Read the summary and the most important questions on An Introduction to International Economics New Perspectives on the World Economy | 9781107003576 | Kenneth A. Reinert

• 1 Windows on the World Economy

• Why do people in all different sectors need to know something about the world economy?

  The world economy impacts us all in increasingly different ways. Trade flows, exchange rates, and multinational enterprises matter to us all, even if we would prefer that they did not.

• What are the four different windows on modern world economy?

  • international trade
  • international production
  • international finance 
  • international development

• 1.2 International Production

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• What are the two modes in which international production can take place and how do they work?

  • contracts (relationship across national boundaries) --> low-commitment-low-control
  • foreign direct investment (FDI) undertaken by multinational enterprises (MNEs) --> high-commitment-high-control. MNEs is another important feature for globalization.

• 1.5 Connecting Windows

• Which four factors influence the four windows: trade, production, finance, and development?

  • technology
  • politics
  • culture
  • the environment

• 2 Absolute Advantage

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• What is an absolute advantage in internatinal economics?

  Absolute advantage refers to the possibility that, due to differences in supply conditions, one country can produce a product at a lower price than another country.

• 2.4 Gains from trade

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• What does 'gains from trade' mean?

  A net increase in welfare

• 3 Comparative advantages

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• Ricardo, comparative cost advantages

  Even if both products are cheaper to produce in country A it’s still not necessarily beneficial to produce both products. You lose time and production to produce something else

• 4 Intra-inter

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• Horizontal Intra-industry trade

  Both imports and exports in a given sector of the economy at the same stage of processing, has its source in product differentiation

• Vertical Intra-Industry trade

  Both imports and exports in a given sector, at different stages of processing, has its source in fragmentation. (comparative advantages sometimes)

• 5 Trade and factors of production

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• Heckscher - Ohlin model

  The model essentially says that countries will export products that use their abundant and cheap factor(s) of production and import products that use the countries' scarce factor(s).