Explique as formas e as classes do sistema de comércio internacional

O que é comércio internacional?
Se você entrar em um supermercado e comprar bananas da América do Sul, café brasileiro e uma garrafa de vinho sul-africano, você está experimentando os efeitos do comércio internacional.
O comércio internacional nos permite expandir nossos mercados tanto para bens como para serviços que, de outra forma, talvez não estivessem disponíveis para nós. É a razão pela qual você pode escolher entre um carro japonês, alemão ou americano. Como resultado do comércio internacional, o mercado contém uma maior concorrência e, portanto, preços mais competitivos, o que traz um produto mais barato para o consumidor.
O que é comércio internacional?
O comércio internacional é o intercâmbio de bens e serviços entre países. Este tipo de comércio dá origem a uma economia mundial, em que os preços, ou oferta e demanda, afetam e são afetados por eventos globais. A mudança política na Ásia, por exemplo, poderia resultar em um aumento no custo do trabalho, aumentando assim os custos de fabricação de uma empresa americana de tênis com base na Malásia, o que resultaria em um aumento no preço que você deve pagar para comprar os tênis em seu shopping local. Uma diminuição no custo do trabalho, por outro lado, resultaria em você ter que pagar menos pelos seus novos sapatos.
A negociação globalmente dá aos consumidores e países a oportunidade de serem expostos a bens e serviços não disponíveis em seus próprios países. Quase todos os tipos de produtos podem ser encontrados no mercado internacional: alimentos, roupas, peças sobressalentes, óleo, jóias, vinhos, estoques, moedas e água. Os serviços também são comercializados: turismo, banca, consultoria e transporte. Um produto que é vendido para o mercado global é uma exportação, e um produto que é comprado no mercado global é uma importação. As importações e exportações são contabilizadas na conta corrente de um país na balança de pagamentos.
Maior Eficiência de Negociação Globalmente.
O comércio global permite que os países ricos usem seus recursos, seja trabalhista, tecnológico ou de capital, de forma mais eficiente. Como os países são dotados de diferentes recursos e recursos naturais (terra, mão-de-obra, capital e tecnologia), alguns países podem produzir o mesmo bem de forma mais eficiente e, portanto, vendê-lo mais barato do que outros países. Se um país não pode produzir um item com eficiência, ele pode obter o item negociando com outro país que possa. Isso é conhecido como especialização no comércio internacional.
Vamos dar um exemplo simples. País A e País B produzem camisolas de algodão e vinho. O país A produz dez camisolas e seis garrafas de vinho por ano, enquanto o país B produz seis camisolas e dez garrafas de vinho por ano. Ambos podem produzir um total de 16 unidades. O país A, no entanto, leva três horas para produzir as dez camisolas e duas horas para produzir as seis garrafas de vinho (total de cinco horas). O país B, por outro lado, leva uma hora para produzir dez camisolas e três horas para produzir seis garrafas de vinho (total de quatro horas).
Mas esses dois países percebem que poderiam produzir mais focando os produtos com os quais eles têm uma vantagem comparativa. O país A começa a produzir apenas vinho e o país B produz apenas camisolas de algodão. Cada país agora pode criar uma produção especializada de 20 unidades por ano e comercializar proporções iguais de ambos os produtos. Como tal, cada país agora tem acesso a 20 unidades de ambos os produtos.
Podemos ver então que, para ambos os países, o custo de oportunidade de produzir ambos os produtos é maior do que o custo de especialização. Mais especificamente, para cada país, o custo de oportunidade de produzir 16 unidades de suéteres e vinhos é de 20 unidades de ambos os produtos (após a negociação). A especialização reduz seu custo de oportunidade e, portanto, maximiza sua eficiência na aquisição dos bens de que necessitam. Com a maior oferta, o preço de cada produto diminuirá, proporcionando assim uma vantagem ao consumidor final.
Note-se que, no exemplo acima, o País B poderia produzir vinho e algodão de forma mais eficiente que o País A (menos tempo). Isso é chamado de vantagem absoluta, e o País B pode ter isso por causa de um nível mais alto de tecnologia. No entanto, de acordo com a teoria do comércio internacional, mesmo que um país tenha uma vantagem absoluta em relação a outro, ele ainda pode se beneficiar da especialização.
Outros benefícios possíveis de negociação globalmente.
O comércio internacional não só resulta em maior eficiência, mas também permite que os países participem de uma economia global, incentivando a oportunidade do investimento direto estrangeiro (IED), que é a quantidade de dinheiro que os indivíduos investem em empresas estrangeiras e outros ativos. Em teoria, as economias podem, portanto, crescer de forma mais eficiente e podem se tornar mais facilmente competitivas participantes econômicos.
Para o governo receptor, o IDE é um meio pelo qual a moeda estrangeira e a experiência podem entrar no país. Isso aumenta os níveis de emprego e, teoricamente, leva a um crescimento no produto interno bruto. Para o investidor, o IED oferece expansão e crescimento da empresa, o que significa maiores receitas.
Free Trade vs. Protecionismo.
Tal como acontece com outras teorias, existem visões opostas. O comércio internacional tem duas opiniões contrastantes sobre o nível de controle colocado no comércio: livre comércio e protecionismo. O livre comércio é o mais simples das duas teorias: uma abordagem do laissez-faire, sem restrições ao comércio. A principal idéia é que os fatores de oferta e demanda, operando em escala global, assegurarão que a produção ocorra de forma eficiente. Portanto, nada precisa ser feito para proteger ou promover comércio e crescimento, porque as forças do mercado irão fazê-lo automaticamente.
Em contrapartida, o protecionismo sustenta que a regulamentação do comércio internacional é importante para garantir que os mercados funcionem adequadamente. Os defensores desta teoria acreditam que as ineficiências do mercado podem dificultar os benefícios do comércio internacional, e eles pretendem orientar o mercado de acordo. O protecionismo existe em muitas formas diferentes, mas as mais comuns são tarifas, subsídios e cotas. Essas estratégias tentam corrigir qualquer ineficiência no mercado internacional.
The Bottom Line.
À medida que abre a oportunidade de especialização e, portanto, um uso mais eficiente dos recursos, o comércio internacional tem o potencial de maximizar a capacidade de um país para produzir e adquirir bens. Os opositores do livre comércio global argumentaram, no entanto, que o comércio internacional ainda permite ineficiências que deixam as nações em desenvolvimento comprometidas. O que é certo é que a economia global está em um estado de mudança contínua e, à medida que ela se desenvolve, também devem todos os seus participantes.

Explique os formulários e as classes do sistema de comércio internacional
As nações são quase sempre melhores quando compram e vendem umas das outras.
Obrigado pelo seu pedido (foto: Paulo Whitaker / Reuters / Corbis)
Se houver um ponto em que a maioria dos economistas concordem, é que o comércio entre as nações torna o mundo melhor. No entanto, o comércio internacional pode ser uma das questões polêmicas mais controversas, tanto no país como entre os governos.
Quando uma empresa ou um indivíduo compra um bem ou um serviço produzido de forma mais barata no exterior, os padrões de vida em ambos os países aumentam. Existem outras razões pelas quais os consumidores e as empresas compram no exterior que também melhoram o produto, o produto pode atender melhor às suas necessidades do que as ofertas domésticas similares ou pode não estar disponível no mercado interno. Em qualquer caso, o produtor estrangeiro também se beneficia ao fazer mais vendas do que vendendo exclusivamente no seu próprio mercado e ao ganhar câmbio (moeda) que pode ser usado por si próprio ou outros no país para comprar produtos produzidos no exterior.
Ainda assim, mesmo se as sociedades como um todo ganharem quando os países trocam, nem todos os indivíduos ou empresas estão melhores. Quando uma empresa compra um produto estrangeiro porque é mais barato, ele beneficia o # 8212; mas o produtor doméstico (mais caro) perde uma venda. Normalmente, no entanto, o comprador ganha mais do que o vendedor doméstico perde. Exceto nos casos em que os custos de produção não incluem custos sociais como a poluição, o mundo está melhor quando os países importam produtos que são produzidos de forma mais eficiente em outros países.
Aqueles que se consideram afetados negativamente pela concorrência estrangeira há muito se opuseram ao comércio internacional. Pouco depois, economistas como Adam Smith e David Ricardo estabeleceram a base econômica para o livre comércio, o historiador britânico Thomas B. Macaulay estava observando os problemas práticos que os governos enfrentam para decidir se abraçar o conceito: o comércio livre, um dos maiores as bênçãos que um governo pode conferir a um povo, são quase todos os países impopulares. & # 8221;
Dois séculos depois, os debates comerciais ainda ressoam.
Por que os países trocam.
Em um dos conceitos mais importantes em economia, Ricardo observou que o comércio foi conduzido por custos comparativos e não absolutos (de produzir um bom). Um país pode ser mais produtivo do que outros em todos os bens, no sentido de que ele pode produzir qualquer bom usando menos insumos (como capital e mão-de-obra) do que outros países precisam produzir o mesmo bem. O intuito de Ricardo era que esse país ainda se beneficiaria da negociação de acordo com sua vantagem comparativa, exportando produtos em que sua vantagem absoluta era maior e importando produtos nos quais sua vantagem absoluta era comparativamente menor (mesmo que ainda assim positivo).
Vantagem comparativa.
Mesmo um país que seja mais eficiente (tem vantagem absoluta) em tudo o que faz beneficiar-se-á do comércio. Considere um exemplo:
País A: Uma hora de trabalho pode produzir três quilogramas de aço ou duas camisas. País B: Uma hora de trabalho pode produzir um quilograma de aço ou uma camisa.
O país A é mais eficiente em ambos os produtos. Agora, suponha que o Country B ofereça a venda do país A duas camisas em troca de 2,5 quilos de aço.
Para produzir essas duas camisas adicionais, o País B desvia duas horas de trabalho de produção de aço (dois quilogramas). O país A desvia uma hora de trabalho de produzir (duas) camisas. Ele usa essa hora de trabalho para, em vez disso, produzir três quilogramas adicionais de aço.
No geral, o mesmo número de camisas é produzido: o País A produz duas camisas menos, mas o País B produz duas camisas adicionais. No entanto, mais aço já é produzido do que antes: o país A produz três quilogramas adicionais de aço, enquanto o país B reduz sua produção de aço por dois quilogramas. O quilograma extra de aço é uma medida dos ganhos do comércio.
Embora um país seja duas vezes mais produtivo que seus parceiros comerciais na confecção de roupas, se for três vezes mais produtivo na fabricação de aço ou na construção de aviões, ele se beneficiará de fazer e exportar esses produtos e importar roupas. Seu parceiro ganhará exportando roupas e # 8212, no qual possui uma vantagem comparativa, mas não absoluta, em troca desses outros produtos (ver caixa). A noção de vantagem comparativa também se estende além dos bens físicos para o comércio de serviços, como escrever código de computador ou fornecer produtos financeiros.
Por causa da vantagem comparativa, o comércio aumenta o nível de vida de ambos os países. Douglas Irwin (2009) chama vantagem comparativa & # 8220; boas notícias & # 8221; para o desenvolvimento econômico. Mesmo que um país em desenvolvimento não tenha uma vantagem absoluta em qualquer campo, sempre terá uma vantagem comparativa na produção de alguns bens, & # 8221; e negociará de forma rentável com as economias avançadas.
Diferenças de vantagem comparativa podem surgir por vários motivos. No início do século 20, os economistas suecos Eli Heckscher e Bertil Ohlin identificaram o papel do trabalho e do capital, as chamadas dotações de fatores, como determinante da vantagem. A proposição de Heckscher-Ohlin sustenta que os países tendem a exportar bens cuja produção usa intensamente o fator de produção que é relativamente abundante no país. Os países bem dotados de capital, como fábricas e máquinas, devem exportar produtos intensivos em capital, enquanto aqueles bem dotados de mão-de-obra devem exportar produtos intensivos em mão-de-obra. Os economistas hoje pensam que as dotações de fatores são importantes, mas que também existem outras influências importantes nos padrões de comércio (Baldwin, 2008).
Pesquisa recente descobre que episódios de abertura comercial são seguidos por ajustes não apenas em indústrias, mas também dentro deles. O aumento da concorrência proveniente de empresas estrangeiras pressiona os lucros, forçando empresas menos eficientes a contratar e dando espaço a empresas mais eficientes. Expansão e nova entrada trazem melhores tecnologias e novas variedades de produtos. Provavelmente, o mais importante é que o comércio permita uma maior seleção em diferentes tipos de bens (digamos geladeiras). Isso explica por que há uma grande quantidade de comércio intra-indústria (por exemplo, os países que exportam refrigeradores domésticos podem importar refrigeradores industriais), o que é algo que a abordagem do fator não é abrangente.
