International Trade and Economic Development

Wednesday 6.1, International Trade and Economic DevelopmentSWBAT apply concepts of supply, demand, trade, and comparative advantage to the economies of different countries.

Agenda1. Warm Up #52. Notes: International Trade

and Economic Development

3. Work on final project in groups

Homework• Notebook Check #4

Thursday-Friday!!!• Final Projects due June 9

and June 10 and June 13-14

Warm Up #5

1. Look at the tags on your clothes. Where were they made?

2. Do you think every country gets a fair deal when they trade? Explain.

3. How does specialization apply to whole countries, not just individual firms? (recall comparative advantage- mowing lawns and washing cars)

Comparative Advantage

• Some countries have what other countries want

U.S. Exports• Exports make up

1/3 of our GDP

• Most of those exports are raw materials and aircraft technology

• Nobody really likes our consumer goods…

U.S. Imports• The U.S. imports $2.1

trillion dollars worth of goods and resources each year

• Crude oil makes up 17% of our imports– What does that say

about demand for gas?

Free Trade Isn’t Free• Since countries want to

export more than they import, they try to restrict the imports as much as possible

– Tariffs- taxes to make imports more expensive

– Quotas- a legal limit on how many goods are imported

Love Dat Tax

• When one country imposes tariffs and quotas, another country will do the same

• This can lead to disputes and even war

Enough with the tariffs!

Trade Organizations• GATT (General Agreement of Tariffs and Trade)- exists

to make sure everyone is happy with terms of trade

• The WTO (World Trade Organization) is the big kahuna in world trade- they oversee the legal stuff

• European Union (est 1958)- free trade among European Countries

• NAFTA (North American Free Trade Agreement)- free trade among US, Canada, and Mexico

Developing Countries

• Low per capita GDP• Low literacy rates• High unemployment

rates• Over-population• Low productivity• Few entrepreneurs

Industrial Market Countries

• Higher GDP• Benefits from trade• High standard of living• Educated professionals• Capitalist

Convergence Theory• This theory states

that one day, developing nations will catch up with richer nations

• China• Singapore• Brazil