Chapter 1 An Introduction to the World Economy and Trade .... (1)
1. 1 The Development Situation ................... (1)
1. 1. 1 World Trade Volumes and World Trade Composition ......... (1)
1. 1. 1. 1 World Trade Volumes ................... (1)
1. 1. 1. 2 The World Trade Composition ................ (2)
1. 1. 2 Main Trade Participants .................... (4)
1. 1. 2. 1 Total Goods and Services Imports and Exports ......... (4)
1. 1. 2. 2 Goods and Services Imports and Goods and Services Exports ... (5)
1. 1. 3 Trade Situation in China and the U. S. .............. (7)
1. 1. 3. 1 Foreign Trade in China .................. (8)
1. 1. 3. 2 Foreign Trade in the U. S. ................ (11)
1. 2 Features of World Economy and Trade .............. (15)
1. 2. 1 The Growth of World Economy and Trade Have Been Slowing Down .. (15)
1. 2. 2 Trade Participants Differentiated Significantly ........... (16)
1. 2. 3 More High-Tech Products and Information Products Are Traded .... (18)
1. 2. 4 The Global Value Chain Is Under Reconstruction, the Cross-Border E-Commerce Is Growing Rapidly ................ (19)
1. 2. 5 The Trade Protectionism Has Been Rising ............ (20)
1. 2. 6 Developing and Middle-Income Countries Have Been Increasingly
Active .......................... (20)
Part Ⅰ International Trade Theory
Chapter 2 Mercantilismꎬ the Theory of Absolute Advantage, and the Theo-ry of Comparative Advantage .............. (25)
2. 1 Mercantilism ......................... (25)
2. 1. 1 Main Thoughts of Mercantilism ................. (25)
2. 1. 2 Main Policies of Mercantilism ................. (25)
2. 1. 3 Limitations of Mercantilism .................. (26)
Reading 2. 1 .......................... (26)
2. 2 The Theory of Absolute Advantage ............... (27)
2. 2. 1 Basic Assumptions ...................... (28)
2. 2. 2 Absolute Advantage ..................... (28)
2. 2. 3 The Theory of Absolute Advantage ............... (29)
2. 2. 4 Limitations of the Theory of Absolute Advantage .......... (30)
Reading 2. 2 .......................... (31)
2. 3 The Theory of Comparative Advantage .............. (32)
2. 3. 1 Basic Assumptions ...................... (32)
2. 3. 2 Opportunity Cost ...................... (32)
2. 3. 3 Comparative Advantage .................... (32)
2. 3. 4 Theory of Comparative Advantage ................ (34)
2. 3. 5 Limitations of the Theory of Comparative Advantage ........ (35)
Reading 2. 3 .......................... (35)
2. 4 Determining the Relative Price with Free Trade .......... (36)
Reading 2. 4 .......................... (40)
Chapter 3 The Standard Trade Model ............... (41)
3. 1 Production Possibility Frontier (PPF) .............. (41)
3. 1. 1 The Shape of PPF ...................... (41)
3. 1. 2 Inefficient, Maximum and Impossible Combinations ........ (43)
3. 1. 3 The Shift of PPF ...................... (44)
3. 1. 4 The Marginal Rate of Transformation (MRT) ........... (46)
Supplementary Content 3. 1: A Derivation of PPF (Constant Costs) ..... (47)
Reading 3. 1 .......................... (50)
3. 2 Community Indifference Curves (CIC) .............. (51)
3. 2. 1 Definition ......................... (51)
3. 2. 2 Characteristics of Community Indifference Curves ......... (52)
3. 2. 3 The Marginal Rate of Substitution (MRS) ............ (54)
3. 3 Equilibrium in Isolation ..................... (54)
3. 4 Production, Consumption, and the Relative Price ......... (56)
3. 4. 1 Production and the Relative Price ............... (56)
3. 4. 2 Consumption and the Relative Price ............... (57)
3. 5 The Trade Pattern and Trade Gain ............... (58)
3. 5. 1 Constant Costs ....................... (59)
3. 5. 2 Increasing Costs ....................... (60)
3. 6 Equilibrium with Trade ..................... (62)
3. 7 Incomplete Specialization .................... (63)
3. 8 Consumer Preferences and International Trade .......... (64)
Reading 3. 2 .......................... (66)
Chapter 4 Export Supply Curves, Import Demand Curves, Offer Curves, and the Terms of Trade ................ (67)
4. 1 Export Supply Curves ..................... (67)
