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Book Details
Abstract
For courses in international economics.
Introduces international economics through accessible writing and real-life applications
A principles-level introduction that’s accessible to students of all majors, International Economics uses real-life applications to cover both the macro and micro components of international economics. The text illuminates economic institutions and policies, as well as recent developments in the global economy, without requiring the use of higher-level math. In addition, the text has a flexible approach, which includes self-contained chapters and comprehensive coverage, allowing instructors to adapt its concepts to a wide range of syllabi. The 7th Edition includes a number of enhancements, such as updated tables and graphs, new case studies, and revised discussion of relevant topics.
MyLabTM Economics not included. Students, if MyLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyLab should only be purchased when required by an instructor. Instructors, contact your Pearson rep for more information.
MyLab is an online homework, tutorial, and assessment product designed to personalize learning and improve results. With a wide range of interactive, engaging, and assignable activities, students are encouraged to actively learn and retain tough course concepts.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover\r | Cover | ||
| Title Page\r | 5 | ||
| Copyright Page\r | 6 | ||
| Brief Contents\r | 7 | ||
| Contents\r | 9 | ||
| Preface | 17 | ||
| PART 1 Introduction and Institutions | 25 | ||
| Chapter 1 An Introduction to the World Economy | 26 | ||
| Introduction: International Economic Integration | 26 | ||
| Elements of International Economic Integration\r | 27 | ||
| The Growth of World Trade | 28 | ||
| Capital and Labor Mobility | 30 | ||
| Features of Contemporary International Economic Relations | 32 | ||
| Trade and Economic Growth | 34 | ||
| Twelve Themes in International Economics | 35 | ||
| The Gains from Trade and New Trade Theory (Chapters 3, 4, and 5) | 35 | ||
| Wages, Jobs, and Protection (Chapters 3, 6, 7, and 8) | 35 | ||
| Trade Deficits (Chapters 9, 11, and 12) | 36 | ||
| Regional Trade Agreements (Chapters 2, 13, and 14) | 36 | ||
| The Resolution of Trade Conflicts (Chapters 2, 7, and 8) | 36 | ||
| The Role of International Institutions (Chapters 2, 8, and 12) | 37 | ||
| Exchange Rates and the Macroeconomy (Chapters 10 and 11) | 37 | ||
| Financial Crises and Global Contagion (Chapter 12) | 37 | ||
| Capital Flows and the Debt of Developing Countries (Chapters 2, 9, and 12) | 38 | ||
| Latin America and the World Economy (Chapter 15) | 38 | ||
| Export-Led Growth in East Asia (Chapter 16) | 38 | ||
| China and India in the World Economy (Chapter 17) | 39 | ||
| Vocabulary | 39 | ||
| Study Questions | 39 | ||
| Chapter 2 International Economic Institutions Since World War II | 41 | ||
| Introduction: International Institutions and Issues Since World War II | 41 | ||
| International Institutions | 41 | ||
| A Taxonomy of International Economic Institutions | 42 | ||
| The IMF, the World Bank, and the WTO | 43 | ||
| The IMF and World Bank | 43 | ||
| The GATT, the Uruguay Round, and the WTO | 44 | ||
| CASE STUDY: The GATT Rounds | 46 | ||
