an elegant
derivation in theory but, right next to it, some persuasive evidence of the economic
mechanisms under investigation.
Contents
Preface
1 International Trade
The Basics of World Trade
3 Conclusions
Key Points, Key Terms, and Problems
PART 2 Patterns of International Trade
CHAPTER 2 Trade and Technology: The Ricardian Model
2 Ricardian Model
The Home Country
The Foreign Country
APPLICATIONComparative Advantage in Apparel, Textiles, and Wheat
5 Conclusions
Key Points, Key Terms, and Problems