Existem benefícios de eficiência claros do comércio que resultam em mais produtos e # 8212, não apenas mais dos mesmos produtos, mas uma maior variedade de produtos. Por exemplo, os Estados Unidos importam quatro vezes mais variedades (como diferentes tipos de carros), como ocorreu na década de 1970, enquanto o número de países que fornecem cada bem dobrou. Um benefício ainda maior pode ser a despesa de investimento mais eficiente que resulta das empresas que têm acesso a uma maior variedade e qualidade de insumos intermediários e de capital (pense em lentes ópticas industriais em vez de carros). Ao aumentar o investimento global e facilitar a inovação, o comércio pode aumentar o crescimento sustentado.
Na verdade, os modelos econômicos utilizados para avaliar o impacto do comércio tipicamente negligenciam influências envolvendo transferência de tecnologia e forças pró-competitivas, como a expansão das variedades de produtos. Isso ocorre porque essas influências são difíceis de modelar e os resultados que as incorporam estão sujeitos a maior incerteza. No entanto, quando isso foi feito, os pesquisadores concluíram que os benefícios das reformas comerciais, como a redução de tarifas e outras barreiras não comerciais para o comércio, são muito maiores do que os sugeridos pelos modelos convencionais.
Por que a reforma comercial é difícil.
O comércio contribui para a eficiência global. Quando um país se abre ao comércio, o capital e o trabalho mudam-se para as indústrias em que são usados ​​de forma mais eficiente. Esse movimento proporciona à sociedade um maior nível de bem-estar econômico. No entanto, esses efeitos são apenas parte da história.
O comércio também traz deslocamento para as empresas e indústrias que não podem cortá-lo. As empresas que enfrentam ajustes difíceis por causa de produtores estrangeiros mais eficientes freqüentemente pressionam contra o comércio. Então, seus trabalhadores. Eles muitas vezes buscam barreiras, como impostos de importação (chamadas de tarifas) e cotas para elevar o preço ou limitar a disponibilidade de importações. Os processadores podem tentar restringir a exportação de matérias-primas para diminuir artificialmente o preço de suas próprias insumos. Em contrapartida, os benefícios do comércio são difundidos de forma difusa e os seus beneficiários geralmente não reconhecem como o comércio os beneficia. Como resultado, os oponentes são muitas vezes bastante eficazes em discussões sobre o comércio.
Políticas comerciais.
As reformas desde a Segunda Guerra Mundial reduziram substancialmente as barreiras comerciais impostas pelo governo. Mas as políticas para proteger as indústrias domésticas variam. As tarifas são muito maiores em certos setores (como agricultura e vestuário) e entre certos grupos de países (como países menos desenvolvidos) do que em outros. Muitos países têm barreiras substanciais ao comércio de serviços em áreas como o transporte, as comunicações e, muitas vezes, o setor financeiro, enquanto outros possuem políticas que recebem a concorrência estrangeira.
Além disso, as barreiras comerciais afetam alguns países mais do que outros. Muitas vezes, os países menos desenvolvidos são os países mais desfavorecidos, cujas exportações se concentram em produtos de baixa mão-de-obra e mão-de-obra intensiva que os países industrializados geralmente protegem. Os Estados Unidos, por exemplo, coletam cerca de 15 centavos de receita tarifária por cada US $ 1 das importações do Bangladesh (Elliott, 2009), em comparação com um centavo por cada US $ 1 de importações de alguns dos principais países da Europa Ocidental. No entanto, as importações de um determinado produto do Bangladesh enfrentam tarifas iguais ou mais baixas do que os produtos classificados de forma similar importados da Europa Ocidental. Embora as tarifas sobre os itens de Bangladesh nos Estados Unidos possam ser um exemplo dramático, os economistas do Banco Mundial calcularam que os exportadores de países de baixa renda enfrentam barreiras em média metade novamente maiores do que as que enfrentam as exportações dos principais países industrializados (Kee, Nicita e Olarreaga, 2006).
A Organização Mundial do Comércio (OMC) arbitra o comércio internacional. Os acordos elaborados desde 1948 por seus 153 membros (da OMC e seu antecessor Acordo Geral sobre Comércio e Tarifas) promovem a não discriminação e facilitam a liberalização em quase todas as áreas do comércio, incluindo tarifas, subsídios, avaliação e procedimentos aduaneiros, comércio e investimento em serviços setores e propriedade intelectual. Os compromissos ao abrigo destes acordos são aplicados através de um poderoso processo de resolução de litígios cuidadosamente elaborado.
Sob o sistema de comércio internacional baseado em regras centrado na OMC, as políticas comerciais tornaram-se mais estáveis, mais transparentes e mais abertas. E a OMC é uma das principais razões pelas quais a crise financeira global não provocou um protecionismo generalizado. No entanto, como visto mais recentemente com a Rodada Doha de negociações comerciais da OMC, a instituição enfrenta grandes desafios ao chegar a acordos para abrir ainda mais o comércio global. Apesar dos sucessos, políticas comerciais restritivas e discriminatórias permanecem comuns. Dirigindo-se a eles poderia render centenas de bilhões de dólares em benefícios globais anuais. Mas os interesses estreitos têm procurado atrasar e diluir novas reformas multilaterais. Um foco no bem maior, juntamente com formas de ajudar os relativamente poucos que podem ser afetados negativamente, pode ajudar a oferecer um sistema de negociação mais justo e economicamente mais sensível.
Brad McDonald é um chefe de divisão adjunto no Departamento de Estratégia, Política e Revisão do FMI.
Referências.
Baldwin Robert E., 2008, The Development and Testing of Heckscher-Ohlin Trade Models: A Review, (Cambridge, Massachusetts: MIT Press).
Elliott, Kimberley Ann, 2009 e # 8220; Mercados de abertura para países pobres: ainda estamos lá? # 8221; Documento de trabalho do Centro para o Desenvolvimento Global 184 (Washington).
Irwin, Douglas A., 2009, Free Trade under Fire (Princeton, Nova Jersey: Princeton University Press, 3ª ed.).
Kee, Hiau Looi, Alessandro Nicita e Marcelo Olarreaga, 2006, # 8220; Estimativa de Índices de Restrição de Comércio, & # 8221; Documento de trabalho de pesquisa de políticas do Banco Mundial nº 3840 (Washington).
Atualizado: 29 de julho de 2017.
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I. Introdução e tópicos gerais.
Algumas teorias e conceitos básicos.
Divisão de Assistência a Políticas.
Este módulo fornece uma introdução a alguns dos conceitos e argumentos teóricos utilizados na discussão sobre política comercial. Os conceitos e argumentos apresentados no módulo referem-se ao comércio em geral, mas são ilustrados tanto quanto possível com exemplos do setor agrícola e sua utilidade para examinar o comércio agrícola é destacada.
2.1 Os ganhos econômicos do comércio.
2.2 Comércio e equidade.
2.3 Proteção contra o livre comércio: argumentos e debates.
2.4 Blocos comerciais regionais.
2.5 Novas preocupações da opinião pública no comércio internacional.
PONTOS CHAVE.
O comércio pode trazer benefícios, permitindo que os países explorem sua vantagem comparativa, colhem os benefícios das economias de escala e assegurem a concorrência, uma maior variedade e, potencialmente, mercados e preços mais estáveis. Não é provável que os ganhos do comércio sejam distribuídos uniformemente, dentro ou entre países, explicando a oposição às políticas de livre comércio por parte de algumas partes. A decisão política raramente é negociar ou não negociar, mas se impõe barreiras ao comércio. Argumentos de proteção podem ser feitos por motivos econômicos ou não econômicos, incluindo segurança alimentar. No entanto, as medidas comerciais geralmente não são as medidas mais diretas nem as mais eficientes para atingir esses objetivos. A liberalização do comércio pode ocorrer tanto dentro de um quadro multilateral como regional. Os acordos comerciais regionais são cada vez mais prevalentes, embora o papel da agricultura nestes arranjos seja frequentemente problemático. A agenda da política comercial reflete cada vez mais as novas preocupações suscitadas pelos grupos de consumidores e ONGs nos países da OCDE e não as preocupações tradicionais de declínio dos termos de troca e trocas desiguais levantadas pelos países em desenvolvimento.
2.1 O GANHO ECONÔMICO DO COMÉRCIO.
Por que os países se envolvem no comércio.
O comércio é vantajoso? Quais são as razões que levam os particulares e as empresas a participar voluntariamente no comércio, os governos a favor e economistas para defendê-lo? Conforme mostrado no Módulo I.1 Tendências no Comércio Mundial e Agrícola, os fluxos de comércio internacional a longo prazo em uma ampla gama de commodities aumentaram constantemente ao longo de centenas de anos e aceleraram espetacularmente desde a Segunda Guerra Mundial. Isso certamente não é apenas porque as instalações de transporte e comunicação melhoraram drasticamente, mas também deve ser porque os benefícios são derivados do comércio.
Os economistas apresentaram uma série de argumentos a favor do comércio; alguns são bastante óbvios e de bom senso, outros são menos evidentes. Esses argumentos podem ser classificados em três grupos, de acordo com se eles enfatizam (i) o aumento que o comércio pode trazer à quantidade total de bens e serviços disponíveis para a população nacional (argumento de consumo aumentado), (ii) a diversidade de bens e serviços disponibilizado através do comércio para esta população (argumento de diversificação), ou (iii) a estabilidade no fornecimento e os preços dos bens e serviços provocados pelo comércio (argumento de estabilidade). Examinamos estes argumentos abaixo.
2.1.1 Comércio e crescimento - o aumento do argumento do consumo.
Teoria dos custos comparativos.
Uma razão pela qual a quantidade de bens e serviços disponíveis para um país em um ponto no tempo pode aumentar através do comércio é porque ele permite que o país compre bens e serviços de fontes onde ele custa comparativamente menos para produzi-los. Os recursos locais ligados na produção desses bens na ausência de comércio são, portanto, liberados de modo que comparativamente mais de outros bens podem ser produzidos. Se os Estados Unidos podem produzir chips de computador e açúcar, mas é muito melhor na produção de chips de computador, enquanto o Brasil também pode produzir chips de computador e açúcar, mas é muito melhor na produção de açúcar, então ambos os países podem se beneficiar do comércio desses itens. A quantidade total de recursos utilizados para produzir as quantidades combinadas de açúcar e chips de computador consumidos pelos Estados Unidos e Brasil será menor para cada país se o Brasil se especializasse na produção de açúcar e nos Estados Unidos em chips de computadores com açúcar brasileiro sendo trocado por chips dos Estados Unidos.
Os ganhos do comércio.
Este ganho conjunto do comércio é compartilhado entre os Estados Unidos e o Brasil. A forma como é compartilhada depende da relação de preço internacional entre chips de computador e açúcar, ou seja, a taxa em que são negociados - o que os economistas chamam de termos de troca externos. Na ausência de comércio, cada país tem sua própria taxa de troca doméstica de açúcar e batatas fritas, por exemplo, uma troca padrão de chips para 50 kg de açúcar nos Estados Unidos e 100 kg no Brasil. Note-se que estas taxas de câmbio expressam a maior eficiência relativa de produção de açúcar no Brasil e chips nos Estados Unidos. Os termos de troca serão contidos entre os índices cambiais dos Estados Unidos e do Brasil, uma vez que, caso contrário, um dos países não estaria interessado em negociar. O comércio favorecerá um país mais, quanto mais longe os termos de troca internacionais são da sua própria taxa de troca 1.
Teoria da vantagem comparativa e alguns corolários.
O que se segue é a clássica teoria dos custos comparativos dos ganhos do comércio, também conhecida como teoria das vantagens comparativas, originalmente declarada por David Ricardo no início do século XIX. É útil apresentá-lo com algum pormenor porque é a explicação mais poderosa dos ganhos do comércio proposto pela profissão econômica. Várias coisas devem ser notadas nesta explicação, que são destacadas abaixo, enquanto algumas qualificações para a teoria são dadas na Caixa 2.
Os ganhos de comércio surgem devido a diferenças nos custos de oportunidade.
Primeiro, ganhos decorrem da existência de diferentes índices de troca doméstica dos dois bens nos dois países. Essas taxas de troca estão associadas a diferentes condições de produção dos dois produtos nos dois países. Assim, em nosso exemplo, em comparação com os recursos necessários para produzir um chip, são necessários mais recursos para produzir um kg de açúcar nos Estados Unidos do que no Brasil, duas vezes mais sob os pressupostos simplificadores utilizados. Em geral, se os recursos são escassos e podem ser usados ​​para produzir dois bens, digamos A e B, a saída de B perdida por causa de comprometer recursos para produzir uma unidade de A é o que os economistas chamam de custo de oportunidade de A (em termos de B ). No exemplo acima, o custo de oportunidade dos chips (em termos de açúcar) é maior nos Estados Unidos do que no Brasil, uma vez que, sob os pressupostos simplificados, para produzir um chip, temos que desistir produzindo 100 kg de açúcar no Brasil, mas apenas 50 nos Estados Unidos. Os ganhos de comércio surgem porque os custos de oportunidade de açúcar e batatas fritas são diferentes nos Estados Unidos e no Brasil.