| Regional Trade Agreements | 47 | ||
| Five Types of Regional Trade Agreements | 47 | ||
| CASE STUDY: Prominent Regional Trade Agreements | 48 | ||
| Regional Trade Agreements and the WTO | 50 | ||
| For and Against RTAs | 51 | ||
| The Role of International Economic Institutions | 52 | ||
| The Definition of Public Goods | 53 | ||
| Maintaining Order and Reducing Uncertainty | 53 | ||
| CASE STUDY: Bretton Woods | 55 | ||
| Criticism of International Institutions | 57 | ||
| Sovereignty and Transparency | 57 | ||
| Ideology | 58 | ||
| Implementation and Adjustment Costs | 59 | ||
| CASE STUDY: China’s Alternative to the IMF and World Bank: The AIIB | 60 | ||
| Summary | 61 | ||
| Vocabulary | 62 | ||
| Study Questions | 63 | ||
| PART 2 International Trade | 65 | ||
| Chapter 3 Comparative Advantage and the Gains from Trade | 66 | ||
| Introduction: The Gains from Trade | 66 | ||
| Adam Smith and the Attack on Economic Nationalism | 66 | ||
| A Simple Model of Production and Trade | 68 | ||
| Absolute Productivity Advantage and the Gains from Trade | 68 | ||
| CASE STUDY: Gains from Trade in Nineteenth-Century Japan | 70 | ||
| Comparative Productivity Advantage and the Gains from Trade | 71 | ||
| The Production Possibilities Curve | 72 | ||
| Relative Prices | 73 | ||
| The Consumption Possibilities Curve | 73 | ||
| The Gains from Trade | 74 | ||
| Domestic Prices and the Trade Price | 76 | ||
| Absolute and Comparative Productivity Advantage Contrasted | 77 | ||
| Gains from Trade with No Absolute Advantage | 78 | ||
| CASE STUDY: Changing Comparative Advantage in the Republic of Korea, 1960–2010 | 79 | ||
| Comparative Advantage and “Competitiveness” | 81 | ||
| Economic Restructuring | 82 | ||
| CASE STUDY: Losing Comparative Advantage | 84 | ||
| Summary | 86 | ||
| Vocabulary | 86 | ||
| Study Questions | 87 | ||
| Chapter 4 Comparative Advantage and Factor Endowments | 89 | ||
| Introduction: The Determinants of Comparative Advantage | 89 | ||
| Modern Trade Theory | 90 | ||
| The HO Trade Model | 90 | ||
| Gains from Trade in the HO Model | 91 | ||
| Trade and Income Distribution | 94 | ||
| The Stolper-Samuelson Theorem | 95 | ||
| The Specific Factors Model | 97 | ||
| CASE STUDY: Comparative Advantage in a Single Natural Resource | 99 | ||
| Empirical Tests of the Theory of Comparative Advantage | 100 | ||
| Extension of the HO Model | 101 | ||
| The Product Cycle | 102 | ||
| CASE STUDY: United States–China Trade | 104 | ||
| Foreign Trade versus Foreign Investment | 105 | ||
| Off-Shoring and Outsourcing | 107 | ||
| CASE STUDY: Off-Shoring by U.S. Multinational Corporations | 108 | ||
| Migration and Trade | 109 | ||
| The Impact of Trade on Wages and Jobs | 111 | ||
| CASE STUDY: Do Trade Statistics Give a Distorted Picture of Trade Relations? The Case of the iPhone 3G | 113 | ||
| Summary | 114 | ||
| Vocabulary | 115 | ||
| Study Questions | 116 | ||
| Chapter 5 Beyond Comparative Advantage | 118 | ||
| Introduction: More Reasons to Trade | 118 | ||
| Intraindustry Trade | 119 | ||
| Characteristics of Intraindustry Trade | 120 | ||
| The Gains from Intraindustry Trade | 122 | ||
| CASE STUDY: United States and Canada Trade | 124 | ||
| Trade and Geography | 125 | ||
| Geography, Transportation Costs, and Internal Economics of Scale | 125 | ||
