What is International Economics about? The Gains from Trade Many people are skeptical about importing goods that a country could produce for itself. When countries sell goods and services to one another, all countries benefit Trade and income distribution International trade might hurt some groups within nations Trade, technology, and wages of high and low-skilled workers What is International Economics About? The Pattern of Trade(who sells what to whom? Climate and resources determine the trade pattern of several goods In manufacturing and services the pattern of trade is more subtle International difference in labor productivity -The relative supplies of national resources such as capital, labor, and land on one side and the relative use of these factors in the production of different goods on the other -A substantial random component There are two types of trade > Interindustry trade depends on differences across countries >>Intraindustry trade depends on market size and occurs among similar countries Copyright C 2003 Pearson Education, Inc Slide 1-4Copyright © 2003 Pearson Education, Inc. Slide 1-4 ▪ The Gains from Trade • Many people are skeptical about importing goods that a country could produce for itself. • When countries sell goods and services to one another, all countries benefit. • Trade and income distribution – International trade might hurt some groups within nations. – Trade, technology, and wages of high and low-skilled workers. • What is International Economics About? – The Pattern of Trade (who sells what to whom?) – Climate and resources determine the trade pattern of several goods. – In manufacturing and services the pattern of trade is more subtle. -International difference in labor productivity. -The relative supplies of national resources such as capital, labor, and land on one side and the relative use of these factors in the production of different goods on the other. -A substantial random component. – There are two types of trade: » Interindustry trade depends on differences across countries. » Intraindustry trade depends on market size and occurs among similar countries. What is International Economics About?