A vantagem comparativa é a chave para o comércio, não uma vantagem absoluta.
Em segundo lugar, a quantidade de recursos necessários para produzir ambas as commodities pode ser maior em um dos países e o comércio ainda pode ser vantajoso para ambas as partes. Assim, por exemplo, no nosso exemplo, podemos assumir que os Estados Unidos usam menos recursos na produção de chips do que o Brasil (o que é provavelmente o caso na prática) e também usar menos recursos na produção de açúcar (o que não é tão evidente na prática, mas pode ser o caso). Assim, o Brasil pode precisar usar quatro vezes mais recursos para produzir chips e o dobro dos recursos para produzir açúcar do que os Estados Unidos, sendo assim absolutamente menos eficiente em ambos. Isto é numericamente ilustrado na caixa 1.
O ponto importante da teoria dos custos comparativos é que, mesmo neste caso, os Estados Unidos ainda se beneficiarão de trocas comerciais de açúcar com o Brasil. O motivo é que ao exportar um chip para o Brasil, os Estados Unidos podem obter 100 kg de açúcar, enquanto que obter 100 kg de açúcar nos Estados Unidos custaria dois chips. Os comerciantes farão um bom lucro comprando chips nos Estados Unidos, enviando-os para o Brasil, vendendo as fichas lá, comprando açúcar com o produto, levando o açúcar de volta aos Estados Unidos e vendendo para comprar mais fichas. No nosso exemplo, no final desta operação, o comerciante acabaria com o dobro da quantidade de chips (ignorando os custos de transporte e comercialização). Claro, depois de um tempo, se muitos comerciantes entrassem no jogo, a venda contínua de batatas fritas e a compra de açúcar no Brasil elevariam o preço do açúcar e diminuíam os chips, modificando a proporção do preço doméstico. O contrário seria o caso nos Estados Unidos. Isto prosseguirá até que seja alcançado um índice de preços internacional comum capaz de trazer simultaneamente o equilíbrio de mercado nos dois países. Os índices de preços domésticos divergem apenas em função dos custos de transporte e comercialização.
Caixa 1: Recursos de produção necessários (Número de unidades trabalhistas necessárias para produzir um kg de açúcar e um chip de computador padrão 1)
1 Assume-se que apenas um recurso, trabalhista, entra na produção de açúcar e batatas fritas. Alternativamente, pode-se assumir que são necessários vários recursos, mas que podem ser representados e medidos por meio de um "recurso composto".
Devido a custos comparativamente (ou seja, relativamente) mais baixos na produção de açúcar, o Brasil teria uma vantagem comparativa em relação aos Estados Unidos na produção de açúcar. O conceito de vantagem comparativa deve ser distinguido do de vantagem absoluta, o que indica que o país em questão usa em termos absolutos menos recursos na produção da mercadoria dada. Assim, em nosso exemplo, os Estados Unidos têm uma vantagem absoluta na produção de chips e açúcar e uma vantagem comparativa na produção de chips apenas. O princípio básico da teoria dos custos comparativos é que os ganhos do comércio surgem da existência de uma vantagem de custo comparativo e não de uma vantagem de custo absoluto.
Pode ser necessário criar uma vantagem comparativa.
Em terceiro lugar, a teoria é estática. Isso explica os ganhos comerciais e comerciais com base na vantagem comparativa em um determinado momento. Pode ser o caso que as vantagens comparativas mudam e podem ser adquiridas ao longo do tempo através, inter alia, de ações políticas. Nesse caso, ter uma vantagem comparativa em um bem não implicaria necessariamente que um país se especializasse na produção desse bem à custa de outras linhas de produção. De fato, as novas indústrias (as chamadas indústrias nascentes) podem não ter uma vantagem comparativa quando estão sendo estabelecidas e, como veremos abaixo, talvez seja necessário proteger até atingir o tamanho necessário para se beneficiar das economias de escala. Assim, em nosso exemplo, o Brasil não se comprometeria necessariamente com a produção de açúcar, esquecendo totalmente os chips de computador, se considerasse que tinha a base para o desenvolvimento de uma indústria de chips viável a longo prazo. Esse tipo de raciocínio, de fato, levou o Brasil a colocar barreiras comerciais na importação de equipamentos de informática com a intenção de desenvolver ao longo do tempo alguma vantagem na produção doméstica de computadores. Observe, é claro, que a política comercial pode não ser a maneira mais eficaz de desenvolver uma capacidade industrial indígena se houver políticas industriais mais diretas. Os países também podem perder vantagem comparativa em certos tipos de produção à medida que a tecnologia evolui para o exterior (a chamada questão das indústrias de pôr do sol). Além disso, os preços mundiais mudam ao longo do tempo, impactando a vantagem comparativa de um país.
Caixa 2: algumas qualificações sobre a teoria dos custos comparativos.
A teoria pressupõe que os recursos são totalmente utilizados, ou seja, há pleno emprego, pois, de outra forma, os índices de preços domésticos não refletem os custos de oportunidade. Assim, se houver recursos inativos, não há necessidade de diminuir a produção de açúcar para aumentar a quantidade de chips ou vice-versa.
O comércio tem importantes efeitos distributivos.
Em quarto lugar, a teoria mostra que os países como um todo ganham do comércio, mas não faz referência a se e como diferentes grupos dentro de cada país beneficiam ou perdem do comércio. Como veremos abaixo, o comércio pode ter impactos importantes na distribuição de renda e isso agrega uma dimensão social à questão comercial. É precisamente por causa do impacto potencialmente negativo do comércio sobre os rendimentos de certos grupos que os Estados Unidos têm tradicionalmente protegido a indústria açucareira, restringindo as importações deste produto através de um sistema de cotas.
Economias de escala.
O comércio permite que economias de escala sejam alcançadas.
Another reason why trade can increase efficiency is because it allows an expansion of the market for a certain industry beyond the limits of the domestic economy. Through exports, the output of the industry can expand and, if there are economies of scale, the average cost of the industry's products will fall.
There are two ways in which economies of scale may occur at the industry level, which will normally operate in conjunction. One is through technological indivisibilities in the firms that make up the industry, for instance, the use of robots in car manufacturing. This happens when there are cost saving technologies that can only be introduced after a certain level of output is reached. In this case, economists talk of economies of scale internal to the firms in the industry. The other is through the existence of cost savings that take place through the sheer expansion of the industry, mostly because of an improvement in the services supplied to the industry by third parties or the technical or commercial environment in which it operates - what economists call external effects . In this case the economies of scale are external to the firm but internal to the industry . Examples of these are the development of a skilled labour force, specialized suppliers of inputs, a competitive atmosphere and a shared technological know-how, all of which will reduce costs.
An interesting thing about economies of scale is that, if they are significant, countries with few differences in resources or in technology, and hence in production costs, will gain from specializing in different products and trading them. With specialization, the two countries can reap the economies of scale in the commodity in which they specialize, lowering the cost of production. Economies of scale, combined with product differentiation (see below) explain the phenomenon of intra-industry trade in which countries trade similar, but differentiated, products with each other, e. g. simultaneously importing and exporting different makes of cars.
Competition through trade.
Trade ensures the benefits of competition.
One more way in which international trade can raise efficiency is through the enhancement of competition. By opening their frontiers to trade, countries force their industries to compete with goods and services produced abroad, and hence to struggle to become competitive and pass on cost reductions to consumers in the form of lower prices. In industries which tend to be monopolistic or oligopolistic because of the nature of the production process (e. g. presence of big entry costs, large economies of scale, dependence on a specialized input in short supply), this may be particularly important. The car and telecommunication industries are examples of this. Trade may be a good way to bring competition and raise efficiency in these industries. This advantage of trade is not very relevant in agriculture since, because there are many farms producing very similar commodities, the farm sector is hardly a concentrated industry. However, farmers may benefit from the increased efficiency of input supply industries or food processing industries brought about through trade.
2.1.2 Trade and access to goods - the diversification argument.
Trade increases the variety of goods.
A different reason why trade is beneficial is because it makes accessible to national consumers and producers an array of goods and services that would not be available otherwise. Since these include consumer goods as well as capital goods and inputs, trade favours both domestic consumers and the development of the domestic production capacity.
Diversity refers to the availability of goods that cannot be produced in the country or could only be produced under very special and expensive conditions (e. g. mangoes in Scandinavia). It also refers to different types or brands of goods actually produced in the country (e. g. different types of apples, motor pumps or meat cuts) or goods which are not produced in the country but could eventually be produced there with acceptable costs. Through product differentiation countries do not need to either fully specialize in industries where they have a comparative advantage or totally abandon industries where they do not; they can specialize in industrial niches (e. g. different makes of cars) and carry out mutually beneficial trade in niche products of industries where trading partners also operate. Intra-industry trade of this kind is common in consumer goods industries, but is less characteristic of trade in agricultural products because of the importance of natural resource endowments and their greater homogeneity.
2.1.3 Trade and fluctuations - the stability argument.
Trade can stabilize markets compared to autarky.
Trade may also serve to smooth out transitory excess demand or excess supply situations in domestic markets, thus avoiding or reducing price fluctuations and eventual supply shortages. Agricultural products may benefit especially in this respect from foreign trade, since agricultural markets tend to be particularly unstable as a consequence of supply rigidities (it takes time for agricultural production to respond to market signals), exogenous factors affecting production (such as weather and pest conditions) and the fact that the demand for food tends to vary little when prices go up or down (it is inelastic) . A country largely self-sufficient in food and agricultural products may have agricultural surpluses in good years, which will place strong downward pressure on farm prices. The international market may serve to dispose of these surpluses with minimum disruption of domestic prices and incomes. The opposite will happen in poor agricultural years.
. but may itself be a source of instability.
It should be noticed, however, that trade may itself be a source of price instability. Thus, if a country is highly specialized in the production of some export commodities and depends largely on imports of other commodities, it will be very exposed to international price fluctuations. These fluctuations are also felt in tradable goods which are only marginally exported or imported, in the absence of policy instruments designed to isolate domestic prices from world price fluctuations. Agriculture has traditionally been the main sector where these instruments have been applied, with varying effects. This is not surprising in view of the characteristic instability of international agricultural prices and the importance attached by governments to the stabilization of food prices and farmers' incomes.
2.2 TRADE AND EQUITY.
Will the benefits from trade be fairly distributed? Will everybody win or at least not lose? Two issues can be distinguished here; one is the impact of trade on different economic or social groups within a country , the other is whether the gains from trade are fairly distributed between trading countries . These issues are examined separately below.
2.2.1 The impact of trade on income distribution within a country.
There are winners and losers from trade.
It is obvious that workers, entrepreneurs, investors and owners of natural resources (i. e. the owners of productive factors) engaged in export industries stand to win from increased trade since their activities develop if exports expand. Contrariwise, the owners of factors engaged in industries which have to compete with products imported from abroad, i. e. of import-competing industries , stand to lose from increased trade. The distribution of the gains and losses arising from trade among the owners of productive factors will depend on the situation in the respective markets. In general, however, factors which are intensively used in an industry, for instance labour in textile industries or land in extensive farming, will stand to gain or lose more than those not intensively used. Similarly, owners of factors that are rather specific to the industry and hence relatively immobile, for instance workers skilled in some agricultural operations (e. g. pruning) or the owners of lands particularly suited to the production of specific crops, will gain or lose more than the owners of more undifferentiated and mobile factors.
If no domestic industries produce the imported good (or close substitutes), consumers (or the producers that use it as an input) will benefit from trade, without anyone losing. Intra-industry trade, where differentiated products from the same industry are traded, will in general have less negative impact on the domestic import-competing industry than trade based on specialization, where the import-competing industry may risk being totally swept away.
Farmers are vulnerable to trade changes because of the lack of alternative opportunities.
Since, in comparison with other industries, factor mobility and product differentiation are rather limited in agriculture, the farming sector is particularly vulnerable to the impact of trade. Thus, it is difficult for agricultural land to change its use to urban or recreational use in response to import competition, or for agricultural labour to find another type of employment since this normally requires reskilling and will often imply migration. It is possible for farmers to change crops to adjust to international competition, but weather, soils, technical know-how and other factors that may restrict or jeopardize possible changes will often come into play. Shifting from plantation or livestock farming to other type of agriculture will be particularly expensive and take a long time. These rigidities, typical of the farm sector, are one of the reasons why governments have traditionally tended to protect farmers from the effects of international competition.