| CASE STUDY: The Shifting Geography of Mexico’s Manufacturing | 126 | ||
| External Economies of Scale | 127 | ||
| Trade and External Economies | 128 | ||
| Industrial Policy | 129 | ||
| Industrial Policies and Market Failure | 130 | ||
| Industrial Policy Tools | 132 | ||
| CASE STUDY: Clean Energy and Industrial Policy | 133 | ||
| Problems with Industrial Policies | 134 | ||
| CASE STUDY: Do the WTO Rules Against Industrial Policies Hurt Developing Countries?\r | 135 | ||
| TRIMs Agreement | 136 | ||
| SCM Agreement | 136 | ||
| TRIPS Agreement | 137 | ||
| Summary | 137 | ||
| Vocabulary | 138 | ||
| Study Questions | 138 | ||
| Chapter 6 The Theory of Tariffs and Quotas | 140 | ||
| Introduction: Tariffs and Quotas | 140 | ||
| Analysis of a Tariff | 140 | ||
| Consumer and Producer Surplus | 141 | ||
| Prices, Output, and Consumption | 142 | ||
| Resource Allocation and Income Distribution | 144 | ||
| CASE STUDY: A Comparison of Tariff Rates | 146 | ||
| Other Potential Costs | 148 | ||
| The Large Country Case | 149 | ||
| Effective Versus Nominal Rates of Protection | 150 | ||
| CASE STUDY: The Uruguay and Doha Rounds | 151 | ||
| Analysis of Quotas | 153 | ||
| Types of Quotas | 154 | ||
| The Effect on the Profits of Foreign Producers | 154 | ||
| Hidden Forms of Protection | 156 | ||
| CASE STUDY: Intellectual Property Rights and Trade | 157 | ||
| Summary | 159 | ||
| Vocabulary | 159 | ||
| Study Questions | 160 | ||
| Chapter 7 Commercial Policy | 162 | ||
| Introduction: Commercial Policy, Tariffs, and Arguments for Protection | 162 | ||
| Tariff Rates in the World’s Major Traders | 163 | ||
| The Costs of Protectionism | 165 | ||
| The Logic of Collective Action | 166 | ||
| CASE STUDY: Agricultural Subsidies | 167 | ||
| Why Nations Protect Their Industries | 169 | ||
| Revenue | 169 | ||
| The Labor Argument | 170 | ||
| The Infant Industry Argument | 171 | ||
| The National Security Argument | 172 | ||
| The Cultural Protection Argument | 172 | ||
| The Retaliation Argument | 172 | ||
| CASE STUDY: Traditional Knowledge and Intellectual Property | 173 | ||
| The Politics of Protection in the United States | 175 | ||
| Antidumping Duties | 175 | ||
| Countervailing Duties | 177 | ||
| Escape Clause Relief | 177 | ||
| Section 301 and Special 301 | 178 | ||
| CASE STUDY: Economic Sanctions | 178 | ||
| Summary | 180 | ||
| Vocabulary | 181 | ||
| Study Questions | 181 | ||
| Chapter 8 International Trade and Labor and Environmental Standards | 182 | ||
| Introduction: Income and Standards | 182 | ||
| Setting Standards: Harmonization, Mutual Recognition, or Separate? | 183 | ||
| CASE STUDY: Income, Environment, and Society | 185 | ||
| Labor Standards | 186 | ||
| Defining Labor Standards | 187 | ||
| CASE STUDY: Child Labor | 188 | ||
| Labor Standards and Trade | 190 | ||
| Evidence on Low Standards as a Predatory Practice | 191 | ||
| CASE STUDY: The International Labour Organization | 192 | ||
| Trade and the Environment | 194 | ||
| Transboundary and NonTransboundary Effects | 194 | ||
| CASE STUDY: Trade Barriers and Endangered Species | 196 | ||
| Alternatives to Trade Measures | 197 | ||
| Labels for Exports | 198 | ||
| Requiring Home Country Standards | 199 | ||
| Increasing International Negotiations | 200 | ||
