International Business:

Trade and Globalization

Outline of today’s class

1. The rise of international trade.

2. Drivers of the increase of international trade.
3. International institutions and organizations
4. Globalization: what it means and criticism.
25000 World merchandise exports (billion current US$)

20000

15000

10000

5000

0
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8
Is the era of increasing world
trade at an end?
• On how some prestigious thinktanks and other
organizations propagated a silly mistake about
international trade:
• [Link]
4502

• Take a look at how Chatbots were used and not used.

• Get a sense of how you need time and experience to
develop your critical judgment for reading abut
economics.
• No questions on the mid-term on this paper specifically,
except to the extent that some issues were covered in
today's class.
2. Drivers of the Growth of International Trade

• What is required to sell anything to

someone in another country?
 Drivers of the Growth of International Trade

Factor Examples of metrics Insight

Productivity GDP Greater production means more goods and services available to
trade
Wealth GDP per capita Greater wealth means excess production for export and disposable
income for import
Diversity Hirschman Herfindahl Specialized production is usually more competitive in the world
versus Index; market, but requires a country to import goods and services to meet
specialization domestic demand.
Infrastructure, Various. For example, Faster throughput reduces inventory costs. Improved quality of
especially ports port liner shipping handling opens international trade to fragile products.
connectivity index of
UNCTAD.
Efficiency of Worldwide Simpler procedures reduce management costs; faster procedures
procedures Bureaucracy Indicators reduce the cost of inventory.
of the World Bank
Trade policies Thalos, Fraser, Opening the border to imports can reduce local materials and
Heritage component costs or increase the quality of the same. Also this
opening can lead to reciprocal opening of foreign markets.
Transportation Logistics Performance Cheaper and faster transport supports competitive pricing in foreign
costs, speed Index of the World destinations. Faster transport also facilitates the handling of time-
Bank sensitive produce.
Experience Government experience can lead to efficiencies. This experience
can also in turn be share to business through government agencies.
Private experience give rise to marketing and logistics advantages
by country, and some can be generalized to new national markets
Communication Costs per minute; data Communication facilitates trade initiation, updates.
throughput per second
Diminished Short and medium- Diminished currency risk reduces risk, and also reduces the
currency risk term analyses of risk management burden of international trade. However, currencies
were relatively stable while on the gold standard (pre 1933) and
under Bretton Woods (1945-1973). ). Since then, financial
techniques and Eurodollar help reduce risk.
 Institutions 3 -Worldwide institutions
• World Trade Organization
• See video on history of multilateral trade deals –accessible on Youtube
• See building trade capacity 
• International Monetary Fund
• See About
• See Data –create an Excel sheet for Vietnam See
• The Impact of US-China Trade Tensions
• The World Bank 
• See Who we areHistory, What We Do;
• See What We Do [top menu]KnowledgeDataVietnam
• United Nations Conference on Trade and Devel
opment
• See About
• Country Profiles-> Vietnam

• International Labor Organization

• See data source.

• The G20
• See About G20
Drivers of the Growth of International
Trade and Upcoming Classes

• Communications (recall impact of wireless on military navy; command but

security). The History of Telecommunications (In Just 3 Minutes)
[Link]
• Eventual impact upon payment mechanisms (class 3)
• Policy changes by which countries opened to free trade (class 10)
• The rise of multi-stage production (classes 4, 5 and 6)
• Bretton woods and the international monetary system (class 13)
 3. Globalization
• What does it mean? (Compare with “international business”.)
• Trade
• Capital
• People
• In practice, most people use it to refer to mobility of goods and
capital. They omit people.
• It more often refers to the effects of this mobility.
 Critiques of Globalization
Misconception Reality
Homogeneity Wider choice
Inequality within nations Government responsibility
Exploitation of poor nations Government of those nations
Suppression of SMEs Opportunities for SMEs
Trade imbalance Reveals weakness of an economy
Corruption Contrary is true
Loss of sovereignty Freedom of citizens
Transportation contributes to the Ocean transport less polluting
greenhouse effect
Specialization is toxic for the Problem of economies of scale
environment
Race to the bottom Perhaps the real issue
Contagion shock True
 Assignment – week 2

• Read "Export and Import Financing" in your

textbook.
• Your workgroup will email me a basic statistic report
for your chosen ASEAN country.
International trade assignment -2
1. In your work group, compile statistics for your chosen
ASEAN country, covering the years 1996-2019:
• Exports (merchandise and services)
• Imports
• Total trade
• Net trade in goods and services
• GDP
• GDP per capita
• Total trade/GDP
• Total exports/GDP
2. Produce a graph for each statistic.
3. Comment each curve. Short and simple.
4. Submit the Excel by email.
1. Name it correctly.
2. cc to all workgroup members.
3. Due Sunday 23:59
 Assignment – week 2

How to get data from the World Bank’s World

Development indicators.
[Link]
pment-indicators