International Trade: Theory and Policy

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Steve Suranovic, George Washington University

Pub Date: 2010

ISBN 13: 978-1-9361264-4-6

Publisher: Saylor Foundation

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Reviewed by Tom Head, Professor of Economics, George Fox University, on 2/16/2017.

The book provides an exhaustive review of key ideas in the economics of international trade. It does not offer an index or glossary, and both would … read more

 

Table of Contents

  • Chapter 1: Introductory Trade Issues: History, Institutions, and Legal Framework
  • Chapter 2: The Ricardian Theory of Comparative Advantage
  • Chapter 3: The Pure Exchange Model of Trade
  • Chapter 4: Factor Mobility and Income Redistribution
  • Chapter 5: The Heckscher-Ohlin (Factor Proportions) Model
  • Chapter 6: Economies of Scale and International Trade
  • Chapter 7: Trade Policy Effects with Perfectly Competitive Markets
  • Chapter 8: Domestic Policies and International Trade
  • Chapter 9: Trade Policies with Market Imperfections and Distortions
  • Chapter 10: Political Economy and International Trade
  • Chapter 11: Evaluating the Controversy between Free Trade and Protectionism

About the Book

International Trade: Theory and Policy is built on Steve Suranovic’s belief that to understand the international economy, students need to learn how economic models are applied to real world problems. It is true what they say, that ”economists do it with models.“ That’s because economic models provide insights about the world that are simply not obtainable solely by discussion of the issues. International Trade: Theory and Policy presents a variety of international trade models including the Ricardian model, the Heckscher-Ohlin model, and the monopolistic competition model. It includes trade policy analysis in both perfectly competitive and imperfectly competitive markets.

The text also addresses current issues such as free trade area formation and administered protection policies. The models are developed, not by employing advanced mathematics, but rather by walking students through a detailed description of how a model’s assumptions influence its conclusions. But more importantly, each model and theory is connected to real world policy issues.

The main purpose of the text is to provide a thorough grounding in the arguments concerning the age-old debate about free trade versus protectionism. This text has the following unique features:  The text begins with an historical overview of trade policy issues to provide context for the theory. The text concludes with a detailed economic argument supporting free trade. The welfare analysis in the Ricardian, Heckscher-Ohlin and specific factors models emphasize the redistributive effects of free trade by calculating changes in real incomes. The trade policy chapter provides a comprehensive look at many more trade policies than are found in a printed textbook.

A chapter about domestic policies contains an evaluation of domestic taxes and subsidies that are often ignored in traditional trade textbooks but are increasingly important as large countries complain more about each other's domestic agriculture policies and labor and environmental policies.

The text uses the theory of the second-best to explain why protection can improve national welfare. This well-known theoretical result is rarely presented as methodically and consistently as it is in this text.

International Trade: Theory and Policy by Steve Suranovic is intended for a one-semester course in International Trade. After April 2010, you can check out the entire book online or request a desk copy.

About the Contributors

Author(s)

Steve Suranovic is an associate professor of economics and international affairs at the George Washington University (GW) in Washington, DC. He has a PhD in economics from Cornell University and a BS in mathematics from the University of Illinois at Urbana-Champaign. He has been teaching international trade and finance for more than twenty years at GW and as an adjunct for Cornell University’s Washington, DC, program. In fall 2002, he taught at Sichuan University in Chengdu, China, as a visiting Fulbright lecturer. He has taught a GW class at Fudan University in Shanghai during the summers of 2009 and 2010. He has also spoken to business, government, and academic audiences in Japan, Malaysia, the Philippines, China, and Mongolia as part of the U.S. State Department speaker’s programs.

His research focuses on two areas: international trade policy and behavioral economics. With respect to behavior, he examines why people choose to do things that many observers view as irrational. Examples include addiction to cigarettes, cyclical dieting, and anorexia. His research shows that dangerous behaviors can be explained as the outcome of a reasoned and rational optimization exercise. With respect to trade policy, his research seeks to reveal the strengths and weaknesses of arguments supporting various policy options. The goal is to answer the question, what trade policies should a country implement? More generally, he applies the economic analytical method to identify the policies that can attract the most widespread support.

His book A Moderate Compromise: Economic Policy Choice in an Era of Globalization will be released by Palgrave Macmillan in fall 2010. In it he offers a critique of current methods to evaluate and choose policies and suggests a simple, principled, and moderate alternative.