| CASE STUDY: Global Climate Change | 201 | ||
| Summary | 203 | ||
| Vocabulary | 204 | ||
| Study Questions | 204 | ||
| PART 3 International Finance\r | 207 | ||
| Chapter 9 Trade and the Balance of Payments | 208 | ||
| Introduction: The Current Account | 208 | ||
| The Trade Balance | 209 | ||
| The Current and Capital Account Balances | 209 | ||
| MyLab Economics Real-time Data | 211 | ||
| Introduction to the Financial Account | 212 | ||
| Types of Financial Flows | 212 | ||
| MyLab Economics Real-time Data | 213 | ||
| Limits on Financial Flows | 218 | ||
| CASE STUDY: The Crisis of 2007–2009 and the Balance of Payments | 219 | ||
| The Current Account and the Macroeconomy | 220 | ||
| The National Income and Product Accounts | 221 | ||
| Are Current Account Deficits Harmful? | 226 | ||
| CASE STUDY: Current Account Deficits in the United States | 227 | ||
| International Debt | 229 | ||
| CASE STUDY: Odious Debt | 230 | ||
| The International Investment Position | 232 | ||
| Summary | 233 | ||
| Vocabulary | 234 | ||
| Study Questions | 234 | ||
| APPENDIX A: Measuring the International Investment Position | 235 | ||
| APPENDIX B: Balance of Payments Data | 236 | ||
| Bureau of Economic Analysis | 236 | ||
| International Financial Statistics | 236 | ||
| Balance of Payments Statistics | 236 | ||
| APPENDIX C: A Note on Numbers | 237 | ||
| Chapter 10 Exchange Rates and Exchange Rate Systems | 238 | ||
| Introduction: Fixed, Flexible, or In-Between? | 238 | ||
| Exchange Rates and Currency Trading | 239 | ||
| Reasons for Holding Foreign Currencies | 240 | ||
| Institutions | 241 | ||
| Exchange Rate Risk | 242 | ||
| The Supply and Demand for Foreign Exchange | 243 | ||
| Supply and Demand with Flexible Exchange Rates | 243 | ||
| Exchange Rates in the Long Run | 244 | ||
| Exchange Rates in the Medium Run and Short Run | 248 | ||
| CASE STUDY: The Largest Market in the World | 252 | ||
| The Real Exchange Rate | 254 | ||
| Alternatives to Flexible Exchange Rates | 256 | ||
| Fixed Exchange Rate Systems | 257 | ||
| CASE STUDY: The End of the Bretton Woods System | 260 | ||
| Choosing the Right Exchange Rate System | 262 | ||
| CASE STUDY: Monetary Unions | 264 | ||
| Single Currency Areas | 266 | ||
| Conditions for Adopting a Single Currency | 267 | ||
| CASE STUDY: Is the NAFTA Region an Optimal Currency Area? | 269 | ||
| Summary | 270 | ||
| Vocabulary | 271 | ||
| Study Questions | 271 | ||
| APPENDIX: The Interest Rate Parity Condition | 272 | ||
| Chapter 11 An Introduction to Open Economy Macroeconomics | 274 | ||
| Introduction: The Macroeconomy in a Global Setting | 274 | ||
| Aggregate Demand and Aggregate Supply | 275 | ||
| Fiscal and Monetary Policies | 280 | ||
| Fiscal Policy | 280 | ||
| Monetary Policy | 281 | ||
| CASE STUDY: Fiscal and Monetary Policy during the Great Depression | 283 | ||
| Current Account Balances Revisited | 286 | ||
| Fiscal and Monetary Policies, Interest Rates, and Exchange Rates | 287 | ||
| Fiscal and Monetary Policy and the Current Account | 288 | ||
| The Long Run | 290 | ||
| CASE STUDY: Argentina and the Limits to Macroeconomic Policy | 291 | ||
| Macro Policies for Current Account Imbalances | 293 | ||
| The Adjustment Process | 293 | ||
| CASE STUDY: The Adjustment Process in the United States | 295 | ||