4. 2 Import Demand Curves ..................... (68)
4. 3 The Partial Equilibrium with Trade ................ (70)
4. 4 Offer Curves and the General Equilibrium Analysis ......... (71)
Reading 4. 1 .......................... (74)
Reading 4. 2 .......................... (75)
4. 5 Partial Equilibrium and General Equilibrium Analyses ........ (76)
4. 6 The Terms of Trade ...................... (78)
Reading 4. 3 .......................... (79)
Chapter 5 Factor Endowments and the Heckscher-Ohlin Theory .. (80)
5. 1 Assumptions of the H-O Model ................. (80)
5. 2 Isoquants ........................... (81)
5. 2. 1 Definition and Derivation ................... (81)
5. 2. 2 Characteristics of Isoquants .................. (81)
5. 2. 3 The Marginal Rate of Technical Substitution (MRTS) ....... (83)
Supplementary Content 5. 1: Two Special Cases of Isoquant Curves ...... (84)
5. 2. 4 The Relationship Between the Factor Input Ratioꎬ Factor Pricesꎬ and
Production Costs ...................... (85)
5. 3 Factor Intensity ........................ (86)
5. 4 Factor Abundance ....................... (87)
5. 5 Factor Intensityꎬ Factor Abundanceꎬ and the Shape of PPF .... (88)
5. 5. 1 The Shape of PPFs in Home and Foreign ............ (88)
5. 5. 2 The Relative Location of PPFs in Home and Foreign ........ (89)
5. 6 The H-O Model and the H-O Theorem .............. (90)
5. 6. 1 The Main Content of H-O Theorem ............... (91)
5. 6. 2 A Graphical Illustration of the H-O Theorem ........... (91)
Reading 5. 1 .......................... (93)
5. 7 The H-O-S Theorem ...................... (93)
Supplementary Content 5. 2: International Factor Mobility ......... (95)
5. 8 The Effect of Trade on Income distribution ............ (97)
Reading 5. 2 .......................... (98)
Reading 5. 3 .......................... (98)
5. 9 The Leontief Paradox and Its Explanations ............ (99)
5. 9. 1 The Leontief Paradox .................... (99)
5. 9. 2 Explanations of the Leontief Paradox .............. (100)
5. 9. 2. 1 An Explanation from the Perspective of Theoretical Base .... (100)
5. 9. 2. 2 An Explanation from the Perspective of Human Capital .... (100)
5. 9. 2. 3 An Explanation from the Perspective of R&D ........ (100)
5. 9. 2. 4 An Explanation from the Perspective of Factor Intensity
Reversal ....................... (101)
5. 9. 2. 5 An Explanation from the Perspective of Tariff Policies ..... (101)
5. 9. 2. 6 An Explanation from the Dynamic Perspective ........ (101)
Chapter 6 Economies of Scaleꎬ Imperfect Competitionꎬ and International
Trade ......................... (103)
6. 1 Economies of Scale and International Trade ........... (103)
6. 1. 1 Returns to Scale and Economies of Scale ............ (103)
6. 1. 2 Economies of Scale and Production Possibilities Frontier ...... (104)
6. 1. 3 Economies of Scale and External Economies ........... (104)
Reading 6. 1 .......................... (105)
6. 1. 4 Economies of Scaleꎬ the International Trade Patternꎬ and Gains from
Trade .......................... (106)
Supplementary Content 6. 1: Cases of External and Internal Economies of
Scale .................. (107)
6. 2 Imperfect Competition and International Trade .......... (108)
6. 2. 1 Imperfect Competition .................... (108)
Reading 6. 2 .......................... (108)
6. 2. 2 The Intra-Industry Trade Index (IIT) ............. (109)
Reading 6. 3 .......................... (110)
6. 3 Dynamic Technological Differences and International Trade .... (111)
6. 3. 1 The Technological Gap Model ................. (112)
Reading 6. 4 .......................... (112)
6. 3. 2 The Product Life-Cycle Model ................ (114)
6. 4 The New Economic Geography Theory and International Trade ... (115)
Reading 6. 5 .......................... (116)
6. 5 Environment Standards and International Trade .......... (117)
Reading 6. 6 .......................... (118)
Chapter 7 The New-New Trade Theory .............. (121)
7. 1 The New-New Trade Theory and Its Development ........ (121)
7. 1. 1 The Trade Model with Heterogeneous Firms ........... (121)
