What Goods do Countries Trade A Quantitative Exploration of Ricardo's Ideas

CHAPTER 7ECONOMIC GROWTH AND INTERNATIONAL TRADEOUTLINE7.1 Introduction7.2 Growth of Factors of Production7.2a Labor Growth and Capital Accumulation Over Time7.2b The Rybczynski Theorem7.3 Technical Progress7.3a Neutral, Labor-Saving, and Capital-Saving Technical Progress7.3b Technical Progress and the Nation's Production FrontierCase Study 7-1: Changes in Relative Resource Endowments of Various Countries and Regions Case Study 7-2: Change in Capital-Labor Rations in Selected Countries7.4 Growth and Trade: The Small Country Case7.4a The Effects of Growth on Trade7.4b Illustration of Factor Growth, Trade, and Welfare7.4c Technical Progress, Trade, and WelfareCase Study 7-3: Growth of Output per Worker from Capital Deepening, TechnologicalChange, and Improvements in Efficiency7.5 Growth and Trade: The Large-Country Case7.5a Growth and the Nation's Terms of Trade and Welfare7.5b Immiserizing Growth7.5c Illustration of Beneficial Growth and TradeCase Study 7-4: Growth, Trade, and the Giants of the Future7.6 Growth, Change in Tastes, and Trade in Both Nations7.6a Growth and Trade in Both Nations7.6b Change in Tastes and Trade in Both NationsCase Study 7-5: Change in the Revealed Comparative Advantage of Various Countries orRegionsCase Study 7-6: Growth, Trade, and Welfare in the Leading Industrial NationsAppendix: A7.1 Formal Proof of Rybczynski TheoremA7.2 Growth with Factor ImmobilityA7.3 Graphical Analysis of Hicksian Technical ProgressKey TermsComparative statics Antitrade production and consumptionDynamic analysis Neutral production and consumptionBalanced growth Normal goodsRybczynski theorem Inferior goodsLabor-saving technical progress Terms-of-trade effectCapital-saving technical progress Wealth effectProtrade production and consumption Immiserizing growthLecture Guide1.This is not a core chapter and it is one of the most challenging chapters in international tradetheory. It is included for more advanced students and for completeness.2.If I were to cover this chapter, I would present two sections in each of three lectures.Time permitting, I would, otherwise cover Sections 1 and 2, paying special attention to theRybczynski theorem.Answer to Problems1. a) See Figure 1.b) See Figure 2c) See Figure 3.2. See Figure 4.3. a) See Figure 5.b) See Figure 6.c) See Figure 7.4. Compare Figure 5 to Figure 1.Compare Figure 6 to Figure 3. Note that the two production frontiers have the same vertical or Y intercept in Figure 6 but a different vertical or Y intercept in Figure 3.Compare Figure 7 to Figure 2. Note that the two production frontiers have the samehorizontal or X intercept in Figure 7 but a different horizontal or X intercept in Figure 2.5. See Figure 8 on page 66.6. See Figure 9.7. See Figure 10.8. See Figure 11.9. See Figure 12.10. See Figure 13 on page 67.11. See Figure 14.12. See Figure 15.13.The United States has become the most competitive economy in the world since the early-1990 period.1990’s while the data in Table 7.3 refers to the 196514.The data in Table 7.4 seem to indicate that China had a comparative advantage incapital-intensive commodities and a comparative disadvantage in unskilled-laborintensive commodities in 1973. This was very likely due to the many traderestrictions and subsidies, which distorted the comparative advantage o f China.Its true comparative advantage became evident by 1993 after China had started to liberalize its economy.App. 1a. See Figure 16.1b. For production and consumption to actually occur at the newequilibrium point after the doubling of K in Nation 2, we mustassume either than commodity X is inferior or that Nation 2 is toosmall to affect the relative commodity prices at which it trades.1c. Px/Py must rise (i.e., Py/Px must fall) as a result of growth only.Px/Py will fall even more with trade.1. If the supply of capital increases in Nation 1 in the production of commodity Yonly, the VMPLy curve shifts up, and w rises in both industries. Some labor shifts to the production of Y, the output of Y rises and the output of X falls, r falls, and Px/Py is likely to rise.2. Capital investments tend to increase real wages because they raise the K/L ratioand the productivity of labor. Technical progress tends to increase K/L and realwages if it is L-saving and to reduce K/L and real wages if it is K-saving.Multiple-Choice Questions1. Dynamic factors in trade theory refer to changes in:a. factor endowmentsb. technologyc. tastes*d. all of the above2. Doubling the amount of L and K under constant returns to scale:a. doubles the output of the L-intensive commodityb. doubles the output of the K-intensive commodityc. leaves the shape of the production frontier unchanged*d. all of the above.3. Doubling only the amount of L available under constant returns to scale:a. less than doubles the output of the L-intensive commodity*b. more than doubles the output of the L-intensive commodityc. doubles the output of the K-intensive commodityd. leaves the output of the K-intensive commodity unchanged4. The Rybczynski theorem postulates that doubling L at constant relative commodity prices:a. doubles the output of the L-intensive commodity*b. reduces the output of the K-intensive commodityc. increases the output of both commoditiesd. any of the above5. Doubling L is likely to:a. increases the relative price of the L-intensive commodityb. reduces the relative price of the K-intensive commodity*c. reduces the relative price of the L-intensive commodityd. any of the above6.Technical progress that increases the productivity of L proportionately more than the productivity of K is called:*a. capital savingb. labor savingc. neutrald. any of the above7. A 50 percent productivity increase in the production of commodity Y:a. increases the output of commodity Y by 50 percentb. does not affect the output of Xc. shifts the production frontier in the Y direction only*d. any of the above8. Doubling L with trade in a small L-abundant nation:*a. reduces the nation's social