| Macroeconomic Policy Coordination in Developed Countries | 296 | ||
| Summary | 297 | ||
| Vocabulary | 298 | ||
| Study Questions | 299 | ||
| Chapter 12 International Financial Crises | 300 | ||
| Introduction: The Challenge to Financial Integration | 300 | ||
| Definition of a Financial Crisis | 301 | ||
| Vulnerabilities, Triggers, and Contagion | 303 | ||
| Vulnerability: Economic Imbalances | 304 | ||
| Vulnerability: Volatile Capital Flows | 305 | ||
| How Crises Become International: Contagion | 306 | ||
| CASE STUDY: The Mexican Peso Crisis of 1994 and 1995 | 307 | ||
| Domestic Issues in Crisis Avoidance | 310 | ||
| Moral Hazard and Financial Sector Regulation | 311 | ||
| Exchange Rate Policy | 312 | ||
| Capital Controls | 312 | ||
| CASE STUDY: The Asian Crisis of 1997 and 1998 | 314 | ||
| Domestic Policies for Crisis Management | 318 | ||
| Reform of the International Financial Architecture | 319 | ||
| A Lender of Last Resort | 320 | ||
| Conditionality | 321 | ||
| Reform Urgency | 322 | ||
| CASE STUDY: The Global Crisis of 2007 | 323 | ||
| Summary | 326 | ||
| Vocabulary | 328 | ||
| Study Questions | 328 | ||
| PART 4 Regional Issues in the Global Economy | 331 | ||
| Chapter 13 The United States in the World Economy | 332 | ||
| Introduction: A Changing World Economy | 332 | ||
| Background and Context | 333 | ||
| The Shifting Focus of U.S. Trade Relations | 334 | ||
| CASE STUDY: Manufacturing in the United States | 335 | ||
| The Nafta Model | 338 | ||
| Demographic and Economic Characteristics of North America | 338 | ||
| Canada–U.S. Trade Relations | 339 | ||
| Mexican Economic Reforms | 341 | ||
| The North American Free Trade Agreement | 343 | ||
| Two NAFTA-Specific Issues | 344 | ||
| CASE STUDY: Ejidos, Agriculture, and NAFTA in Mexico | 346 | ||
| New and Old Agreements | 348 | ||
| Labor and Environmental Standards | 349 | ||
| Investor-State Relations | 351 | ||
| Jobs and Trade Agreements | 352 | ||
| CASE STUDY: The African Growth and Opportunity Act | 354 | ||
| Summary | 355 | ||
| Vocabulary | 356 | ||
| Study Questions | 357 | ||
| Chapter 14 The European Union: Many Markets Into One | 358 | ||
| Introduction: The European Union | 358 | ||
| The Size of the European Market | 360 | ||
| The European Union and its Predecessors | 361 | ||
| The Treaty of Rome | 362 | ||
| Institutional Structure | 362 | ||
| Deepening and Widening the Community in the 1970s and 1980s | 364 | ||
| Before the Euro | 364 | ||
| The Second Wave of Deepening: The Single European Act | 366 | ||
| CASE STUDY: The Schengen Agreement | 367 | ||
| The Delors Report | 368 | ||
| Forecasts of the Gains from the Single European Act | 369 | ||
| Problems in the Implementation of the SEA | 370 | ||
| CASE STUDY: The Erasmus+ Program and Higher Education | 372 | ||
| The Third Wave of Deepening: The Maastricht Treaty | 373 | ||
| Monetary Union and the Euro | 374 | ||
| Costs and Benefits of Monetary Union | 375 | ||
| The Political Economy of the Euro | 377 | ||
| CASE STUDY: The Financial Crisis of 2007–2009 and the Euro | 378 | ||
| Widening the European Union | 382 | ||
| New Members | 382 | ||
| CASE STUDY: Spain’s Switch from Emigration to Immigration | 383 | ||
| The Demographic Challenge of the Future | 384 | ||
| Summary | 386 | ||
