International economics

INTERNATIONAL ECONOMICS

Esame:

Poche risposte multiple

• esercizio su modello economico

• almeno un paio di domande aperte

•

Le imprese operano in un contesto globalizzato.

Flussi di scambi e commercio internazionale (trade patterns: direzioni

attraverso cui il commercio internazionale ha luogo).

Il mercato esportatore dell’Italia sono i paesi dell’UE principalmente.

Natura degli scambi: scambio di prodotti appartenenti a settori

• merceologici diversi (commercio

intersettoriale).

La maggior parte degli scambi tra paesi sviluppati avviene in ambito intra

• settoriale, cioè scambiamo un bene che appartiene allo stesso settore

industriale anche se sono profitti differenziati (di qualità diversa)

Modello gravitazionale

Adam Smith nel 1776 parla nel “Commercio delle nazioni” del driver del

• commercio internazionale;

Ricardo invece inventa il modello del vantaggio comparato;

• Heckscher Ohlin e Ricardo ci permettono di spiegare solo gli scambi

• intersettoriali; per quelli intrasettoriali serve il modello di Krugman che

colloca l’impresa sul mercato internazionale

FDIs —> IDE in italiano: investimenti diretti all’estero

Esempi di politiche di commercio internazionale sono i dazi di Trump sulle

importazioni

Deficit commerciale —> le importazioni di un paese superano le esportazioni in

un determinato periodo, determinando una bilancia commerciale negativa;

INTERNATIONAL TRADE

Scambio di beni e servizi tra paesi diversi; lo scambio di beni avviene quando

esportiamo e importiamo un bene che è tangibile e immagazzinabile, mentre lo

scambio di servizi avviene quando i beni che ci scambiamo sono intangibili,

quindi non immagazzinabili.

Lo scambio internazionale di beni è facilmente verificabile; quello di servizi no:

guardare un film su Netflix è importare un servizio senza rendersene conto;

avere un conto corrente come ING che è olandese è essere un importatore di

servizi bancari.

L’importazione di servizi sta diventando sempre più importante nel panorama

del commercio internazionale (rappresenta ⅕ del volume degli scambi

internazionali); tuttavia, ci sono servizi che per loro natura intrinseca non sono

importabili o non possono essere importati.

EXPANSION OF INTERNATIONAL TRADE

Collocare singoli pezzi della mia produzione nei paesi dove costa meno e poi

assemblare in casa madre le varie componenti del prodotto; l’industria

dell’abbigliamento per esempio i bottoni, le etichette sono fatti in Cina, i ricami

in India, i tessuti tra India e Pakistan e poi tutti assemblati in Italia.

Tutte queste attività sono di off shoring (spostano una parte del mio processo

produttivo nei paesi dove mi costa meno produrre) con flussi di scambio

intermedi.

La crescita del commercio internazionale (globalizzazione) è causata dal fatto

che dalla fine della Seconda guerra mondiale si ritenesse che la crescita

economica fosse sinonimo di pace che portò alla nascita del WTO (world trade

organization) per favorire il commercio internazionale mediante la riduzione

delle tariffe (liberalizzazione del commercio).

Quando la Cina entra nel WTO nel 2001 c’è la rimozione di alcuni limiti ed essa

entra come player nel commercio internazionale cioè esporta senza limiti

(questo fatto è visto sia in modo positivo che negativo perché ha distrutto la

competitività)

GDP mondo: PIL

2007-8: crisi mondiale mutui subprime* (mutui a persone con un basso credit

score); è la prima grande crisi finanziaria con contagio internazionale e con

sviluppo dell’ICT.

*I subprime sono prestiti o mutui erogati a clienti definiti “ad alto rischio”. Sono

chiamati prestiti subprime perché a causa delle loro caratteristiche e del

maggiore rischio a cui sottopongono il creditore sono definiti di qualità non

primaria, ossia inferiore ai debiti primari (prime) che rappresentano dei prestiti

erogati in favore di soggetti con una storia creditizia e delle garanzie

sufficientemente affidabili.

2020: lockdown —> blocco economia con picco negativo che viene recuperato

subito quando si riapre la possibilità di esportare

La crescita dell’esportazione è tale per cui cresce a un tasso più alto del GDP e

della crisi che ci dice che le nostre economie sono sempre più riconnesse.

Stati Uniti e Cina esportano e importano miliardi di dollari di beni e servizi; la

misura da tenere presente è anche il rapporto tra esportazioni e PIL

Y= C+I+G+(X-IM)

G —> spesa pubblica

X-IM > 0 esportatore netto (i beni che produciamo attraggono reddito straniero)

X-IM < 0 importatore netto

Gli Stati Uniti sono un paese importatore netto; i dazi scoraggiano le

importazioni, quindi un paese con un disavanzo della bilancia commerciale

crescente. I dazi sono in linea con l’idea di ridurre la bilancia commerciale,

rendendolo meno negativo.

Il dollaro per ridurre le importazioni deve essere più debole

1$ = 1€ parità perfetta

1$ = 50 cent €

deprezzare il dollaro: con un dollaro si comprano meno beni

se fluttua il tasso di cambio sul mercato internazionale e il potere di acquisto

sul mercato internazionale si riduce, per comprare la stessa quantità di beni

stranieri, devo spendere più reddito e quindi sceglieremo di comprare meno.