welfareb. reduces the nation's terms of tradec. reduces the volume of traded. all of the above9. Doubling L with trade in a large L-abundant nation:a. reduces the nation's social welfareb. reduces the nation's terms of tradec. reduces the volume of trade*d. all of the above10.If, at unchanged terms of trade, a nation wants to trade more after growth, then the nation's terms of trade can be expected to:*a. deteriorateb. improvec. remain unchangedd. any of the above11. A proportionately greater increase in the nation's supply of labor than of capital is likely to result in a deterioration in the nation's terms of trade if the nation exports:a. the K-intensive commodity*b. the L-intensive commodityc. either commodityd. both commodities12. Technical progress in the nation's export commodity:*a. may reduce the nation's welfareb. will reduce the nation's welfarec. will increase the nation's welfared. leaves the nation's welfare unchanged13. Doubling K with trade in a large L-abundant nation:a. increases the nation's welfareb. improves the nation's terms of tradec. reduces the volume of trade*d. all of the above14. An increase in tastes for the import commodity in both nations:a. reduces the volume of trade*b. increases the volume of tradec. leaves the volume of trade unchangedd. any of the above15. An increase in tastes of the import commodity of Nation A and export in B:*a. will reduce the terms of trade of Nation Ab. will increase the terms of trade of Nation Ac. will reduce the terms of trade of Nation Bd. any of the aboveADDITIONAL ESSAYS AND PROBLEMS FOR PART ONE1.Assume that both the United States and Germany produce beef and computer chipswith the following costs:United States Germany(dollars) (marks)Unit cost of beef (B) 2 8Unit cost of computer chips (C) 1 2a) What is the opportunity cost of beef (B) and computer chips (C) in each country?b)In which commodity does the United States have a comparative cost advantage?What about Germany?c)What is the range for mutually beneficial trade between the United States andGermany for each computer chip traded?d)How much would the United States and Germany gain if 1 unit of beef isexchanged for 3 chips?Ans. a) In the United States:the opportunity cost of one unit of beef is 2 chips;the opportunity cost of one chip is 1/2 unit of beef.In Germany:the opportunity cost of one unit of beef is 4 chips;the opportunity cost of one chip is 1/4 unit of beef.b) The United States has a comparative cost advantage in beef with respect toGermany, while Germany has a comparative cost advantage in computer chips.c)The range for mutually beneficial trade between the United States and Germanyfor each unit of beef that the United States exports is2C < 1B < 4Cd) Both the United States and Germany would gain 1 chip for each unit of beeftraded.2.Given: (1) two nations (1 and 2) which have the same technology but differentfactor endowments and tastes, (2) two commodities (X and Y) produced under increasing costs conditions, and (3) no transportation costs, tariffs, or other obstructions to trade. Prove geometrically that mutually advantageous trade between the two nations is possible.Note: Your answer should show the autarky (no-trade) and free-trade points of production and consumption for each nation, the gains from trade of each nation, and express the equilibrium condition that should prevail when trade stopsexpanding.)Ans.: See Figure 1 on page 74.Nations 1 and 2 have different production possibilities curves and differentcommunity indifference maps. With these, they will usually end up with differentrelative commodity prices in autarky, thus making mutually beneficial tradepossible.In the figure, Nation 1 produces and consumes at point A and Px/Py=PA in autarky,while Nation 2 produces and consumes at point A' and Px/Py=PA'. Since P A < P A', Nation 1 has a comparative advantage in X and Nation 2 in Y. Specialization inproduction proceeds u ntil point B in Nation 1 and point B' in Nation 2, at whichP B=P B' and the quantity supplied for export of each commodity exactly equals thequantity demanded f or import. Thus, Nation 1 starts at point A in production andconsumptionin autarky, moves to point B in production, and by exchanging BC ofX for CE of Y reaches point E in consumption. E > A since it involves more of bothX and Y and lieson a higher community indifference curve. Nation 2 starts at A' inproduction andconsumption in autarky, moves to point B' in production, and byexchanging B'C' of Y for C'E' of X reaches point E'in consumption (which exceedsA').At Px/Py=P B=P B', Nation 1 wants to export BC of X for CE of Y, while Nation 2wants to export B'C' (=CE) of Y for C'E' (=BC) of X. Thus, P B=P B'is theequilibrium relative commodity price because it clears both (the X and Y) markets. 3.Draw a figure showing: (1) in Panel A a nation's demand and supply curve for Atraded commodity and the nation's excess supply of the commodity, (2) in Panel Cthe trade partner's demand and supply curve for the same traded commodity and its excess demand for the commodity, and (3) in Panel B the supply and demand for the quantity traded of the commodity, its equilibrium price, and why a price above orbelow the equilibrium price will not persist. At any other price, QD QS, and P willchange to P2.Ans. See Figure 2 on page 74.The equilibrium relative commodity price for commodity X (the traded commodityexported by Nation 1 and imported by Nation 2) is P2 and the equilibrium quantityof commodity X traded is Q2.4.a) Identify the conditions that may give rise to trade between two nations.b) What are some of the assumptions o n which the Heckscher-Ohlin theory isbased?c) What does this theory say about the pattern of trade and effect of trade on factorprices?Ans. a) Trade can be based on a difference in factor endowments, technology, or tastes between two nations. A difference either in factor endowments or technology resultsin a different production possibilities frontier for each nation, which, unlessneutralized by a difference in tastes, leads to a difference in relative commodity price and mutually beneficial trade. If two nations face increasing costs and have identical production possibilities frontiers but different tastes, there will also be a difference inrelative commodity prices and the basis for mutually beneficial trade between thetwo nations. The difference in relative commodity prices is then translated i nto adifference in absolute commodity prices between the two nations, which is theimmediate cause of trade.