| Vocabulary | 387 | ||
| Study Questions | 387 | ||
| Chapter 15 Trade and Policy Reform in Latin America | 389 | ||
| Introduction: Defining a “Latin American” Economy | 389 | ||
| Population, Income, and Economic Growth | 390 | ||
| Import Substitution Industrialization | 392 | ||
| Origins and Goals of ISI | 392 | ||
| Criticisms of ISI | 395 | ||
| CASE STUDY: ISI in Mexico | 396 | ||
| Macroeconomic Instability and Economic Populism | 398 | ||
| Populism in Latin America | 399 | ||
| CASE STUDY: Economic Populism in Peru, 1985–1990 | 400 | ||
| The Debt Crisis of the 1980s | 401 | ||
| Proximate Causes of the Debt Crisis | 401 | ||
| Responses to the Debt Crisis | 402 | ||
| Neoliberal Policy Reform and the Washington Consensus | 405 | ||
| Stabilization Policies to Control Inflation | 405 | ||
| Structural Reform and Open Trade | 407 | ||
| CASE STUDY: Regional Trade Blocs in Latin America | 408 | ||
| The Next Generation of Reforms | 410 | ||
| CASE STUDY: The Chilean Model | 411 | ||
| Summary | 413 | ||
| Vocabulary | 414 | ||
| Study Questions | 414 | ||
| Chapter 16 Export-Oriented Growth in East Asia | 416 | ||
| Introduction: High-Growth Asian Economies | 416 | ||
| Population, Income, and Economic Growth | 418 | ||
| A Note on Hong Kong | 420 | ||
| General Characteristics of Growth | 420 | ||
| Shared Growth | 420 | ||
| Rapid Accumulation of Physical and Human Capital | 421 | ||
| Rapid Growth of Manufactured Exports | 422 | ||
| Stable Macroeconomic Environments | 423 | ||
| The Institutional Environment | 424 | ||
| CASE STUDY: Worldwide Governance Indicators | 425 | ||
| Fiscal Discipline and Business–Government Relations | 427 | ||
| CASE STUDY: Doing Business in the Export Oriented Asian Economies | 427 | ||
| Avoiding Rent Seeking | 429 | ||
| CASE STUDY: Were East Asian Economies Open? | 431 | ||
| The Role of Industrial Policies | 433 | ||
| Targeting Specific Industries | 433 | ||
| Did Industrial Policies Work? | 434 | ||
| CASE STUDY: HCI in Korea | 436 | ||
| The Role of Manufactured Exports | 437 | ||
| The Connections between Growth and Exports | 437 | ||
| Is Export Promotion a Good Model for Other Regions? | 439 | ||
| CASE STUDY: Asian Trade Blocs | 440 | ||
| Is There an Asian Model of Economic Growth? | 441 | ||
| Summary | 443 | ||
| Vocabulary | 444 | ||
| Study Questions | 444 | ||
| Chapter 17 China and India in the World Economy | 445 | ||
| Introduction: New Challenges | 445 | ||
| Demographic and Economic Characteristics | 446 | ||
| Economic Reform in China and India | 450 | ||
| The Reform Process in China | 451 | ||
| Indian Economic Reforms | 452 | ||
| Shifting Comparative Advantages | 453 | ||
| CASE STUDY: Why Did the USSR Collapse and China Succeed? | 455 | ||
| China and India in the World Economy | 456 | ||
| Chinese and Indian Trade Patterns | 457 | ||
| Tariffs and Protection | 458 | ||
| Current Account Balances | 459 | ||
| Looking Forward | 461 | ||
| Four Issues | 463 | ||
| Services | 463 | ||
| Manufacturing | 464 | ||
| Resources | 465 | ||
| Multilateral Institutions | 465 | ||
| Unresolved Issues | 466 | ||
| The Choices Ahead | 467 | ||
| Summary | 468 | ||
| Vocabulary | 469 | ||
| Study Questions | 469 | ||
| Glossary | 471 | ||
| Index | 483 | ||
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