7. 1. 2 The Endogenous Boundary Model of Firms ............ (122)
7. 2 What`s New in the New-New Trade Theory? A Comparison of the Traditional Trade Theory, the New Trade Theory, and the New-New Trade Theory ........................ (123)
7. 2. 1 Research Subjects Are Different ................ (123)
7. 2. 2 Theoretical Assumptions Are Different ............. (124)
7. 2. 3 Theoretical Cores Are Different ................ (125)
7. 2. 4 Sources of Trade Benefits and Trade Policies Are Different ..... (125)
7. 3 The Value of the New-New Trade Theory ............ (126)
7. 4 Limits of the New-New Trade Theory .............. (126)
7. 5 Policy Implications of the New-New Trade Theory ........ (127)
Reading 7. 1 .......................... (128)
Chapter 8 Economic Growth and International Trade ....... (129)
8. 1 Growth of Factors of Production and Economic Growth ...... (129)
8. 1. 1 Capital and Labor Grow Simultaneously and K/ L Is Unchanged ... (130)
8. 1. 2 Capital Grows and Labor Is Unchanged ............. (131)
8. 1. 3 Labor Grows and Capital Is Unchanged ............. (132)
8. 1. 4 Capital and Labor Grow Simultaneously and K/ L Rises ...... (134)
8. 1. 5 Capital and Labor Grow Simultaneously and K/ L Drops ...... (136)
Reading 8. 1 .......................... (138)
8. 2 Technical Progress and Economic Growth ............ (139)
8. 3 Economic Growth and International Trade ............ (143)
8. 3. 1 Economic Growthꎬ Consumption Changesꎬ and Trade Scale ..... (143)
8. 3. 2 Economic Growth and International Trade (The Small-Country Case) .......................... (146)
8. 3. 3 Economic Growth and International Trade (The Large-Country Case) .......................... (148)
8. 3. 4 Immiserizing Growth .................... (151)
Reading 8. 2 .......................... (152)
Part Ⅱ International Trade Policy
Chapter 9 Tariffs ......................... (155)
9. 1 Definition and Classification of Tariffs .............. (155)
9. 1. 1 Tariffs Classified by Commodity Flows ............. (155)
9. 1. 1. 1 Import Duty ...................... (155)
9. 1. 1. 2 Export Duty ...................... (156)
9. 1. 1. 3 Transit Duty ...................... (156)
9. 1. 2 Tariffs Classified by Collection Methods ............. (156)
9. 1. 2. 1 Ad Valorem Tariff ................... (156)
9. 1. 2. 2 Specific Tariff ..................... (156)
9. 1. 2. 3 Compound Tariff .................... (156)
9. 1. 2. 4 Alternative Tariff .................... (157)
9. 1. 2. 5 Sliding Tariff ..................... (157)
9. 1. 3 Tariffs Classified by Purposes ................. (157)
9. 1. 3. 1 Revenue Tariff ..................... (157)
9. 1. 3. 2 Protective Tariff .................... (157)
9. 1. 4 Tariffs Classified by Differential Treatments ........... (157)
9. 1. 4. 1 Import Surtax ..................... (157)
9. 1. 4. 2 Variable Levy ..................... (158)
9. 1. 4. 3 Preferential Duty .................... (158)
9. 1. 4. 4 Generalized Preferential Duty ............... (158)
9. 2 Effects of Import Duties (A Small-Country Case) ........ (158)
9. 3 Effects of Import Duties (A Large-Country Case) ........ (163)
9. 4 Effects of Import Duties on the Export Country .......... (166)
9. 4. 1 A Small-Country Case .................... (166)
9. 4. 2 A Large-Country Case .................... (166)
9. 5 Nominal and Effective Rates of Protection ............ (167)
9. 5. 1 Nominal Rate of Protection .................. (168)
9. 5. 2 Effective Rate of Protection .................. (168)
Reading 9. 1 .......................... (169)
Chapter 10 Export Subsidies ................... (172)
10. 1 The Definition of Export Subsidy ................ (172)
10. 2 Effects of Export Subsidies (A Small-Country Case) ...... (172)
10. 3 Effects of Export Subsidies (A Large-Country Case) ...... (174)
10. 4 Effects of Export Subsidies on the Import Country ........ (176)
10. 4. 1 A Small-Country Case ................... (176)
10. 4. 2 A Large-Country Case ................... (176)
Reading 10. 1 ......................... (177)
Chapter 11 Non-Tariff Trade Barriers .............. (180)