– asb) The Heckscher-Ohlin theory (sometimes referred to as the modern theoryopposed to the classical theory - of international trade) assumes that nations have the same tastes, use the same technology, face constant returns to scale (i.e., a given percentage increase in all inputs increases output by the same percentage) but differ widely in factor endowments. It also says that in the face of identical tastes ordemand conditions, this difference in factor endowments will result in a difference inrelative factor prices between nations, which in turn leads to a difference in relativecommodity prices and trade. Thus, in the Heckscher-Ohlin theory, the internationaldifference in supply conditions alone determines the pattern of trade. To be noted isthat the two nations need not be identical in other respects in order for internationaltrade to be based primarily on the difference in their factor endowments.c) The Heckscher-Ohlin theorem postulates that each nation will export thecommodity intensive in its relatively abundant and cheap factor and import thecommodity intensive in its relatively scarce and expensive factor. As an importantcorollary, it adds that under highly restrictive assumptions, t rade will completelyeliminate the pretrade relative and absolute differences in the price of homogeneous factors among nations. Under less restrictive and more usual conditions, however,trade will reduce, but not eliminate, the pretrade differences in relative and absolutefactor prices among nations. In any event, the Heckscher-Ohlin theory does saysomething very useful on how trade affects factor prices and the distribution ofincome in each nation. Classical economists were practically silent on this point.5. consumers demand more of commodity X (the L-intensive commodity) and less ofcommodity Y (the K- intensive commodity). Suppose that Nation 1 is India,commodity X is textiles, and commodity Y is food. Starting from the no-tradeequilibrium position and using the Heckscher-Ohlin model, trace the effect ofthis change in tastes on India's(a) relative commodity prices and demand for food and textiles,(b) production of both commodities and factor prices, and(c) comparative advantage and volume of trade.(d) Do you expect international trade to lead to the complete equalization ofrelative commodity and factor prices between India and the United States?Why?Ans. a. The change in tastes can be visualized by a shift toward the textile axis in India's indifference map in such a way that an indifference curve is tangentto the steeper segment of India's production frontier (because of increasingopportunity costs) after the increase in demand for textiles. This will causethe pretrade relative commodity price of textiles to rise in India.b. The increase in the relative price of textiles will lead domesticproducers in India to shift labor and capital from the production of food tothe production of textiles. Since textiles are L-intensive in relation to food,the demand for labor and therefore the wage rate will rise in India. At thesame time, as the demand for food falls, the demand for and thus the priceof capital will fall. With labor becoming relative more expensive,producers in India will substitute capital for labor in the production of bothtextiles and food.Even with the rise in relative wages and in the relative price of textiles,India still remains the L-abundant and low-wage nation with respect to anation such as the United States. However, the pretrade difference in therelative price of textiles between India and the United States is nowsomewhat smaller than before the change in tastes in India. As a result thevolume of trade required to equalize relative commodity prices and hencefactor prices is smaller than before. That is, India need now export asmaller quantity of textiles and import less food than before for therelative price of textiles in India and the United States to be equalized.Similarly, the gap between real wages and between India and the UnitedStates is now smaller and can be more quickly and easily closed (i.e., witha smaller volume of trade).c. Since many of the assumptions required for the complete equalization ofrelative commodity and factor prices do not hold in the real world, greatdifferences can be expected and do in fact remain between real wages inIndia and the United States. Nevertheless, trade would tend to reduce thesedifferences, and the H-O model does identify the forces that must beconsidered to analyze the effect of trade on the differences in the relative andabsolute commodity and factor prices between India and the United States.5.(a) Explain why the Heckscher-Ohlin trade model needs to be extended.(b) Indicate in what important ways the Heckscher-Ohlin trade model can beextended.(c) Explain what is meant by differentiated products and intra-industry trade.Ans. (a) The Heckscher-Ohlin trade model needs to be extended because, while generally correct, it fails to explain a significant portion of international trade, particularly the trade in manufactured products among industrial nations.(b)The international trade left unexplained by the basic Heckscher-Ohlin trade modecan be explained by(1) economies of scale,(2) intra-industry trade, and(3) trade based on imitation gaps and product differentiation.(c)Differentiated products refer to similar, but not identical, products (such as cars,typewriters, cigarettes, soaps, and so on) produced by the same industry or broad product group. Intra-industry trade refers to the international trade in differentiated products.。