An issue that has received much attention from trade welfare theorists is whether those who benefit from the opening of trade can compensate those who lose, so that the opposition of the latter to a free trade regime can be overcome and the gains from trade are better distributed. This may be possible in principle, but it is extremely complex in practice. The reason is the difficulty of agreeing on the exact amount of gains and losses and the identification of the groups involved, as well as that of establishing a mechanism to carry out direct payments from one group to the other. Governments may try to collect part of the gains, for instance, through export taxation. They may also be called to assist the losers, through some type of subsidy or transfer, but they will normally do this using taxpayers' (rather than exporters') money.
2.2.2 How do different countries benefit from trade?
This is a highly contentious subject surrounded by controversy and contrasting points of view. We cannot survey them all here but we will summarize some of the most representative ones.
The "mainstream economics" Visão.
Mainstream theories emphasize the role of demand in explaining the distribution of trade gains between countries.
The first view we have called "mainstream economics" to emphasize a theoretical tradition that is at the core of conventional Western academic economic thinking on international trade issues. While "mainstream economics" has much to say on the benefits deriving from trade and the welfare implications of protectionist policies and regional trade agreements, it does not offer much by way of predictions with respect to the intercountry distribution of trade gains.
As mentioned before, under the comparative cost theory the distribution of benefits is inversely related to the closeness of the international terms of trade to the domestic price ratio. However, in the original formulation of the theory by David Ricardo there was no explanation of how close the terms of trade would be to either of the domestic price ratios. Later economists, such as John Stuart Mill, stressed the role of demand factors in the determination of the terms of trade. Thus, if in our example, United States consumers are much more eager demanders of sugar than of chips compared to their Brazilian counterparts, the terms of trade will favour Brazil 2 , which will obtain most of the gains. This was a step forward but not yet a fully satisfactory theory since there was no explanation of the determinants of the demand for imported/exported commodities.
In more modern forms of the theory, the terms of trade continue to depend on the relative strength of the respective demands. The main prediction arising from this reformulation is a dynamic one stating that export-biased growth, i. e. growth based on technological advance in the export industry of a country, would turn the terms of trade against the country, lowering its share in the gains 3 . The opposite would happen with import-biased growth. The reason is straightforward: export-biased growth permits a decrease in the cost of exported goods relative to imported goods and hence results in a fall in the terms of trade. The opposite is the case with import-biased growth. In our example, if there is a technological breakthrough in the semiconductor industry, and hence in the production of chips, but not in that of sugar, there will be a tendency, under competitive conditions, for the price of chips to decrease vis-à-vis that of sugar. The above effects only take place, however, if the participation in world trade of the country in question is sufficiently large for a reduction in the domestic production cost to influence the international price of the commodity.
The structuralist view.
Structuralists argue that the periphery is disadvantaged relative to core countries.
In the 1950s and 1960s, the distribution of trade gains between developed countries (the "centre" of the world economy) and less developed countries (the "periphery") became an issue of intense debate, due in no small part to the intellectual influence of Raul Prebisch, the Argentinean economist who was for many years at the head of the UN Economic Commission for Latin America and one of the fathers of the Latin American structuralist school. The argument is based on the assumption of trade specialization between centre and periphery, with the centre specializing in exporting manufactured industrial products and the periphery primary commodities. After observing (and measuring) a secular decline in the terms of trade of primary commodities vis-à-vis manufactured goods, the structuralists set about to explain the reasons for this.
The decline was viewed not as a transitory phenomenon due to a specific set of circumstances but as something embedded in the structural features of central and peripheral economies and in the nature of the development process. In a nutshell, the declining trend in the terms of trade for countries in the periphery 4 was explained by three reasons.
The income elasticity of the demand for imports is lower at the centre than in the periphery due to the different type of the goods imported by both sets of countries - primary commodities in one case, industrial products in the other 5 . The consequence is that the process of growth, and hence of income expansion, raises import demand more in the periphery than at the centre pushing up the prices of periphery imports vis-à-vis those of exports and thus lowering the terms of trade. Asymmetries are postulated in the impact of technological change at the centre and in the periphery. In central countries, it is argued that technological progress tends to decrease the demand for periphery country exports (many of which are substituted by synthetic products). On the contrary, technological progress in the periphery increases the demand for capital goods and inputs produced at the centre. This also lowers the terms of trade. Product and factor markets are argued to be less competitive at the centre than in the periphery, with prices (particularly wage rates) showing more downward rigidity in the centre. As a consequence, cost savings from technical progress are passed on to export prices more in the periphery than in the centre, where a significant portion of these savings goes to improve wages. Also, during the downturn of the business cycle the prices of export products fall proportionally more in the periphery than at the centre.
A natural policy corollary of the structuralist view was the emphasis on industrialization as a vehicle for development, for if the diagnosis of the long-term evolution of the terms of trade was right, the development process could not rely on export-led growth based on primary products. The development policy associated with this view in the Latin American context of the time has come to be known as import-substitution strategy . This strategy is summarized in Box 3.
Unequal exchange and dependency views.
Unequal exchange is a normative concept.
Theorists subscribing to the so-called "unequal exchange" view have also insisted on the uneven distribution of trade gains between the centre and the periphery. A key difference with the structuralists is that, while the latter focus on the trend over time of an observable variable, the terms of trade, the former have a more normative approach, focussing on the "unfairness" of trade between the two sets of countries at any given point in time.
Unequal exchange refers to the terms on which different commodities entering trade between the centre and the periphery are exchanged. Exchange is said to be unequal (in the normative sense of "unfair") because production conditions in the periphery lead to exporting goods at cheaper prices than if the conditions had been those of the centre. At any point in time, production conditions at the centre lead to high prices of the commodities exported, whereas production conditions in the periphery lead to cheap prices of exports.
What are the differences in production conditions between centre and periphery that give rise to unequal exchange? There are many answers to this question but we will consider two.
Box 3: The import-substitution strategy and its denouement.
The thrust of the strategy was a change of development engine from the promotion of exports to the substitution of imports and from investment in primary products (agricultural raw materials, minerals and fuels) to investments in the development of the manufacturing sector. Industrialization required a number of conditions:
(i) protecting infant industries from international competition;
(ii) financial and fiscal support to these industries;
(iii) the development of domestic infrastructure in the transport, communication and energy sectors;
(iv) the enlargement of the domestic market so that it could absorb the manufacturing goods produced internally, to be achieved through suitable income distribution measures such as agrarian reform, social welfare and improved wages;
(v) the contribution of direct and indirect foreign investment, and.
(vi) a strong and rational (i. e. planning-oriented) government of a new type, representing the aspirations of the emerging industry-related classes, as opposed to those of the traditional land-owning and intermediary bourgeoisie groups.
This policy package was very successful in creating an industrial base and pushing up growth rates throughout most of the Latin-American region in the post-war decades, until the late 1970s and early 1980s. This happened, however, in a macroeconomic climate of recurrent economic cycles, fiscal and monetary permissiveness, mounting inflation and overvalued exchange rates, which led to recurrent fiscal and balance of payment disequilibria. It is generally acknowledged today that, in the end, these disequilibria led to the exhaustion of the model's development potential, at least under its traditional form. This happened roughly in two phases.
First, in the 1970s, the macroeconomic disequilibria, which had been generally moderate up to then were exacerbated by the abandonment of convertibility by the United States and the consequent proliferation of flexible exchange regimes. This generated a relaxation of discipline in the international monetary system, exacerbated by the oil shocks, which led to international inflation. They were cushioned, however, by the undisturbed accumulation of a growing international debt in most countries in the region, facilitated by the enormous excess liquidity existing at the time in international capital markets, much of which found its way into Latin America in the form of international loans.
Second, in the 1980s, the disequilibria became unsustainable due to a combination of three factors: (i) the drying up of fresh capital inflows due to growing repayment difficulties; (ii) a big international increase in interest rates; and (iii) a long-lasting international recession, which resulted in a big fall in the prices of Latin American primary export products. These factors precipitated the so-called debt crisis (i. e. the inability to service the debt) which marked the end of the import substitution strategy and the opening of the structural adjustment era.
Trade is seen as unfair where different values are placed on equivalent labour.
The first is that of Arghiri Emmanuel - the "classical" theorist of unequal exchange. Emmanuel's answer is wage rates . He assumes that institutional factors and negotiation (through union activity) set wage rates at the centre, and that wage rates determine prices and not the other way around. Capital is assumed to be mobile, and hence there is a tendency for the same rate of profit to be obtained at the centre and in the periphery. Because of historical circumstances, he argues, wage rates at the centre are much higher than in the periphery, the difference being greater than the difference in labour productivity. Higher wage rates together with an equal rate of profit give rise to higher prices at the centre, generating unequal exchange. Thus, if the centre had to supply for itself the commodities imported from the periphery it would produce them at much higher wages and hence would have to pay much more. This is true even after adjusting for productivity differences since differences in wages are bigger than those in productivity. Notice that Emmanuel, just like the structuralists, does not argue that the periphery will not benefit from trade but that the distribution of gains will be favourable to the centre.
From a policy perspective, no obvious recommendations emerge from the unequal exchange theory since there is little that policy can do to bridge the wage gap between centre and periphery countries. It is interesting, however, that the wage gap argument has been intensively used by labour unions in central countries to advocate protection, particularly in the United States. But the argument is used in this case in the context of unequal competition rather than that of unequal exchange. Thus, workers in central countries, e. g. United States textile or sugar workers, complain against the "unfair" competition from textiles imported from South Asia or sugar imported from South America, which are produced by workers earning wages several times lower than theirs.
. or because it appears to perpetuate under-development.
A different answer to the question above comes from authors belonging to the under-development and dependency schools 6 . The answer is that production conditions at the centre and in the periphery differ in many ways and are not independent from each other: favourable conditions at the centre are closely related to unfavourable conditions in the periphery, and vice versa. Views among these authors differ but they have in common the emphasis on the role of historical factors and extra-economic sources of domination in the shaping of international trade relations 7 . Inequalities in trade are seen in connection to inequalities in development. These in turn are seen as a consequence of the way in which the capitalist system has expanded over time and has come into contact with other modes of production, central countries subordinating periphery ones to their own advantage. The whole international economy is seen as a system of domination organized to the advantage of the centre, which generates under-development in the periphery. Periphery countries do not gain proportionately less from international relations - they actually suffer from them. Development hence entails breaking away from the system of dependency through self-centred growth strategies. Thus, while the structuralists highlight the consequences of periphery countries being primary producers and Emmanuel highlights those of their being low-wage producers, under-development theorists see the matter in terms of these countries being at the losing end of a world system of domination.
More contemporary writers, like Marcel Mazoyer, have highlighted the effect of increasing globalization (see Box 4) on the unequal competition between modern agricultural producers and traditional peasant farmers, forced to compete on very unequal terms in the same global market.
Box 4: Globalization.
Globalization has entered our current vocabulary and our conceptual toolbox in recent years, practically since the end of the cold war. The increase of commodity trade flows documented in Module I.1 Trends in World and Agricultural Trade and the progress on multilateral trade liberalization reached under GATT/WTO are only an aspect of it. Other equally important economic aspects are the international mobility of factors, particularly capital, and the internationalization of production and investment decisions. Thus, capital markets are fully integrated today into a closely connected net, enjoying a single system of hedging which allows them to react to leads and lags and relevant economic information at the world level. Transnational firms, big and small, make production and investment decisions also at the world level, both through their network of plants scattered around the world and/or through a network of international contracts with third parties.
But globalization is not just an economic phenomenon; it has other important dimensions like the massive circulation of information at the world level due to the on-going revolution in communications technology, the growing inter-country standardization of regulatory aspects in economic, cultural, scientific, environmental and administrative matters, and the growing internationalization of life styles, human and aesthetic values, political agendas and social and cultural fads.
The multidimensional nature of globalization has been captured in the global village metaphor , i. e. the view that globalization has made the world's economy and society akin to that of a single village extending worldwide. The global village metaphor is an effective one but should be taken with a grain of salt, for globalization trends coexist with phenomena setting apart countries, regions and social groups and marking wide gaps among them. Thus, nationalist, cultural and religious movements seem to have increased rather than waned with globalization, and the technology and income gap between North and South also seems to have increased. If anything, the global village is a rather unequal and multifarious place.
While, because of globalization, the prices of agricultural commodities are roughly similar in different countries, differences in labour productivities are formidable. Thus, argue Mazoyer and Roudart (1997, page 457), a European farmer well-endowed with land, inputs and equipment may alone produce 500 ton of cereal per year, while his counterpart in Sub-Saharan Africa working in a small plot of land with manual means may only be able to produce one ton per year. The point is not just the big difference in incomes ensuing from this gap in productivities, but also the fact that (i) continuous increases in labour productivity in modern farming puts a downward pressure on agricultural commodity prices, which is transmitted to peasant farmers throughout the world, and (ii) because of their low incomes, these farmers can hardly have access to modern technology.