11. 1 Green Barriers, Technical Barriers, and Antidumping Barriers ... (180)
11. 1. 1 Green Barriers ...................... (180)
Reading 11. 1 ......................... (180)
Reading 11. 2 ......................... (182)
11. 1. 2 Technical Barriers ..................... (182)
Reading 11. 3 ......................... (183)
11. 1. 3 Antidumping Barriers ................... (184)
Reading 11. 4 ......................... (185)
11. 2 Other Forms of Non-Tariff Trade Barriers ............ (185)
11. 2. 1 Licenses and Quotas .................... (185)
11. 2. 2 Customs & Administrative Entry Procedures .......... (186)
11. 2. 3 Import Prohibition ..................... (189)
Reading 11. 5 ......................... (189)
11. 2. 4 Discrimination Against Imported Products ........... (189)
Reading 11. 6 ......................... (190)
11. 2. 5 Export Restrictions .................... (190)
11. 3 Characteristics of Non-Tariff Trade Barriers ........... (191)
11. 4 Effects of Non-Tariff Trade Barriers on Developing Countries and
Developing Countries Countermeasures ............ (192)
11. 4. 1 Effects of Non-Tariff Trade Barriers on Developing Countries .... (192)
11. 4. 2 Developing Countries Countermeasures ............ (193)
11. 4. 2. 1 Innovate Technologies and Improve the Quality of Goods and Services ....................... (193)
11. 4. 2. 2 To Be Consistent with International Standards and Cooperate Actively
with the Rest of World ................. (193)
11. 4. 2. 3 Fully Understand the Importing Markets and Local Policies .. (193)
11. 4. 2. 4 Expand Domestic Demand and Reduce the Dependence on the International Trade .................. (194)
11. 4. 2. 5 Protect National Legitimate Rights and Interests ....... (194)
Chapter 12 Global and Regional Economic Integration ...... (195)
12. 1 Global and Regional Economic Integration Organizations ..... (195)
12. 1. 1 World Trade Organization (WTO) .............. (195)
12. 1. 2 European Union (EU) ................... (196)
12. 1. 3 North American Free Trade Agreement (NAFTA) ........ (197)
Reading 12. 1 ......................... (197)
12. 1. 4 Asia-Pacific Economic Cooperation (APEC) .......... (198)
12. 1. 5 Association of Southeast Asian Nations (ASEAN) ........ (199)
12. 1. 6 Organisation for Economic Co-operation and Development (OECD) . (200)
12. 1. 7 BRICS ......................... (200)
12. 1. 8 The Belt and Road (B&R) ................. (201)
Reading 12. 2 ......................... (202)
12. 2 The Trend of Global and Regional Economic Integration ..... (203)
12. 2. 1 Regional Economic Integration Tends to Accelerate ........ (203)
12. 2. 2 The Cross-Regional Cooperation Develops Fast ......... (203)
12. 2. 3 FTAs Become the Main Form of Regional Economic Integration ... (204)
12. 2. 4 The Deep Cooperation Becomes the Mainstream ......... (204)
12. 2. 5 Developed Economies Play the Leading Role in Regional Economic Integration ........................ (204)
12. 2. 6 Developing Countries Accelerate the Regional Economic Integration Process ......................... (205)
12. 2. 7 The Asia-Pacific Region Has Become the Focus of Free Trade Area Construction ....................... (205)
Reading 12. 3 ......................... (206)
12. 3 Influences of Regional Economic Integration .......... (207)
12. 3. 1 On Trade Liberalization ................... (207)
12. 3. 2 On Global Capital Flows and Industrial Structure Optimization ... (207)
12. 3. 3 On Global Economic and Trade Orders and Operation Rules .... (208)
12. 3. 4 On the Global Trade Pattern ................. (208)
12. 4 Countermeasures by Developing Countries to Deal With Global and
Regional Economic Integration ................ (209)
12. 4. 1 Act Positively ...................... (209)
12. 4. 2 Adapt to Global and Regional Economic Integration Rules Quickly . (209)
12. 4. 3 Participate in the International Cooperation and International Trade Actively ......................... (210)
12. 4. 4 Strengthen the Awareness of Risk Prevention and Safeguard the National Economic and Financial Security ............... (210)
12. 4. 5 Appreciate Talents and Innovation .............. (210)