国际商务英语课后问答题答案〔多写多练〕Unit1 课后问答题1、What does international business refer to Please tell the difference between international business and domestic business. P3International business refers to transactions between parties from diffirent countries. There are four major diffrences between international business and domestic business: 〔1) differences in legal system〔2) differences in currencies〔3) differences in cutural background〔4) differences in natural and economic conditions2、Please explain the differences between visible trade and invisible trade. Which is becoming more and more important and accounts for an increasing proportion in international trade P4Commodity trade, i.e ，exporting and importing goods produced or manufactured in one country for consumption or resale in another. This kind of trade is also referred to visible trade. Invisible trade is in the form of transportation, communication, banking, insurance, consulting, information etc.Invisible trade is becoming more and more important and accounts for an increasing proportion in international trade.3、Can you cite some examples to illustrate cultural differences in international business P3Cultural differences including language, customs, traditions, religion, value, behavior etc.4、Please elaborate on the two categories of international investment. What is their major difference P4Foreign direct investments or FDI for short is made for returns through controlling the enterprises or assets invested in in a host country.Portfolio investment refers to purchases of foreign financial assets for a purpose other than controlling.5、What is licensing Why do firms sometimes choose it as means of entering a foreign market P5In licensing, a firm leases the right to use its intellectual property to a firm in another country. Firms choose licensing because they do not want to make cash payments to start business, and can simply receive income in the form of royalty. Besides, they can benefit from locational advanteges of foreign operation without any obligations in ownership or management.6、What is franchising How is it different from licensing P5Under franchising, a fim, called the franchisee, is allowed to operate in the name ofanother, called the franchiser who provides the former with trademarks, brand name, logos, and operating techniques for royalty.In comparision with the relation between the licenser and the licensee, the franchiser has more control over and provides more support for the franchisee.7、What is a management contract Under what conditions is it most applicable P5 Under a management contract, one company offers managerial or other specialized services to another within a particular period for a flat payment or a percentage of the relevant business volume.When a government forbids foreign ownership in certain industries it considers to be of strategic importance but lacks the expertise for operation, management contracts may be a practical choice enabling a foreign company to operate in the industry without owning the assets..8、What is an international turnkey project In what way is its variant BOT different from it P6For an interantional turnkey project, a firm signs a contract with a foreign purchaser and undertakes all the designing, contracting and facility equiping before handing it over to the latter upon completion. For a BOT project, a firm operate a facility for a period of time after building it up before finally transferring it to a foreign company.Making profit from operating the project for a period is the major difference between BOT and the common turnkey project.Unit2 课后问答题答案1.Explain the concepts of GNP and GDP respectively and point out their majordifference. Can we use them interchaeably P18GNP refers to the market value of goods and services produced by the property and labor owned by the residents of an economy.GDP measures the market value of all goods and services produced within the geographic area of an economy.The difference between GNP and GDP is that the former focuses on ownership of the factors of production while the latter concentrates on the place where production takes place.The difference between GNP and GDP can be ignored since it is very small in most cases, so we can use them interchangeably.2、What are meant by high income, middle income, and low income countries according to the World Bank Cite some exaples for each group. P20Those enjoying annual per capita income of $9386 and above are classified as high-income countries.This group comprises three types of countries.〔1〕Most members of the Organization for Economic Cooperation andDevelopment(OECD)(2) Rich oil producing contries of the middle east (Kuwait, Saudi Arabia, United Arab Emirates).(3) Small-industrialized countries or regions such as Israel, Singapore, Hong Kong and Taiwan.Countries with annual per capita income below $9386 but above $765 are regarded as middle-income countries.(1) Most East European countries and most members of the Commonwealth of Independent States, six OECD members.(Czech, Greece, Hungary, Mexico, Turkey) (2) Quite a number of Latin American countries and some comparatively developed countries in Asia.