Bài giảng Macro - Chapter 5 Canada in the Global Economy

Chapter 5Canada in the Global EconomySLIDES PREPARED BY JUDITH SKUCE, GEORGIAN COLLEGEIn this chapter you will learnThat trade is crucial to Canada’s economic well-beingThe importance of specialization & comparative advantage in international tradeHow the value of a currency is established on foreign exchange marketsThe economic costs of trade barriersAbout multilateral trade agreements & free trade zonesChapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionInternational LinkagesOther National EconomiesCanadianEconomyGoods & ServicesCapital & LabourInfo & TechnologyMoneyFigure 5-1Chapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionCanada & World Tradevolume of international trade has been increasingabsolutelyrelative to GDP for Canada & the worldGLOBAL PERSPECTIVE 5.1Canada’s exports make up almost 40% of domestic output of goods & servicesCanada & World TradeCanada is dependent on other countries for many goodsimported goods compete with Canadian goods in many marketsmany Canadian industries rely on foreign marketsCanada & World TradeCanada has a trade surplus in goodsCanada has a trade deficit in servicesCanada imports goods in some of the same categories it exports% of total exportsMachinery & equipment25Automotive products23Industrial goods & materials15Forestry products10Energy products13Agricultural & fishing products7Principal Canadian Exports of Goods, 2000Table 5-1% of total importsMachinery & equipment34Automotive products21Industrial goods & materials19Consumer goods11Agricultural & fishing products5Energy products5Principal Canadian Imports of Goods, 2000Table 5-1Canada & World TradeCanada trades with:the USother advanced nationsCanadian Exports & Imports of Goods by Area, 2000Exports to% of totalImports from% of totalUS86US74EU5EU9Japan3Japan3other6other14Table 5-2Canada & World TradeRapid trade growth because of:Transportation TechnologyCommunications TechnologyGeneral Decline in TariffsParticipants in TradeWho trades?North America, Japan & Western EuropeNew ParticipantsGLOBAL PERSPECTIVE 5.2Chapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionCANADIANBUSINESSESCANADIANHOUSEHOLDSCANADIANRESOURCEMARKETSCANADIANPRODUCTMARKETS$ COSTS$ INCOMES$ CONSUMPTION$ REVENUEGOODS & SERVICESCANADIANGOVERNMENTRESTOF THEWORLDRESOURCESRESOURCESINPUT FACTORSEXPENDITURESEXPENDITURESGOODS & SERVICESGOODS & SERVICESGOODSGOODSNETTAXESNETTAXESBack to the Circular Flow ModelCdn. ImportsCdn. ExpendituresCdn. ExportsForeign ExpendituresChapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionSpecialization & Comparative AdvantageBasic PrincipleSpecialization & international trade increase the productivity of a nation’s resources & allow for greater total output than otherwise possibleComparative CostsillustratedMEXICOTABLE 5-3PRODUCTION ALTERNATIVESProductABCDECorn020244060Soybeans1510950CANADATABLE 5-4PRODUCTION ALTERNATIVESProductABCDECorn030336090Soybeans302019100Soybeans:Mexico must give up 4 tonnes of corn for 1 tonne of soybeansCanada must give up 3 tonnes of corn for 1 tonne of soybeansCanada has comparative advantage in soybeansMEXICOTABLE 5-3PRODUCTION ALTERNATIVESProductABCDECorn020244060Soybeans1510950CANADATABLE 5-4PRODUCTION ALTERNATIVESProductABCDECorn030336090Soybeans302019100Corn:Mexico must give up 1/4 tonne of soybeans for 1 tonne of cornCanada must give up 1/3 tonne of soybeans for 1 tonne of cornMexico has comparative advantage in cornSpecialization & Comparative AdvantageBasic PrincipleSpecialization & international trade increase the productivity of a nation’s resources & allow for greater total output than otherwise possibleComparative CostsTerms of Trademust be mutually beneficialSpecialization & Comparative AdvantageBasic PrincipleSpecialization & international trade increase the productivity of a nation’s resources & allow for greater total output than otherwise possibleComparative CostsTerms of TradeGains from Specialization & TradeillustratedCanadaMexicocornsoybeanscornsoybeansOutputs before specialization3319249Outputs after specializationAmounts tradedOutputs available after tradeGains from specialization & trade030600+35-10-35+10352025102111Table 5-6Chapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionForeign Exchange MarketA Competitive MarketLinkages to All Domestic & Foreign PricesForeign Exchange MarketDollar-Yen Marketchanging rates:depreciationappreciationForeign currency price of dollar fallsInternational value of foreign currency rises (foreign currency appreciates)EqualsEqualsEqualsEqualsForeign Exchange MarketDollar price of foreign currency risesInternational value of dollar falls (dollar appreciates)Chapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionGovernment & TradeTrade Impediments & SubsidiesProtective tariffsImport quotasNon-tariff barriersExport subsidiesGovernment & TradeWhy Government Trade Interventions?Misunderstanding of the Gains from TradePolitical ConsiderationsGovernment & TradeCosts to Societydomestic consumers domestic firmsreduction of competitionChapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionMultilateral Trade Agreements & Free-Trade ZonesReciprocal Trade AgreementsGATTWTOThe European Union (EU)The EU Trade BlocThe EuroNAFTAChapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global CompetitionIncreased Global Competitionwinners & losersresources are reallocatedChapter 5 TopicsInternational LinkagesCanada & World TradeBack to the Circular Flow ModelSpecialization & Comparative AdvantageForeign Exchange MarketGovernment & TradeMultilateral Trade Agreements & Free-Trade ZonesIncreased Global Competition