A rules-based trading system is in the interests of weaker economies.
In response to these criticisms that trade is unfair where countries have different bargaining strengths or very different productivity and living standards, mainstream theorists reply that the lesson of comparative advantage theory is that initial conditions do not prevent countries from being able to exploit the gains from trade. However, where there are asymmetric power relationships, the less powerful countries have a strong interest in a rules-based trading system which limits the ability of economically-stronger countries to exploit their position at the expense of weaker economies. This is a powerful reason why it is in the interests of developing countries to participate in and shape a strong system of trading rules.
2.3 PROTECTION VS. FREE TRADE: ARGUMENTS AND DEBATE.
Everybody would agree today that countries can hardly survive without trade, and that even if they could live in autarky they would suffer much from it. Hence, trade as such is not a policy issue. The important question is how much trade? Should policy makers stand for free trade in all cases or should they envisage providing domestic industries with some degree of protection? The relevant debate is whether there should be more, less or no protection. We discuss below the main arguments traditionally put forward for and against protection.
2.3.1 The case for protection.
Protection can be advocated for purely economic reasons or on other grounds such as equity considerations, national security objectives, the defence of vulnerable groups, to avoid risks rated as unacceptable, and to defend certain interest groups because of political calculation. In the agricultural sector, protection can also be advocated on food security grounds.
Economic arguments.
Economic arguments stress the role of industry learning…
Among the economic arguments for protection the most influential one is that of the infant industry. Protection is justified as a temporary measure while a nascent industry develops and comes to the stage where it will be ready to face international competition. Several reasons may exist to protect an industry during its infant phase. Those more frequently quoted are economies of scale, managerial and technological learning processes, start up costs (e. g. opening marketing channels, bringing in and adapting technology), and economies external to the firms but internal to the industry that may take time and may need help to develop but once developed will allow the industry to stand on its own.
…as well as of market failures…
Protection is also advocated when markets relevant to the activity in question either do not exist or do not function well. Protecting the industry may allow it to operate under these conditions of market failure. Thus, for instance, lack or inadequate working of financial markets in a country may prevent an industry from raising the financial resources needed to modernize and withstand international competition. Protection may enable the industry to make the extra profits required to finance its expansion and technical improvement plans.
There is a related but separate argument in favour of protecting industries which generate positive externalities and spillover effects for other groups. An argument of this nature is used to advocate continued protection to European farmers under the CAP (Common Agricultural Policy). It is claimed that agriculture is a multifunctional activity whose contribution is not just food production but also environmental protection, land stewardship, and preservation of the landscape and lifestyle of the countryside. By protecting European farmers from foreign competition, these beneficial side effects of agriculture, for which European consumers and citizens are believed to be willing to pay, would be preserved.
…and terms of trade effects.
Another economic argument is that known as optimum tariff theory. In the case of importing and exporting countries sufficiently large to affect the world price of the particular commodity, a tariff on imports (or a tax on exports) may serve to improve the terms of trade in favour of the country. This is because by restricting imports the tariff will weaken world demand putting a downward pressure on the price of the imported commodity. Similarly, by restricting exports the export tax will weaken world supply putting an upward pressure on the price of the exported commodity. Of course, gains from protection obtained by a country in this way are at the expense of its trading partners.
A type of protection often applied in practice, known as contingent protection, seeks to counteract "unfair" trading practices, in particular the type of competition that results from export subsidies or from dumping. Protection is advocated because the price at which the commodity enters the country reflects distortionary practices on the exporter's side. Hence, it is not a price that the domestic industry should be expected to match.
Non-economic reasons.
Non-economic reasons involve redistribution of income to either more vulnerable or, often, more powerful groups.
Social and political reasons for protection are often stronger than purely economic arguments. In essence, protection seeks to avoid the negative impact of import competition on the incomes of domestic factor owners. It is also a way of favouring certain groups considered meritorious of positive discrimination by the political decision-making process. This is the case with farmers in many countries, notably in Europe, Japan and the United States. Through the political process, for social and political reasons, societies in these countries have decided to give special economic treatment to their farming sectors, even at the cost of higher food prices to consumers and higher taxes (and also of reduced opportunities to other countries). This is a luxury that developing countries could hardly afford.
Sheer political pressure from powerful industrial or labour groups that stand to lose from free trade is also a common reason for protection.
Producing with the help of protection a more diversified collection of products than would be the case with free trade specialization may also bring wider social and political advantages such as improving national defence. This is an argument typically used for the protection of military and other so-called "strategic" industries.
Food security arguments.
Trade can make a contribution to food security…
Protection can also be advocated for food security reasons. FAO defines the objective of food security as assuring to all human beings on a permanent basis the physical and economic access to the basic foods they need. This implies three different aspects: availability, stability and access. Thus, governments may try to ensure through protection that some minimum level of national production of basic foods is attained. Protection may also serve to shield consumers from severe fluctuations of external origin and to preserve the social and strategic advantage of food. However, the relationship between trade and food security is a complex one.
Trade can contribute to food security in a number of ways: by making up the difference between production and consumption needs; reducing supply variability; fostering economic growth; making more efficient use of world resources; and permitting production to take place in those regions more suited to it. But reliance on trade may also bring some risks such as uncertainty of supplies, world market price instability, and increasing environmental stress if appropriate policies are not in place.
By contributing to growth of more efficient production, trade can be a source of income to a country. At the national level, additional foreign exchange from exports increases the capacity of the country to fill the eventual food gap. At the household level, the income generated by growth can improve access to food. This increase of income can benefit the poorer sections of population, provided they are involved in the production of exports or if there is an internal mechanism of redistribution or trickling down of the income generated. Some constraints may imply that small farmers are not able to benefit from opportunities for export production. Measures should then be taken to put them in a position to benefit from these opportunities. If not, their production could in fact be adversely affected by a possible increase of the price of land (due to increased opportunities of income from land arising from expanded trade).
…but there are also risks.
In developing countries, export opportunities are usually better for non-food cash crops. Increased trade opportunities may therefore induce substitution of food crops by non-food cash crops. This can be favourable for the food security of producers if they can purchase food in local markets at fair prices. Food security could, however, be at risk if inefficiencies in the food marketing system result in high food prices. There are a number of examples where development of export cash crops has also resulted in an increase in food production because of the general improvement of input and service delivery to agriculture and the remaining effects on food crops of fertiliser used for cash crops. There are cases where the particular social and strategic value of food justifies some mechanism of protection. This is the case, for example, of drought-prone countries where food production is highly variable because of the frequent occurrence of droughts and where foreign exchange is mostly earned from agricultural exports. Export crop production is likely to follow the same pattern as food production, and hence foreign exchange earned from exports is likely to be insufficient in a "bad" year to import enough food.
The issue of diversification of agriculture is high in the agenda of many developing countries. One aspect of it is the diversification of agricultural exports. Many developing countries rely for their export earnings on one or two major commodities. Diversification aims at decreasing dependency on the fluctuations of the world market for these commodities and creating a base for more stable income flows.
Some countries are ready to forego income from trade in order to reduce the risk of food dependency on the world market. They are also ready to establish the mechanisms and pay the price to protect their food producers so as to encourage them to produce a certain amount of food. This can be justified when there is uncertainty on supplies (poor transport infrastructure, uncertain access to port facilities or others). It must be noted, however, that food dependency may then be replaced by another type of dependency, such as the dependency on fertiliser imports, particularly in the case of small countries.
Food self-reliance is one approach to food security.
Food dependency could also be induced by unfair trade practices like dumping or excessive export subsidies by trading partners which bring into the domestic market cheap food items against which local producers cannot compete. The issue of food security vs. food self-sufficiency is dealt with in Box 5. A concept that has gained increasing acceptance is that of food self-reliance. It implies maintaining a certain level of domestic production plus a capacity to import in order to meet the food needs of the population by exporting other products. This concept is fully explored in Module II.10 Trade and Food Security: Options for Developing Countries , where food security issues in the context of the Millennium Round of negotiations are discussed.
2.3.2 The case against protection.
Many of the arguments against protection are also used in defence of trade in general, and have already been presented in Section 2.2. The main arguments for free trade (as opposed to simply trade) or, equivalently, the main arguments against protection are four: that protection promotes inefficiency, that it encourages rent-seeking behaviour, that it always implies a net welfare loss, and that there are usually more direct and efficient non-trade measures to achieve the desired objective.
Box 5: Food security vs. food self-sufficiency.
The concept of food self-sufficiency is generally taken to mean the extent to which a country can satisfy its food needs from its own domestic production. It may seem that a country has more control over its food supply if it is not dependent on international markets, where food imports may come from countries which could be politically hostile.
The concepts of food self-sufficiency and food security differ on two fundamental points:
food self-sufficiency looks at national production as the sole source of supply, while food security takes into account commercial imports and food aid as possible sources of commodity supply;
In other words, food self-sufficiency is linked to an overall perspective on development, which emphasises the need for an auto-centric approach, whereas food security is consistent with a view of development which incorporates international specialisation and comparative advantage.
Those who believe that countries should develop international specialisation both within agriculture and between agriculture and other sectors of the economy argue that failure to take advantage of comparative advantage means that the country will not fully exploit its productive potential.
Those who believe that self-sufficiency is more beneficial argue that comparative advantage in export crops such as tea or rubber is not inherent in a country's physical resources, but a result of historical investment in certain industries often by colonising powers who wanted raw materials for their own industries or consumption. They argue that this has locked some countries into producing commodities which face declining terms of trade on inherently unstable international markets. Far from increasing their food security, these countries have declining and wildly fluctuating export earnings, thus making it difficult to plan imports and develop medium-term sectoral or national development plans.
A more significant argument for greater emphasis on food self-sufficiency can be made when a country's main food staple is not traded internationally in great amounts, resulting in a thin market. This is the case for white maize, and possibly for rice. When this occurs, an increase in demand from more than one major importer can push prices up and create difficulties for all importers.
Source: FAO. 1997. Implications of Economic Policy for Food Security: A Training Manual, p.19-21. Training Materials for Agricultural Planning No. 40. Rome.
Protection promotes inefficiency…
The first argument stresses that by isolating domestic producers, at least in part, from the pressures of international competition, protection permits inefficient industries to perpetuate themselves at the expense of domestic consumers and of the soundness of the growth process. It also checks the dynamic process of entrepreneurial learning and innovation stimulated by exposure to international competition. By reducing competition and artificially raising profits, more firms may be attracted and be able to survive in the protected industries than would be economically justified, reducing the market share of the remaining firms and thus preventing the attainment of potential economies of scale.
. distracts effort into rent-seeking.
It is also argued that protectionist measures are usually granted by political decision-makers to production sectors on a rather ad hoc and frequently clientelistic way, and are often not connected to clearly identifiable and measurable losses from trade. This gives rise to situations where entrepreneurs and owners of productive factors in general focus their energies in lobbying decision-makers to obtain administrative concessions which would benefit them - referred to as rent-seeking behaviour. The proponents of free trade argue that since in most cases the political process makes the above almost unavoidable, countries are better advised to go for free trade without exceptions or, short of this, to go for low levels of tariff protection equally and transparently applied to all industries across the board.
…is costly to society…
Another argument against protection is that it makes society as a whole poorer in overall terms. The reason for this welfare loss is explained in greater detail in Module I.3 Instruments of Protection and their Economic Impact. Although producers benefit from protection, and the government benefits from the additional tariff revenue, their gains are more than counterbalanced by the higher prices consumers must pay for the protected commodity. If protection takes place through subsidies to producers or to inputs, then it will be the taxpayers that will lose out.
…and usually more effective alternatives exist.
Of course, any cost to society must be weighed against the benefits which are sought from the protectionist policy. But it is usually the case that there are more direct and more efficient measures to address the market deficiencies which lie behind protectionist measures. For example, if it is desired to encourage infant industries, it would be better to do this through a targeted industrial subsidy than through trade protection which benefits all firms whether infant or not.
2.3.3 The prevalent consensus.
Desire for freer trade is now widespread…
For these reasons, with differences of emphasis, the consensus nowadays among policy-makers around the world is that trade is advantageous and that the growth of international exchanges should be encouraged. The road to increased trade is through progressive reductions in the level of protection. This should be achieved by means of negotiations and reciprocal concessions. There are two methods, not mutually exclusive, to progress along this path. One is through regional trade agreements, which seek the reduction or elimination of trade barriers among a limited set of countries, normally (but not always) adjacent. The other is through multilateral trade negotiations (MTN) , like the ones which have taken place for several decades under GATT and are now taking place under WTO. These agreements are called multilateral because they exclude preferential treatment by one country to another country or set of countries, and are based on the application of the most favoured nation (MFN) clause to all countries entering the agreement 8 .