(Indonesia, Malaysia, the philippines, Thailand)(3) Among the African countries, South Africa and oil-producing Libya, Nigeria and Algeria. Lower income countries are those that have per capita incomes of only $765 or even less.Most African contries, some Asian countries and a few Latin American countries.3.Why are high income countries important to trade and investment Should weneglect low income countries in international business P20-21High-income countries often have good infrastructure, high purchasing power, advanced technology, efficient management, and favorable environment for trade and investment. They offer prime markets for expensive consumer goods and are both attractive sources and destinations of investment.We should not neglect low income countries in international business, because they constitute markets for lower-priced staple goods, provide cheap labor and are often rich in resources. What is more important, market is something to be developed. Once tapped, the business potential of these countries will one day become real business opportunities.4、In what different ways are GDP and per capita income significant in assessing the potential of a particular market P19Total GDP indicates the overall size of an economy which is important in market assessment for durable equipment or bulk goods such as grain, steel, or cement.Per capita GDP reveals the average income level of consumers, which is important when marketing consumer durables.5、Was china a low-income country a few years ago How about now P21China with a per capita income of over $1100 is a middle-income country though it was a low income country just a few years ago.6、What does the term “Traid〞 refer to What is meant ty Quad P23The term Triad refers to the three richest regions of the world the United States, the European Union and Japan that offer the most important business opportunities. Some people extend the scope of Triad to include Canada and name the broadened grouping Quad.7、How much do you know about OECD Please make a brief account.OECD means Organization of Economic Cooperation and Development was establishedin 1961 by the major capitalism countries with the headquarter in Paris. It has 29 member countries, among which, 23 of them are high-income countries and the others are middle-income countries.8、What is the best policy for China to develop business opportunites P23The best policy is to develop business opportunities wherever advantageous while keeping in mind the key markets.Unit3 课后问答题答案1.What is a free trade area Make a brief account of the most notable free trade area in theworld. P35Members of a free trade area removes barries to the flow of goods and services smong themselves while each member still adopts its own policy as regards to trade with outsiders. The most notable free trade area is the North American Free Trade Agreement (NAFTA), the largest free market formed by the United States.2.In what way is a customs union different from a free trade area P35Customs Union that goes a step further by adopting the same trade policy for all the members toward countries outside their organization in addition to abolishing trade barriers among themselves.3.What are the characteristics of a comon market Which organization remained acommon market for some years in the past P36Besides free movement of goods and services and adoption of common external trade policy, factors of production such as labor, capital and technology are free to move among members so that they can be utilized in a more efficient and productive way. In the past, the European Community remained a common market for some years.4.How much do you know about an economic union Can members of an economicunion keep all of their national sovereignty P36Economic union is characterized by integration of the domestic policies of its members in respect of economy, finance etc. in addition to absence of trade barriers, practice of common external policy and free production factor mobility.The member countries of an economic union are required to surrender some of their national sovereignty.5.Make a brief account of the origin and development of the EU. P37Its history dates back to the early post-war years. The first community, the European Coal and Steel Community (ECSC) was established in 1952 which set the stage for more ambitious integration efforts. The signing of the monumental Treaty of Rome in 1957 marks the establishment of the European Economic Community with the aim of gradually realizing the free movement of goods, services, labor and capital as well as the harmonization of economic policies of the member countries. Ten years later in 1967, the European Community was formed by merging EEC, ECSC and the European Atomic Energy Community (EURATOM). 1992 was a landmark year in theSingle Eropean Act. Then on January 1, 1994 the European Union (EU) came into being on the strength of the Maastricht Treaty.6.What is the most powerful institution of the EU What is the executive bodyof the EU How does it operate P37-38The most Powerful institution of the EU is the Council of Ministers. It has the final say on all important matters. Decisions of the council are made by votes allocated to member countries on the basis of their size. Different ministers attend the council meetings depending on the matters discussed.Its executive body is the European Commision composed of 20commissioners overseeing 23 departments in charge of different affairs.7. Explain briefly the five layer organizational structure of Asia-Pacific Economic Cooperation. P39(1)The first is the Informal Meeting of Economic leaders held annually.(2)The second is the Dual-Ministerial Meeting attended by foreign ministers (excluding Chinese Taipei and Hong Kong) and ministers in charge of foreign trade.(3)The third is the Meeting for Ministers Responsible for Trade.(4)The fourth is the Senior Officials Meeting (SOM) attended by vice ministers, departmental directors or ambassadors to implement decisions by economic leaders and ministerial meetings.