What is international trade (definition)?

International Trade is usually referred to the exchange of goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). In 2010, the value of international trade achieved 19 trillion (current US) dollars, i.e. about 30% of the world GDP. That is, about one third of the produced goods and services are exchanged internationally around the world.

What does international trade talk about?

* Pattern of trade (trade model), the core subjects of trade theory are the pattern and volume of trade: which goods are traded by which countries, and how much of those goods are traded. These questions will be investigated by various international trade theories, mainly, Ricardian approach, H-O-V theory, and monopolistic competition models.

* Gains from trade: Why should nations exchange their products and services? Who is gainer and who is loser, if there is any? Partial answers from any trade theory will be discussed, in order to find some policy oriented results.

* Protectionism: Should we protect our industries from international competition? Using what selection criteria? What may be economic consequences of trade protectionism or trade liberalization?

* Free Trade Agreements (FTAs): What does mean a FTA? How to measure its impact on trade between countries: members and non-members? What are trade potentials of a hypothetical FTA (to be admitted)? What are required criteria to benefit from a special FTA? What are policies to be considered?

* International policy coordination: To where does the world go in international trade relations? What are related international organizations, and what role they play?

* Trade and development: What are the impact of trade on industrial specialization? Industrialization? Economic growth? Poverty? Income discrimination? Could be international trade considered as a development engine for less developed countries (special cases)?

* Trade and labour economics: What are trade effects on employment, wages, and wage inequality?

*  Trade and political economy: How trade affect the income distribution within a country? How trade may affect the political regimes? Are trade pro-democracy or anti-democracy?

*   And some other interdisciplinary topics....

What is its importance?!

According to "Global Policy Forum", till 2030, 60% of the world economy be exchanged internationally. That is the share of the rest of the world in each national economy will be more than the share of his own domestic economy. Many current evidences are in line with this prediction. For example, either country in the world is now member of, at least, one international trade agreement. In such circumstances, domestic economy will be affected more and more by the world economy. That is, the level of income, employment, wages, growth, and development in a country is not only a result of its domestic policies, but also determined by its position in the world economy. No market is spared by this fact. Consequently, a good knowledge of International Economics becomes vital for any economist. Some times, a good economic policy regarding his international relations is more beneficial than any policy arranging domestic economic issues of that country.






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Sharif University of Technology

Graduate School of Management and Economics

Course: International Trade