…but politically often requires concessions from trading partners.
In general, policy-makers do not make trade concessions without a quid pro quo . There is a history of international trade negotiations (and wars) of many centuries behind this. GATT/WTO negotiations are a modern system to discuss and agree on these quid pro quo in an organized and consistent manner. It is interesting that, while mainstream theoretical economists have traditionally focused on the gains from trade, implicitly or openly advocating the unilateral dismantling of trade barriers, policy-makers and practically-oriented policy economists have seen the matter in terms of reciprocal concessions 9 . This is probably due to a better understanding by policy-makers and practical economists of the imperfections and extra-economic features present in the operation of markets, as well as policy-makers' exposure to pressures from political constituencies who may suffer from international competition.
2.4 REGIONAL TRADING BLOCS.
2.4.1 Different types of blocs and their effects.
Freer trade can be pursued in either a multilateral or regional context.
Regional Trading Blocs (RTBs) can be broadly seen as reducing the economic significance of national political boundaries within a geographical area. There are various types of regional agreements that involve different commitments from participating countries. In Free Trade Areas (FTA) , member countries reduce or eliminate trade barriers among themselves but keep separate trade regimes with third countries. This allows members of FTAs to protect specific sectors against competition from non-members, if so they wish, but also creates many problems of custom administration because of the need to control re-exports . Thus, if countries A and B are members of a FTA, with zero tariffs on each other's imports, and A has a high tariff on computers while that of B is very low, traders will try to import computers into B and then re-export them to A. This problem is not present in Customs Unions (CU) , which are like FTAs except that participating countries agree on a common trade regime vis-a-vis third parties, i. e. on a common external tariff structure. CUs do not need to control re-exports but leave less room for individual members to protect selected industries, since they will have to negotiate with other members a high common external tariff for those industries. A more committed form of RTBs are Economic Unions (EU) . EUs are CUs where factors and not just commodities can circulate freely. Countries forming EUs may also harmonize aspects other than their economic policies such as financial and tax systems or labour regulations.
What advantages do countries derive from RTBs? This depends on many circumstances but, in general, advantages will be bigger the more potentially complementary the concerned national economies are. For example, two countries which have followed an import substitution strategy to build up a diversified industrial base but whose comparative advantage lies in different industries could gain significantly from a RTB. The reason is that there will be more room for specialization according to comparative advantage if the economies are complementary. Thus, trade integration in agricultural products between two countries will be more advantageous if one country specializes in tropical and the other in temperate products than if both are temperate or tropical producers.
When countries enter a RTB the reciprocal reduction or elimination of tariffs promotes the increase of trade flows among them over what they traded under protection. This effect is called trade creation and is a positive result of RTBs. The agreement will also promote the substitution of supplies from member countries for supplies from non-member countries, not because the member country is the cheapest possible source but because it enjoys a preferential tariff or no tariff at all. This effect is called trade diversion and may have a negative impact on efficiency since countries in the RTB may be importing goods from each other that are cheaper in countries outside the bloc.
2.4.2 The proliferation of regional trading blocs and agreements.
Regional trade arrangements are increasingly popular.
In parallel with multilateral trade negotiations, RTBs have been initiated throughout the world since the 1950s among both developed and developing countries. To date, the most significant one has been the European Union (EU), which has had considerable impact on world agricultural markets and provides a benchmark for comparative analysis when assessing the coverage of other agreements.
Out of the total of 198 regional trade agreements notified to the WTO (or previously to the GATT), 119 are presently in force 10 . In recent years, policy-makers from developing countries have stated their commitment to regional trading agreements. Box 6 highlights some of the main existing agreements among developing countries.
Box 6: Main regional agreements among developing countries.
The political impetus to conclude regional trade agreements is, if anything, increasing. Several factors contribute to this: purely political considerations (as in the case of the EU); economies of scale, so that countries fear that their producers may be at a disadvantage vis-a-vis their larger scale competitors if they remain unaligned on a regional scale; the desire to use regional agreements to 'lock in' and even extend the multilateral liberalization achieved in the Uruguay Round (UR); and the drawn out UR negotiations and fear that there would be no final agreement which led countries to strengthen regional blocs in anticipation of trade polarization (WTO, 1998).
Agriculture can often be a problematic sector in RTBs because of the degree of domestic intervention in agricultural markets designed to achieve particular price and income goals. If trade barriers to agricultural products are removed as part of a RTB arrangement, but countries continue to pursue different price policies within the RTB, then major trade distortions will result. Allowing for transport and marketing costs, agricultural products will flow out of countries with low market prices and flow into the country with the highest market price in the RTB once trade barriers are removed within a regional integration arrangement. For this reason, agriculture is often left out of RTBs (e. g. the European Free Trade Association) or liberalized within the framework of specific tariff quotas (e. g. the Central European Free Trade Agreement). It is unclear if regional integration arrangements which exclude agriculture meet the GATT requirement for a waiver for RTBs that substantially all trade should be covered by the arrangement. The alternative is to develop a common agricultural policy for the region as a whole, as the EU did. However, a common policy will result in a significant redistribution of income where members of a RTB have different levels of self-sufficiency for different products, as the EU has found. There is no easy solution to these problems as long as countries joining a RTB have different levels of agricultural protection.
2.5 RECENT PUBLIC OPINION CONCERNS ON INTERNATIONAL TRADE.
Trade policy agenda now driven more by new concerns than by the traditional debates over terms of trade and unequal exchange.
While structuralist and dependency views have somewhat receded in recent years (notwithstanding the falling prices of primary commodities and the debt crisis) the public debate on issues related to international trade has widened to include environmental, social and ethical concerns. This is a reflection of the uneasiness of many consumers about the acceptability of goods offered to them through trade either because of their inherent characteristics or because of the social relations under which they were produced. It is also related to the upsurge of "ethical movements", particularly in OECD countries. A large variety of non-governmental organizations feature prominently in the debate on these issues 11 .
Some of the demands coming from this opinion sector are the following:
labelling of organic produce; labelling of goods containing genetically-modified organisms; animal and plant health and human safety; social clauses in trade agreements to make access to markets conditional on exporting nations meeting previously agreed core minimum labour standards; promotion of human rights-sensitive codes of conduct by firms operating internationally; promotion of 'fair trade' networks (see Box 7).
Box 7: Fair trade.
Fair trade (also called alternative trade) networks are being promoted by a growing number of organizations. It consists of direct links between producers from developing countries and consumers, mostly in industrialized countries. Many of the small producers involved in direct trading links are women's co-operatives. Fair trade takes advantage of the willingness of a growing number of consumers to pay a different price and eventually to buy in different shops in order to ensure that what they buy has been produced under certain conditions and contributes to some social end. The criteria used to determine whether a trade relation is 'fair' tend to vary according to each alternative trade organization but some basic components may be summarized as follows:
direct trading links with producers in developing countries; guaranteed minimum price to producers (country specific); price premium to producers; credit allowances or advance payments; goods have to be produced under certain "acceptable" conditions; and long term relationships.
Fair trade in food started in the early 1970s with cane sugar and coffee sold in specialized alternative shops. With the introduction in 1988 of fair trade labels, food products could also be sold through conventional marketing channels, thereby allowing a substantial expansion of the market for fair trade foods. These now include, inter alia , coffee, cocoa, tea, bananas and honey.
Advocates of these concerns propose that these issues be part of international trade negotiations and agreements, such as those taking place within the WTO framework. Others argue that trade negotiations should concentrate on economic issues, while human rights, health, social and cultural issues should be addressed in other fora.
Loss of indigenous skills and knowledge is another concern.
Another concern over trade liberalization of food and agriculture products that has been expressed by academics, NGOs and farmers' organizations is the belief that this is causing peasant agriculture and its accumulated traditional knowledge to disappear. Similar concerns are echoed on the cultural impoverishment brought about by, for example, the disappearance of indigenous crafts and indigenous knowledge. Even though trade is said to generate knowledge and trust, it is argued that technologies are imposed on developing countries whose inhabitants learn to 'consume' new techniques but not to adapt or generate new science and technology. Globalization trends have given new momentum to these concerns.
REFERENCES.
Amir, S. 1973. Le Dйveloppement Inйgal. Paris, Les Editions de Minuit.
Baghwati, J. 1988. Protectionism. Cambridge, MA, MIT Press.
Corden, W. M. 1974. Trade Policy and Economic Welfare. Oxford, Clarendon Press.
Edwards, S. 1995. Crisis and Reform in Latin America: from Despair to Hope. Oxford, Oxford University Press.
Ellsworth, P. T. 1964. The International Economy. Third Edition. New York, The Macmillan Company.
Emmanuel, A. 1972. Unequal Exchange: a Study of the Imperialism of Trade. London, Monthly Review Press.
Johns, R. A. 1985. International Trade Theories and the Evolving International Economy. London, Frances Printer Publishers.
Krugman, P. R & Obstfeld, M. 1997. International Economics: Theory and Policy. Reading, Massachusetts, Addison-Wesley.
Lipsey, R. 1960. The Theory of Customs Unions: a General Survey. Economic Journal. Vol. 70.
Mazoyer, M. & Roudart, L. 1997. Histoire des Agricultures du Monde. Paris, Йditions du Seuil.
Prebisch, R. 1959. Commercial Policy in the Underdeveloped Countries. American Economic Review. Papers and Proceedings, 49 No. 2.
Prebisch, R. 1950. The Economic Development of Latin America and its Principal Problems. New York, United Nations.
Streeten, P. 1987. What Price Food? Agricultural Price Policies in Developing Countries. Ithaca, New York, Cornell University Press.
WTO. 1998. Annual Report, 1998.
1 Thus, if in our example one chip exchanges internationally for 90 kg of sugar, the gains from trade will go more to the United States than to Brazil. By selling one chip to Brazil, the United States obtains 90 kg of sugar, i. e. 40 kg more (80 percent more) than it would have obtained domestically. By selling 90 kg of sugar to the United States, Brazil obtains 1 chip, i. e. 0.1 chips more (11.1 percent more) than it would have obtained domestically.
2 "More eager demanders" means in this context that United States consumers are prepared to give up more chips per ton of sugar than Brazilian consumers do.
3 This does not mean that the total gain to the country will fall since the volume of exports may rise in a way that more than compensates for the fall in the terms of trade.
4 The terms of trade are here defined as a price index of export commodities divided by a price index of import commodities of these countries.
5 The income elasticity of demand for a commodity indicates the proportion in which demand varies when income changes. If the increase in demand is proportionally bigger than the growth of income, the demand is said to be "elastic". In the opposite case it is said to be "inelastic" or "rigid".
6 We can include here, among others, authors like Samir Amin, Paul Baran, Theotonio Dos Santos, Andrй Gunder Frank, Osvaldo Sunkel and Immanuel Wallerstein.
7 By extra-economic domination it is understood a form of dominion that arises not from a superior capacity to compete in more or less free and open markets, but from the use of coercion grounded on political, military or institutional superiority.
8 The application of the most favoured nation clause by country A to country B means that all imports of A from B will receive the best import treatment that A gives to any of its other trading partners.
9 This was not the case during the 1980s when many countries in the developing world dismantled their protection systems without any negotiation or reciprocal trade concession from their trading partners in the developed world. If these countries had decided to move to a more open economic system, why did they do it unilaterally not taking this opportunity to negotiate and seek some reciprocity from their trading partners? The answer probably is that negotiating conditions were very unfavourable to them at the time. They were in fact under great pressure to adjust their economies in view of their indebtedness, the reduction of foreign investment flows, the high international interest rates, and the strong fall in the prices of primary commodities that took place in the 1980s.
11 Organizations such as Human Rights Watch and the International Secretariat of Amnesty International are engaged in promoting the development of corporate human rights-sensitive codes of conduct. Non-traditional agricultural exports (NTAEs), especially floriculture, are highlighted as in need of special attention in codes of conduct and labour standards agreements because of the potentially severe health hazards involved. The Clean Clothes Campaign (CCC) in the Netherlands aims to improve labour standards and conditions of workers in the garments industry world-wide.

Free Trade Agreement: Types and Examples.
Definition, Types and Examples of U. S. Agreements.
Definition: Trade agreements are when two or more nations agree on the terms of trade between them. They determine the tariffs and duties that countries impose on imports and exports. All trade agreements affect international trade.
Imports are goods and services produced in a foreign country and bought by domestic residents. That includes anything shipped into the country even if it by the foreign subsidiary of a domestic firm.
If the consumer is inside the country's boundaries and the provider is outside, then the good or service is an import.
Exports are goods and services that are made in a country and sold outside its borders. That includes anything shipped from a domestic company to its foreign affiliate or branch.
Three Types of Trade Agreements.
There are three types of trade agreements. The first is a unilateral trade agreement . It occurs when a country imposes trade restrictions and no other country reciprocates.