(5)The fifth layer refers to the four subordinate committees under SOM, i.e. Committee of Trade and Investment, Economic Committee, Economic and Technical Cooperation Subcommittee of SOM and Budget Management Committee.8、What are the tenet and objectives of APEC What is meant by its two wheels P39 APEC-Asia-Pacific Economic Co-operation, its tenet and objectives are “inter-dependence, mutual benefits, adhering to an open and multilateral trading system and reduction of regional trade barriers〞.APEC co- operation concentrates on trade and investment liberation and facilitation (TILF) and economic and technical cooperation (ECOTECH) that are commonly termed as “the two wheels of APEC〞.9. What are the nature and objectives of OPEC P40The nature of OPEC is a commodity cartel. By assigning production quotas among its members, OPEC tried to limit the overall crude oil supply of the world for the purpose of maintaining higher oil prices.Unit4 课后问答题答案1. What are the basic feature and major role of economic globalization P52With the basic feature of free flow of comodity, capital, technology, service, and information in the global context for optimized allocation, economic globalization giving new impetus and providing opportunities to world economic development and meanwhile making the various economies more and more interdependent and interactive. It has become an objective trend in world economic development.2. Mention some of the pros and cons of economic globalization. What is the rightattitude toward it P52Economic integration enables countries benefit from the boom of other countries but also makes them more vulnerable to the adverse events across the globe.The best policy for us is to follow the trend closely, availing the opportunities it offers to develop ourselves and avoiding its poosible impacts.3、What is the formal definition of a multinational enterprise How can you tell whether a multinational corporation is a parent or just an affiliate P53A typical multinational enterprise shall be defined as a business organization which owns (whether wholy or partly), controls and manages assets, often including productive resources, in more than one country, through its member companies incorporated separately in each of these countries.If the MNC is the original investing corporation, it is known as the parent MNC, which is normally also the international headquarters of the MNE.If the MNC is established as a result of investments by the MNE, whether through the parent or through another of its already established MNC, it is an affiliate MNC.4. Describe briefly the characteristics of MNEs. P54〔1〕Enormous size〔2〕Wide geographical spread〔3〕Longevity and rapid growth5. What is the ecommonly recognized objective of MNEs P54Like most business organizations, MNEs are formed for profit.6.Why is security so important to MNEs P55Profit is useless if it cannot be secured by the MNE and transferred wherever it so desires.7. Do you think “wide geographical spread〞 of MNEs plays a very important role in the development of their business Why P54(1)Enables them have a wide range of options in terms of decisions in areas such as sourcing and pricing.(2)More able to take advantage of changes in the international economic environment.(3)Enable MNEs to engage in worldwide integrated production and marketing giving rise to extensive intra-MNE transactions which constitute a very significant proportion of total international trade.8、What is the relationship between MNEs and their host countries P56Host governments can and do wield power over MNCs located within their territories. MNCs are under the legal jurisdiction of their host governments which can impose various rules, regulations, and laws on the MNCs to the extent of nationalizing all their assets.9. What are the four types of multinational enterprises Describe each of them briefly. P56〔1〕Multi-domestic corporation that is a group of relatively independent subsidiaries.〔2〕Global corporations which operates under an opposite principle from the first type and views the world market as an integrated whole.〔3〕Transnational corporation, aims to combine the advantages of the above two ways of operation so as to achieve both efficiency and flexibility.(4) World companies, as their national indentities are blurred to a large extent.10. Are there many world companies at present Imagine their future role in complete globalization P57No, very few companies, if any, have reached this level of internationalization. When such companies become dominating, the possiblility of conflicts among sovereigncomplete globalization.Unit 5 课后问答题1.How would you define international trade P68International trade can be defined as the exchange of goods and services produced in one country with those produced in another.2.Why did international trade first begin P68In the complex economic world, no country can be completely self-sufficient. The distribution of natural resources is uneven. Some countries are abundant in resources, while elsewhere reserves are scarce or even nonexistent. And a country may be rich in some resources but poor in others. That is the reason why international trade first begin.3. What is the new incentive for trade that arose with the development of manufacturing and technology P68International specialization – one country producing more of a commodity than it uses itself and selling the remainder to other countries.4、According to the theory of absolute advantage, trade occurs only when a country has an absolute advantage over another. Is that always true P69No. Because in