Gli scambi sul mercato internazionale generano il 25% della ricchezza mondo;

nei paesi come Singapore la ricchezza è più del 100%, mentre gli Stati Uniti sono

quelli con la minore dipendenza dal commercio internazionale pur avendo la

bilancia commerciale più negativa al mondo (X-IM negli Stati Uniti è quella più

alta al mondo). Hanno un deficit gigante ma è solo il 10% della ricchezza annua.

Quelli che esportano di più sono quelli con un mercato interno più piccolo

La dipendenza è inversamente proporzionale alla dimensione del mercato

interno

INTERNATIONAL TRADE

The term international economy refers to the exchange of both goods and

services in international scope*(international trade)

*Ambito

Goods: tangible and storable (something you can drop on your toe)

Services: intangible and non-storable (something you cannot drop on your toe)

• Trade in services accounts for approximately one fifth of global trade

• The two are often intertwined

EXPANSION OF INTERNATIONAL TRADE

There are many reasons for the expansion of world trade:

• Transportation: the container shipping revolution

• Technology: information and communication technology (ICT)

• Tariffs: trade liberalization

• Entry of China: market reforms beginning in the late 1970s; joining the

World Trade Organization (WTO) in 2001

The international economy deals with the interaction between countries

through:

Exchanges of goods and services

• Monetary flows

• Investment flows

•

It can be divided into two sub-sets:

a. Study of international trade

It focuses primarily on the real transactions in the international economy,

that is, on those transactions that involve a physical movement of goods or a

tangible commitment of economic resources

b. Study of the international monetary economy

International monetary analysis focuses on the monetary side of the

international economy, that is, on financial transactions such as foreign

purchases of U.S. dollars.

It is an ancient subject, but it continues to increase its relevance with the

intensification of ties* between countries.

*Legame

ADAM SMITH

Adam Smith is the first economist who, in his book, says that wealth is given by

labor productivity which grows with exchanges, which must be free (and not

from inflation: "what brings inflation does not bring wealth").

According to him, England was wrong to put restrictions on trade with the

American colonies, which then rebelled and had not come to the concept of

comparative advantage, but only to the absolute advantage (which leads to

some paradoxes).

The international trade of the USA, in relation to the size of the economy

national, has tripled in the last 40 years thanks to the collapse of the USSR

(which made a good part of the world closed to international trade).

During the following years there were collapses due to crises (during the

pandemic the imports and exports have decreased).

Compared to the USA, other countries are even more dependent on

international trade.

The weight of the USA in world trade is very high, but world trade weights less in

the USA than in Italy (in proportion, in Italy it weighs about 30% while in the USA

it is about 6%).

For Italy, the main destination countries are Germany and France due to a

geographical matter, followed by the USA and others European countries.

TRADE THEORY THEMES

• Why do countries trade?

• What are the:

source of gains from trade?

✓ patterns of trade?

✓ implications of trade on different segments of the population?

✓ trade policy instruments to be adopted

✓

• Ricardo, Neoclassical, Heckscher-Ohlin models, Post Heckscher-Ohlin

model

COMPARATIVE ADVANTAGE

International Trade is driven by trade gains based on comparative advantage

Countries can specialize in production, while consuming many goods and

services through trade

Trade benefits countries by allowing them to export goods made with relatively

abundant resources and imports goods made with relatively scarce resources.

When countries specialize, they may be more efficient due to larger-scale

production.

Countries may also gain by trading current resources for future resources

(international borrowing and lending) and due to international migration

(outside the scope of our course!)

Consumption Gains: consumers can access goods at lower international prices

(even without production efficiency gains in their countries)

PATTERNS OF TRADE

Economists cannot discuss the effects of international trade or recommend

changes in government policies toward trade with any confidence unless they

know their theory is good enough to explain the international trade that is

actually observed. As a result, attempts to explain the pattern of international

trade—who sells what to whom — have been a major preoccupation of

international economists.

The pattern of trade describes who sells what to whom.

• Differences in climate and resources explain why Brazil exports coffee

and Saudi Arabia exports oil.

• Much of the pattern trade of trade is more subtle, however. Why does

Japan export automobiles, while the U.S. exports aircraft?

• Why some countries export certain products can stem from differences

in: Labor productivity

✓ Relative supplies of capital, labor and land and their use in the

✓ production of different goods and services

WHY THE RESISTANCE? INCOME DISTRIBUTION EFFECTS

Trade is predicted to benefit countries as a whole in several ways, but trade may

harm particular groups within a country.

• International trade can harm the owners of resources that are used

relatively intensively in industries that compete with imports.

• Trade may therefore affect the distribution of income within a country.

LECTURE 2

THE GRAVITY MODEL AND WORLD TRADE

This is the first very simple model that offers the explanation of trade flows; he

reasons why we observe US exchanges in goods and services with China or with

European Union countries.