A country can also unilaterally loosen trade restrictions, but that rarely happens. It would put the country at a competitive disadvantage. The United States and other developed countries only do this as a type of foreign aid. They want to help emerging markets strengthen certain industries. The foreign industry is too small to be a threat. It helps the emerging market's economy grow, creating new markets for U. S. exporters.
Bilateral trade agreements are between two countries. Both countries agree to loosen trade restrictions to expand business opportunities between them. They lower tariffs and confer preferred trade status with each other. The sticking point usually centers around key protected or subsidized domestic industries.
For most countries, these are in the automotive, oil or food production industries. The United States has 16 bilateral agreements. The Obama administration was negotiating the world's largest bilateral agreement. It was the Transatlantic Trade and Investment Partnership with the European Union.
Multilateral trade agreements are the most difficult to negotiate. These are among three countries or more. The greater the number of participants, the more difficult the negotiations are. They are also more complex, since each country has its own needs and requests.
Once negotiated, multilateral agreements are very powerful. They cover a larger geographic area. That confers a greater competitive advantage on the signatories. All countries also give each other most favored nation status. They agree to treat each other equally.
The largest multilateral agreement is the North American Free Trade Agreement. It is between the United States, Canada and Mexico. Their combined economic output is $20 trillion. NAFTA quadrupled trade to $1.14 trillion in 2018 But it also cost between 500,000 to 750,000 U. S. jobs. Most were in the manufacturing industry in California, New York, Michigan and Texas. For more, see Pros and Cons of Free Trade Agreements.
The United States has one other multilateral regional trade agreement. The United States negotiated the Central American-Dominican Republic Free Trade Agreement. It was with Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador. It eliminated tariffs on more than 80 percent of U. S. exports.
The Trans-Pacific Partnership would have replaced NAFTA as the world's largest agreement. In 2017, President Trump withdrew the United States from it.
The Role of the WTO in Trade Agreements.
Once agreements move beyond the regional level, they usually need help. The World Trade Organization steps in at that point It is an international body that helps negotiate global trade agreements. Once in place, the WTO enforces the agreements and responds to complaints.
Pronto para começar a construir riqueza? Inscreva-se hoje para aprender a economizar para uma reforma antecipada, enfrentar sua dívida e aumentar seu patrimônio líquido.
The world almost received greater free trade from the next round, known as the Doha Round Trade Agreement. If successful, Doha would have reduced tariffs across the board for all WTO members.
Unfortunately, the two most powerful economies refused to budge on a key sticking point. Both the United States and the EU resisted lowering farm subsidies. These subsidies made their food export prices lower than those in many emerging market countries. Low food prices would have put many local farmers out of business. When that happens, they must look for jobs in overcrowded urban areas. The U. S. and EU refusals to cut subsidies doomed the Doha round. It is a thorn in the side of all future world multilateral trade agreements.
The failure of Doha allowed China to gain a global trade foothold. It has signed bilateral trade agreements with dozens of countries in Africa, Asia and Latin America. Chinese companies receive rights to develop the country's oil and other commodities. In return, China provides loans and technical or business support,

Principles of Economics.
17.3 Restrictions on International Trade.
Objetivos de aprendizado.
Define the term protectionist policy and illustrate the general impact in a market subject to protectionist policy. Describe the various forms of protectionist policy. Discuss and assess the arguments used to justify trade restrictions.
In spite of the strong theoretical case that can be made for free international trade, every country in the world has erected at least some barriers to trade. Trade restrictions are typically undertaken in an effort to protect companies and workers in the home economy from competition by foreign firms. A protectionist policy is one in which a country restricts the importation of goods and services produced in foreign countries. The slowdown in the U. S. economy late in 2007 and in 2008 has produced a new round of protectionist sentiment—one that became a factor in the 2008 U. S. presidential campaign.
The United States, for example, uses protectionist policies to limit the quantity of foreign-produced sugar coming into the United States. The effect of this policy is to reduce the supply of sugar in the U. S. market and increase the price of sugar in the United States. The 2008 U. S. Farm Bill sweetened things for sugar growers even more. It raised the price they are guaranteed to receive and limited imports of foreign sugar so that American growers will always have at least 85% of the domestic market. The bill for the first time set an income limit—only growers whose incomes fall below $1.5 million per year (for couples) or $750,000 for individuals will receive direct subsidies (The Wall Street Journal, 2008).
The U. S. price of sugar is almost triple the world price of sugar, thus reducing the quantity consumed in the United States. The program benefits growers of sugar beets and sugar cane at the expense of consumers.
Figure 17.10 The Impact of Protectionist Policies.
Protectionist policies reduce the quantities of foreign goods and services supplied to the country that imposes the restriction. As a result, such policies shift the supply curve to the left for the good or service whose imports are restricted. In the case shown, the supply curve shifts to S 2 , the equilibrium price rises to P 2 , and the equilibrium quantity falls to Q 2 .
Source: Historical Statistics, Colonial Times to 1970: Statistical Abstract of the United States 1998, Table no. 1325; Statistical Abstract of the United States, 1990 ; U. S. International Commission (dataweb. usitc. gov/prepared_reports. asp).
In general, protectionist policies imposed for a particular good always reduce its supply, raise its price, and reduce the equilibrium quantity, as shown in Figure 17.11 “U. S. Tariff Rates, 1820–2005”. Protection often takes the form of an import tax or a limit on the amount that can be imported, but it can also come in the form of voluntary export restrictions and other barriers.
A tariff is a tax on imported goods and services. The average tariff on dutiable imports in the United States (that is, those imports on which a tariff is imposed) is about 4%. Some imports have much higher tariffs. For example, the U. S. tariff on imported frozen orange juice is 35 cents per gallon (which amounts to about 40% of value). The tariff on imported canned tuna is 35%, and the tariff on imported shoes ranges between 2% and 48%.
A tariff raises the cost of selling imported goods. It thus shifts the supply curve for goods to the left, as in Figure 17.10 “The Impact of Protectionist Policies”. The price of the protected good rises and the quantity available to consumers falls.
Antidumping Proceedings.
One of the most common protectionist measures now in use is the antidumping proceeding. A domestic firm, faced with competition by a foreign competitor, files charges with its government that the foreign firm is dumping , or charging an “unfair” price. Under rules spelled out in international negotiations that preceded approval of the World Trade Organization, an unfair price was defined as a price below production cost or below the price the foreign firm charges for the same good in its own country. While these definitions may seem straightforward enough, they have proven to be quite troublesome. The definition of “production cost” is a thoroughly arbitrary procedure. In defining cost, the government agency invariably includes a specification of a “normal” profit. That normal profit can be absurdly high. The United States Department of Justice, which is the U. S. agency in charge of determining whether a foreign firm has charged an unfair price, has sometimes defined normal profit rates as exceeding production cost by well over 50%, a rate far higher than exists in most U. S. industry.
The practice of a foreign firm charging a price in the United States that is below the price it charges in its home country is common. The U. S. market may be more competitive, or the foreign firm may simply be trying to make its product attractive to U. S. buyers that are not yet accustomed to its product. In any event, such price discrimination behavior is not unusual and is not necessarily “unfair.”
In the United States, once the Department of Justice has determined that a foreign firm is guilty of charging an unfair price, the U. S. International Trade Commission must determine that the foreign firm has done material harm to the U. S. firm. If a U. S. firm has suffered a reduction in sales and thus in employment it will typically be found to have suffered material harm, and punitive duties will be imposed.
A quota is a direct restriction on the total quantity of a good or service that may be imported during a specified period. Quotas restrict total supply and therefore increase the domestic price of the good or service on which they are imposed. Quotas generally specify that an exporting country’s share of a domestic market may not exceed a certain limit.
In some cases, quotas are set to raise the domestic price to a particular level. Congress requires the Department of Agriculture, for example, to impose quotas on imported sugar to keep the wholesale price in the United States above 22 cents per pound. The world price is typically less than 10 cents per pound.
A quota restricting the quantity of a particular good imported into an economy shifts the supply curve to the left, as in Figure 17.10 “The Impact of Protectionist Policies”. It raises price and reduces quantity.
An important distinction between quotas and tariffs is that quotas do not increase costs to foreign producers; tariffs do. In the short run, a tariff will reduce the profits of foreign exporters of a good or service. A quota, however, raises price but not costs of production and thus may increase profits. Because the quota imposes a limit on quantity, any profits it creates in other countries will not induce the entry of new firms that ordinarily eliminates profits in perfect competition. By definition, entry of new foreign firms to earn the profits available in the United States is blocked by the quota.
Voluntary Export Restrictions.
Voluntary export restrictions are a form of trade barrier by which foreign firms agree to limit the quantity of goods exported to a particular country. They became prominent in the United States in the 1980s, when the U. S. government persuaded foreign exporters of automobiles and steel to agree to limit their exports to the United States.
Although such restrictions are called voluntary, they typically are agreed to only after pressure is applied by the country whose industries they protect. The United States, for example, has succeeded in pressuring many other countries to accept quotas limiting their exports of goods ranging from sweaters to steel.
A voluntary export restriction works precisely like an ordinary quota. It raises prices for the domestic product and reduces the quantity consumed of the good or service affected by the quota. It can also increase the profits of the firms that agree to the quota because it raises the price they receive for their products.
Other Barriers.
In addition to tariffs and quotas, measures such as safety standards, labeling requirements, pollution controls, and quality restrictions all may have the effect of restricting imports.
Many restrictions aimed at protecting consumers in the domestic market create barriers as a purely unintended, and probably desirable, side effect. For example, limitations on insecticide levels in foods are often more stringent in the United States than in other countries. These standards tend to discourage the import of foreign goods, but their primary purpose appears to be to protect consumers from harmful chemicals, not to restrict trade. But other nontariff barriers seem to serve no purpose other than to keep foreign goods out. Tomatoes produced in Mexico, for example, compete with those produced in the United States. But Mexican tomatoes tend to be smaller than U. S. tomatoes. The United States once imposed size restrictions to “protect” U. S. consumers from small tomatoes. The result was a highly effective trade barrier that protected U. S. producers and raised U. S. tomato prices. Those restrictions were abolished under terms of the North American Free Trade Agreement, which has led to a large increase in U. S. imports of Mexican tomatoes and a reduction in U. S. tomato production (Guajardo, R. G. and Homero A. Elizondo, 2003).
Justifications for Trade Restriction: An Evaluation.
The conceptual justification for free trade is one of the oldest arguments in economics; there is no disputing the logic of the argument that free trade increases global production, worldwide consumption, and international efficiency. But critics stress that the argument is a theoretical one. In the real world, they say, there are several arguments that can be made to justify protectionist measures.
Infant Industries.
One argument for trade barriers is that they serve as a kind of buffer to protect fledgling domestic industries. Initially, firms in a new industry may be too small to achieve significant economies of scale and could be clobbered by established firms in other countries. A new domestic industry with potential economies of scale is called an infant industry.
Consider the situation in which firms in a country are attempting to enter a new industry in which many large firms already exist in the international arena. The foreign firms have taken advantage of economies of scale and have therefore achieved relatively low levels of production costs. New firms, facing low levels of output and higher average costs, may find it difficult to compete. The infant industry argument suggests that by offering protection during an industry’s formative years, a tariff or quota may allow the new industry to develop and prosper.
Figure 17.11 U. S. Tariff Rates, 1820–2005.
Tariff rates on “dutiable imports” have fallen dramatically over the course of U. S. history.
Sources: Historical Statistics, Colonial Times to 1970; Statistical Abstract of the United States, 1998, Table no. 1325; Statistical Abstract of the United States, 1990; U. S. International Commission dataweb. usitc. gov/prepared_reports. asp).
The infant industry argument played a major role in tariff policy in the early years of U. S. development. Figure 17.11 “U. S. Tariff Rates, 1820–2005” shows average tariff rates on dutiable imports in the United States since 1820. The high tariffs of the early nineteenth century were typically justified as being necessary to allow U. S. firms to gain a competitive foothold in the world economy. As domestic industries became established, tariff rates fell. Subsequent increases in tariffs were a response in part to internal crises: the Civil War and the Great Depression. Tariff rates have fallen dramatically since 1930.
Critics of the infant industry argument say that once protection is in place, it may be very difficult to remove. Inefficient firms, they contend, may be able to survive for long periods under the umbrella of infant industry protection.
Strategic Trade Policy.
A new version of the infant industry argument has been used in the past few years as technological developments have spawned whole new industries and transformed existing ones. The new version of the infant industry argument assumes an imperfectly competitive market.