reality, it is not rare that one country has no absolute advantage in any commodity.5. Who introduced the theory of comparative advantage Which theory makes more sense, absolute or comparative advantage P71David Ricardo. Comparative advantage.6、Explain briefly why trade to exploit comparative advantage promotes efficiency among countries. P70Since it can make one country better off without making another worse off.7.Is comparative advantage something static Is it purely decided by the endowmentsof nature Give examples to show the development of comparative advantage bycertain countries. P70Comparative advantage is not a static concept. A country may develop a particular comparative advantage purely through its own actions, independent of the endowments of nature. Switzerland’s comparative advantage in watchmaking is a typical example.Unit 6 课后问答题答案1、Are there other bases for trade when there are no differences among countries in production conditions Mention some of the bases. P81〔1〕 Patterns of demand〔2〕 Economy of scale〔3〕 Innovation or style2. What is economy of scale What is the relation between economy of scale and trade P81 The cost advantages of large-scale production.Trade may occur out of economy economies of scale.3.What does the theory of international specialization seek to answer P81The theory of international specialization seeks to answer the question which countries will produce what goods, with what trade patterns among them.4.Will complete specialization occur in reality Why P82No. Because for strategic or domestic reasons, a country may continue to produce goods for which it does not have any advantage.5.What is tariff barriers What is a customs area and what is a customs union P82Tariff barriers are the most common form of trade restriction.Customs area usually coincides with the area of a country.A customs area extending beyond national boundaries to include two or more independent nations is called a customs union.6、What is most favoured nation treatment Is it a very special treatment Why P82The term most-favoured-nation treatment refers to a tariff treatment under which a county is required to extend to all signatories any tariff concessions granted to any participating country.MFN treatment is not relly special but is just normal trading status. It gives a country the lowest tariffs only within the tariff’s schedule, but it is still possible to have tariffs. 7.What is the most common form of non-tariff barriers Explain it in a few words.P83Quotas or quantitative restrictions are the most common form of non-tariff barriers.A quota limits the imports or exports of a commodity during a given period of time.8. What are the differences between visible trade and invisible trade Give a few examples of invisible trade. P83Visible trade involves the import and export of goods, while invisible trade involves the exchange of services between countries.Transportation service across national boundaries; insurance; tourism and immigrant remittance.9、Explain briefly the different kinds of tariffs. P82〔1〕Import duties are tariffs levied on goods entering an area〔2〕Export duties are taxes levied on goods leaving an area.〔2〕Drawback refers to duties paid on imported goods that are refunded if the goods are reexported.Uint 7 课后问答题答案1、What sort of risks can arise when goods are being moved from one place toanother If risks do occur, what consequences would they bring about P94〔1〕Lost or damaged〔2〕Delivery does not take place for some other reasonThe climate of confidence between parties may degenerate to the point where a law suit is brought.2. Why is it necessary to have Incoterms And what is the purpose of makingamendments and additions to Incoterms P94The prupose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade.In order to bring the rules in line with current international trade practices.3. Do you know anything about container transport Is it a revolutionary innovation in transportation techniques Give your reasons.Container transport is a revolutionary innovation.It greatly accelerates modern transport.4. Can you explain the word “negotiable〞in the phrase “negotiable transportdocument〞Negotiable here means that the transport document can be passed from person to person instead of money.5. What are the main characteristic of Incoterms 202X P95In the present 202X version of Incoterms the trade terms are presented in a new format which allows seller and buyer to follow a step-by-step process to determine their respective obligations.Further, under all terms, the respective obligations of the parties have been grouped under 10 headings where each heading on the seller’s side mirrors the position of the buyer with respect to the same subject matter.With respect to the division between the parties of duties, taxes and other official charges, as well as the costs of carrying out customs formalities, the terms explain for the sake of clarity how such costs are divided between the parties.6、What are the four different categories of terms in Incoterms 202X P96〔1〕The seller makes the goods available to the buyer at the seller’s own premises 〔2〕The seller I called upon to deliver the goods to a carrier appointed by the buyer 〔3〕The seller has to contract for carriage, but without assuming the risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch 〔4〕The seller has to bear all costs and risks needed to bring the goods to the country of destination7. How do you understand the first sentence of Paragraph 6 Try to put it into Chinese and then paraphrase it in English. P951990年修订通则的主要原因是使贸易术语能够适应日益广泛使用的电子数据交换系统。

