International economics

Economics Scool Subjects பொருளாதாரம்

Introduction:The subject ‘International Economics’ evolved from a simple theory of international trade was formulated to answer a few basic questions. The subject first originated in Western Europe on account of increasing importance of foreign trade in that part of the world.The contributions of classical economists like Adam Smith, David Ricardo, F.W. Taussig, Haberler, J.S.Mill and Bela Balassa shaped the subject matter of International Economics.International Economics studies the entire range of international economic transactions that consist of not only trade in goods and services but also capital flows, technology transfer, the rate of exchange, balance of payments, and issues relating to tariffs, protection, free trade, investment flows, role of fiscal and monetary policies pursued by individual countries.Meaning of International: Economics:International Economics is that branch of economics which is concerned with the exchange of goods and services between two or more countries. Hence the subject matter is mainly related to foreign trade.In other words, International Economics is a specialized field of Economics which deals with the economic interdependence among countries and studies the effects of such interdependence and the factors that affect it.Subject Matter of International Economics:The subject matter of International Economics includes large number of segments which are classified into the following parts.

1. Pure Theory of Trade

This component explains the causes for foreign trade, composition, direction and volume of trade, determination of the terms of trade and exchange rate, issues related to balance of trade and balance of payments.

2. Policy Issues

Under this part, policy issues such as free trade vs. protection, methods of regulating trade, capital and technology flows, use of taxation, subsidies and dumping, exchange control and convertibility, foreign aid, external borrowings and foreign direct investment, measures of correcting disequilibrium in the balance of payments etc are covered.

3. International Cartels and Trade

Blocs This part deals with the economic integration in the form of international cartels, customs unions, monetary unions, trade blocs, economic unions and the like. It also discusses the operation of Multi National Corporations (MNCs).

4. International Financial and Trade

Regulatory Institutions The financial institutions like International Monetary Fund IMF, IBRD, WTO etc which influence international economic transactions and relations shall also be the part of international economics.Meaning of TradeTrade is one of the powerful forces of economic integration. The term ‘trade’ means exchange of goods, wares or merchandise among people.

Trade is of two types. They are:

a) Internal Trade andb) International Trade.Internal TradeIt refers to the exchange of goods and services within the political and geographical boundaries of a nation. It is a trade within a country. This is also known as ‘domestic trade’ or ‘home trade’ or ‘intra-regional trade’.International TradeIt refers to the trade or exchange of goods and services between two or more countries. In other words, it is a trade among different countries or trade across political boundaries. It is also called as ‘external trade’ or ‘foreign trade’ or ‘inter-regional trade’.

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