Suppose technological change has given rise to a new industry. Given the economies of scale in this industry, only a few firms are likely to dominate it worldwide—it will likely emerge as an oligopoly. The firms that dominate the industry are likely to earn economic profits that will persist. Furthermore, because there will be only a few firms, they will be located in only a few countries. Their governments could conceivably impose taxes on these firms’ profits that would enhance economic well-being within the country. The potential for such gains may justify government efforts to assist firms seeking to acquire a dominant position in the new industry.
Government aid could take the form of protectionist trade policies aimed at allowing these firms to expand in the face of foreign competition, assistance with research and development efforts, programs to provide workers with special skills needed by the industry, or subsidies in the form of direct payments or special tax treatment. Any such policy aimed at promoting the development of key industries that may increase a country’s domestic well-being through trade with the rest of the world is known as a strategic trade policy.
Although strategic trade policy suggests a conceptually positive role for government in international trade, proponents of the approach note that it has dangers. Firms might use the strategic trade argument even if their development were unlikely to offer the gains specified in the theory. The successful application of the approach requires that the government correctly identify industries in which a country can, in fact, gain dominance—something that may not be possible. Various European governments provided subsidies to firms that were involved in the production of Airbus, which is now a major competitor in the airplane industry. On the other hand, Britain and France subsidized the development of the supersonic plane called the Concorde. After only a few Concordes had been produced, it became obvious that the aircraft was a financially losing proposition and production was halted. The airline has now gone out of business.
Finally, those firms whose success strategic trade policy promotes might have sufficient political clout to block the taxes that would redistribute the gains of the policies to the population in general. Thus, the promise of strategic trade policy is unlikely to be fulfilled.
National Security.
It is sometimes argued that the security of the United States would be threatened if this country depended on foreign powers as the primary source of strategic materials. In time of war, the United States might be cut off from sources of foreign supply and lose some of the materials upon which U. S. industry depends.
One area where the national security argument is applied is the oil industry. Given the volatility of the political situation in the Middle East, some people say, the United States should protect the domestic oil industry in order to ensure adequate production capability in the event Middle Eastern supplies are cut off.
An alternative to tariff protection of strategic commodities is to stockpile those commodities for use in time of crisis. For example, the United States maintains a strategic petroleum reserve for use in case of a cutoff in foreign supplies or domestic crises. For example, strategic oil reserves were tapped in the wake of pipeline and refinery disruptions following Hurricane Katrina in 2005.
Job Protection.
The desire to maintain existing jobs threatened by foreign competition is probably the single most important source of today’s protectionist policies. Some industries that at one time had a comparative advantage are no longer among the world’s lowest-cost producers; they struggle to stay afloat. Cost cutting leads to layoffs, and layoffs lead to demands for protection.
The model of international trade in perfect competition suggests that trade will threaten some industries. As countries specialize in activities in which they have a comparative advantage, sectors in which they do not have this advantage will shrink. Maintaining those sectors through trade barriers blocks a nation from enjoying the gains possible from free trade.
A further difficulty with the use of trade barriers to shore up employment in a particular sector is that it can be an enormously expensive strategy. Suppose enough of a foreign good is kept out of the United States to save one U. S. job. That shifts the supply curve slightly to the left, raising prices for U. S. consumers and reducing their consumer surplus. The loss to consumers is the cost per job saved. Estimates of the cost of saving one job in the steel industry through restrictions on steel imports, for example, go as high as $800,000 per year.
Cheap Foreign Labor and Outsourcing.
One reason often given for the perceived need to protect American workers against free international trade is that workers must be protected against cheap foreign labor. This is an extension of the job protection argument in the previous section. From a theoretical point of view, of course, if foreign countries can produce a good at lower cost than we can, it is in our collective interest to obtain it from them. But workers counter by saying that the low wages of foreign workers means that foreign workers are exploited. To compete with foreign workers, American workers would have to submit themselves to similar exploitation. This objection, however, fails to recognize that differences in wage rates generally reflect differences in worker productivity.
Consider the following example: Suppose U. S. workers in the tool industry earn $20 per hour while Indonesian workers in the tool industry earn only $2 per hour. If we assume that the tool industry is competitive, then the wages in both countries are based on the marginal revenue product of the workers. The higher wage of U. S. workers must mean that they have a higher marginal product—they are more productive. The higher wage of U. S. workers need not mean that labor costs are higher in the United States than in Indonesia.
Further, we have seen that what matters for trade is comparative advantage, not comparative labor costs. When each nation specializes in goods and services in which it has a comparative advantage—measured in the amounts of other goods and services given up to produce them—then world production, and therefore world consumption, rises. By definition, each nation will have a comparative advantage in something.
A particularly controversial issue in industrialized economies is outsourcing , in which firms in a developed country transfer some of their activities abroad in order to take advantage of lower labor costs in other countries. Generally speaking, the practice of outsourcing tends to reduce costs for the firms that do it. These firms often expand production and increase domestic employment, as is discussed in the accompanying Case in Point essay.
Differences in Environmental Standards.
Another justification for protectionist measures is that free trade is unfair if it pits domestic firms against foreign rivals who do not have to adhere to the same regulatory standards. In the debate over NAFTA, for example, critics warned that Mexican firms, facing relatively lax pollution control standards, would have an unfair advantage over U. S. firms if restraints on trade between the two countries were removed.
Economic theory suggests, however, that differences in pollution-control policies can be an important source of comparative advantage. In general, the demand for environmental quality is positively related to income. People in higher-income countries demand higher environmental quality than do people in lower-income countries. That means that pollution has a lower cost in poorer than in richer countries. If an industry generates a great deal of pollution, it may be more efficient to locate it in a poor country than in a rich country. In effect, a poor country’s lower demand for environmental quality gives it a comparative advantage in production of goods that generate a great deal of pollution.
Provided the benefits of pollution exceed the costs in the poor country, with the costs computed based on the preferences and incomes of people in that country, it makes sense for more of the good to be produced in the poor country and less in the rich country. Such an allocation leaves people in both countries better off than they would be otherwise. Then, as freer trade leads to higher incomes in the poorer countries, people there will also demand improvements in environmental quality.
Do economists support any restriction on free international trade? Nearly all economists would say no. The gains from trade are so large, and the cost of restraining it so high, that it is hard to find any satisfactory reason to limit trade.
Key Takeaways.
Protectionist measures seek to limit the quantities of goods and services imported from foreign countries. They shift the supply curve for each of the goods or services protected to the left. The primary means of protection are tariffs and quotas. Antidumping proceedings have emerged as a common means of protection. Voluntary export restrictions are another means of protection; they are rarely voluntary. Other protectionist measures can include safety standards, restrictions on environmental quality, labeling requirements, and quality standards. Protectionist measures are sometimes justified using the infant industry argument, strategic trade policy, job protection, “cheap” foreign labor and outsourcing, national security, and differences in environmental standards.
Suppose the United States imposes a quota reducing its imports of shoes by one-half (roughly 85–90% of the shoes now sold in the United States are imported). Assume that shoes are produced under conditions of perfect competition and that the equilibrium price of shoes is now $50 per pair. Illustrate and explain how this quota will affect the price and output of shoes in the United States.
Case in Point: Outsourcing and Employment.
The phenomenon of outsourcing has become common as the Internet and other innovations in communication have made it easier for firms to transfer aspects of their production overseas. At the same time, countries such as India and China have invested heavily in education and have produced a sizable workforce of professional people capable of filling relatively high level positions for firms in more developed countries.
The very idea of outsourcing rankles politicians on the left and on the right. In the United States, there have been numerous congressional hearings on outsourcing and proposals to block firms that engage in the practice from getting government contracts.
By outsourcing, firms are able to reduce their production costs. As we have seen, a reduction in production costs translates into increased output and falling prices. From a consumer’s point of view, then, outsourcing should be a very good thing. The worry many commentators express, however, is that outsourcing will decimate employment in the United States, particularly among high-level professionals. Matthew J. Slaughter, an economist at Dartmouth University, examined employment trends from 1991 to 2001 among multinational U. S. firms that had outsourced jobs. Those firms outsourced 2.8 million jobs during the period.
Were the 2.8 million jobs simply lost? Mr. Slaughter points out that there are three reasons to expect that the firms that reduced production costs by outsourcing would actually increase their domestic employment. First, by lowering cost, firms are likely to expand the quantity they produce. The foreign workers who were hired, who Mr. Slaughter refers to as “affiliate workers,” appeared to be complements to American workers rather than substitutes. If they are complements rather than substitutes, then outsourcing could lead to increased employment in the country that does the outsourcing.
A second reason outsourcing could increase employment is that by lowering production cost, firms that increase the scale of their operations through outsourcing need more domestic workers to sell the increased output, to coordinate its distribution, and to develop the infrastructure to handle all those goods.
Finally, firms that engage in outsourcing are also likely to increase the scope of their operations. They will need to hire additional people to explore other product development, to engage in research, and to seek out new markets for the firm’s output.
Thus, Mr. Slaughter argues that outsourcing may lead to increased employment because domestic workers are complements to foreign workers, because outsourcing expands the scale of a firm’s operations, and because it expands the scope of operations. What did the evidence show? Remember the 2.8 million jobs that multinational firms based in the United States outsourced between 1991 and 2001? Employment at those same U. S. firms increased by 5.5 million jobs during the period. Thus, with the phenomena of complementarity, increases in scale, and increases of scope, each job outsourced led to almost two additional jobs in the United States.
The experience of two quite dissimilar firms illustrates the phenomenon. Wal-Mart began expanding its operations internationally in about 1990. Today, it manages its global operations from its headquarters in Bentonville, Arkansas where it employs 15,000 people. Roughly 1,500 of these people coordinate the flow of goods among Wal-Mart’s stores throughout the world. Those 1,500 jobs would not exist were it not for globalization. Xilinx, the high technology research and development firm, generates sales of about $1.5 billion per year. Sixty-five percent of its sales are generated outside the United States. But 80% of its employees are in the United States.
Outsourcing, then, generates jobs. It does not destroy them. Mr. Slaughter concludes: “Instead of lamenting ongoing foreign expansion of U. S. multinationals, if history is our guide then we should be encouraging it.”
Source: Matthew J. Slaughter, “Globalization and Employment by U. S. Multinationals: A Framework and Facts,” Daily Tax Report (March 26, 2004): 1–12.
Answer to Try It! Problema.
The quota shifts the supply curve to the left, increasing the price of shoes in the United States and reducing the equilibrium quantity. In the case shown, the price rises to $68. Because you are not given the precise positions of the demand and supply curves, you can only conclude that price rises; your graph may suggest a different price. The important thing is that the new price is greater than $50.
Referências.
Guajardo, R. G., and Homero A. Elizondo, “North American Tomato Market: A Spatial Equilibrium Perspective,” Applied Economics , 35(3) (February 2003): 315–22.
The Wall Street Journal , “Who Wants to Be a Millionaire?”, May 14, 2008, p. A20.
This is a derivative of Principles of Economics by a publisher who has requested that they and the original author not receive attribution, which was originally released and is used under CC BY-NC-SA. Este trabalho, salvo indicação expressa em contrário, está licenciado sob uma Licença Internacional Creative Commons Atribuição-Não-Comercial-Partilha 4.0.
Chapter 1: Economics: The Study of Choice.
Chapter 2: Confronting Scarcity: Choices in Production.
Chapter 3: Demand and Supply.
Chapter 4: Applications of Demand and Supply.
Chapter 5: Elasticity: A Measure of Response.
Chapter 6: Markets, Maximizers, and Efficiency.
Chapter 7: The Analysis of Consumer Choice.
Chapter 8: Production and Cost.
Chapter 9: Competitive Markets for Goods and Services.
Chapter 10: Monopoly.
Chapter 11: The World of Imperfect Competition.
Chapter 12: Wages and Employment in Perfect Competition.
Chapter 13: Interest Rates and the Markets for Capital and Natural Resources.
Chapter 14: Imperfectly Competitive Markets for Factors of Production.
Chapter 15: Public Finance and Public Choice.
Chapter 16: Antitrust Policy and Business Regulation.
Chapter 17: International Table.
Chapter 18: The Economics of the Environment.
Chapter 19: Inequality, Poverty, and Discrimination.
Chapter 20: Macroeconomics: The Big Picture.
Chapter 21: Measuring Total Output and Income.
Chapter 22: Aggregate Demand and Aggregate Supply.
Chapter 23: Economic Growth.
Chapter 24: The Nature and Creation of Money.
Chapter 25: Financial Markets and the Economy.
Chapter 26: Monetary Policy and the Fed.
Chapter 27: Government and Fiscal Policy.
Chapter 28: Consumption and the Aggregate Expenditures Model.
Chapter 29: Investment and Economic Activity.
Chapter 30: Net Exports and International Finance.
Chapter 31: Inflation and Unemployment.
Chapter 32: A Brief History of Macroeconomic Thought and Policy.
Chapter 33: Economic Development.
Chapter 34: Socialist Economies in Transition.
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