高二英语全球经济发展单选题30题1.The growth of a country's economy is often measured by its GDP. Which of the following is NOT a factor that can increase GDP?A.Increase in consumptionB.Decrease in investmentC.Rise in exportsD.Expansion of government spending答案：B。

解析：增加消费、出口增加和政府支出扩大都能促进经济增长从而增加GDP。

而减少投资会抑制经济增长，不利于GDP 的增加。

本题主要考查对GDP 影响因素的理解以及对相关经济术语的掌握。

2.International trade plays a crucial role in the global economy. What is the main benefit of exporting goods for a country?A.Increase in domestic pricesB.Reduce unemployment rateC.Decrease in quality of productsD.Limit competition答案：B。

解析：出口商品可以增加就业机会，降低失业率。

出口一般不会导致国内价格上升、产品质量下降和限制竞争。

本题考查对国际贸易好处的理解。

3.Which of the following is an example of a primary sector in the economy?A.ManufacturingB.BankingC.AgricultureD.Telecommunications答案：C。

解析：农业属于第一产业。

制造业属于第二产业，银行业和电信业属于第三产业。

高二英语国际贸易单选题40题1.International trade mainly involves the exchange of goods and services between different _____.A.countriesB.citiesC.townsD.villages答案：A。

本题主要考查国际贸易的主体。

国际贸易主要是不同国家之间的商品和服务交换，所以答案是countries。

cities（城市）、towns（城镇）和villages（村庄）通常不是国际贸易的主要主体。

2.One of the important factors in international trade is _____.A.priceB.quantityC.qualityD.color答案：C。

在国际贸易中，质量是一个重要因素。

价格（（price）、数量（（quantity）和颜色（（color）虽然也有影响，但质量往往是决定能否长期合作的关键。

3.International trade can bring many benefits, such as _____.A.increased productionB.lower pricesC.better quality productsD.all of the above答案：D。

国际贸易可以带来很多好处，包括增加生产、降低价格和提供更好质量的产品。

4.The term “tariff” in international trade refers to _____.A.a tax on imports or exportsB.a subsidy for exportsC.a bonus for importsD.a discount on exports答案：A。

“tariff”在国际贸易中指的是进出口关税。

补贴出口是subsidy for exports；进口奖金不是一个常见的国际贸易术语；出口折扣是discount on exports。