Using the so-called experimental method, we test the hypothesis below the

gravity model based on real data: we’ll use trade data on U.S., and we check

wether the gravity model provides a good fit with the data.

In the end of the next lecture, we are going to discuss possible extension of the

gravity model to provide the better fit with the data we observe.

FDI: foreign direct investment, significant component of trade flows nowadays

WORLD TRADE EVOLUTION

This is an historical data series about exports for specific countries divided by

the level of the value.

The European Union appears to be the most important area for both importing

and exporting at least in the past 5 years.

China (red line) is a significant exporter and in the past 5 years (15% of the world

trades in goods services); it’s also becoming an importer and has a positive

currency account E>IM.

US exports above 10%; on the contrary, the US importations accounts for

something around 15% (net importer).

Negative currency account E<IM (net importer imports more Thant the volume

of exports)

Y —> Total export of a specific country divided by the world level of that variable.

The UE in 2005 accounts for about 40% good exports which explain a significant

share of the UE GDP

Other UE countries: a volume of something below 1/3 of world’s exports come

from the euro area.

The European Union is losing its edge (margine) over world exports since the

shares has been constantly decreasing in the past 10 years.

East Asia increased the regional share from 26% close to 31%) and slightly

Middle East, which are winning the competition on international market

This is another type of table that shows most recent data on exports.

WHO TRADES WITH WHOM (HOW A COUNTRY TRADES WITH AN ANOTHER

COUNTRY)?

About ⅓ of world’s output is either exporter or importer (sell on the national

boarder).

The 5 largest trading partners with the U.S. in 2012 were Canada, China, Mexico,

Japan, and Germany

The largest 15 trading partners with the U.S. accounted for 69% of the value of

U.S. trade in 2012

Canada is the most important trading partner of the U.S. and Mexico ranks

second. More that 30% of the value of exports generated by the U.S. goes to

trading partners (Canada and Mexico) which are very closed to the US.

The share of exports declines immediately.

• U.S. imports 413.8 and exports 327.4 billion

• We are importing less from China that the volume we export towards

China.

ITALY: A CLOSER LOOK

8 out of the first 10 are European countries (only U.S. and China are not).

The explanation of trade flows is explained by the gravity model. The flow tends

to be correlated positively with valuables referred to distance (I tend to export or

import from/to a country which is geographically close to me);

However, we observe also that Italy exports to U.S. and China although they

aren’t close to Italy.

THE GRAVITY MODEL

Trade flows and their magnitude can be estimated by means of gravity model;

such a model is named after the Newton’s law of universal gravitation (Isaac

Newton — 1642-1727)

2 important variables to explain gravity in the universe

Mass of the planet (size of the planet)

✓ Distance of the planets

✓

“two bodies in the universe attract each other with a force that is directly

proportional to the product of their masses and inversely proportional to the

square of the distance between them”

We translate this model into an economic model —> by analogy it is the same of

what gravity law and says that bilateral trade between 2 countries can be

explained using 2 variables:

1. Same role of the mass of the planet (economic size proxies by GDP )

2. distance which refers to geographical distance (km)

Italy will trade more with those countries with a high GDP, and

➔ which are at a closer distance.

Major hypothesis:

Economic size of countries: the higher is the GDP of the foreign country,

• the higher will be the volume exports

Three of the top 15 U.S. trading partners are the largest European

economies: Germany, the United, Kingdom, and France. United States

trades more heavily with these three European countries than with others

because these are the three largest European economies. That is, they

have the highest values of gross domestic product (GDP), which

measures the total value of all goods and services produced in an

economy.

There is a strong empirical relationship between the size of a country’s

economy and the volume of both its imports and its exports.

Each European country’ s share of U .S. trade with Europe is roughly equal

to its share of European GDP:

Distance refers to geographical distance (km)

• All estimated gravity models show a strong negative effect of distance on

international trade; typical estimates say that a 1 percent increase in the

distance between two countries is associated with a fall of 0.7 to 1

percent in the trade between those countries. This drop partly reflects

increased costs of transporting goods and services.

Economists also believe that less tangible factors play a crucial role: trade

• tends to be intense when countries have close personal contact, and this

contact tends to diminish when distances are large.

Other factors: cultural ties do have a role on explaining trade flows,

• multinational companies that open branches in foreign countries, …

Positive relationship with GDP and negative with distance

Tij —> value of trades between countries i and j

A —> constant

Trade volume is the product between GDP divided by the distance between

country i and country j

If GDP increases, trade increases

AN EMPIRICAL QUESTION

How the gravity models fit trade data?

Italy is about 12% contribution towards EU GDP

UK about 15%

Germany about 20%

Total trade volume between US and European Union.

The gravity model is somehow satisfying.

There are other factors that affect trades

Any tariff affects the UE in symmetrical manner. The choice of tariff has to be

taken together by the UE.

This chart reveals an interesting relationship between European countries’

economic size and their trade importance to the United States.

Key Observations:

The diagonal line represents proportionality - if a country’s share of U.S.- EU

trade exactly matched its share of EU GDP; it would fall on this line.

Above the line (over-traders):

Germany is the standout, representing about 21% of EU GDP but

• accounting for roughly 24