World Trade and Investment: The Economics of Interdependence

World Trade and Investment: The Economics of Interdependence

World Trade and Investment: The Economics of Interdependence

World Trade and Investment: The Economics of Interdependence

Excerpt

World Trade and Investment has been written first of all for undergraduates in American and Canadian universities. I have enough respect for this great captive audience to avoid what I consider the most insidious temptation of the textbook writer: to write down, presumably to something called the "undergraduate level." There is of course a common danger in making generalizations about groups of widely different individuals that makes nonsense of nice calculations regarding the proper "level of difficulty." But even apart from this danger, I suspect that the mental power and ambition of undergraduates are often underestimated and that the ceiling beyond which we are not supposed to go in works of this sort is often placed too low. Accordingly, though in organization and subject matter I have tried to meet the needs of the student and the convenience of his instructor, the exposition and content are in general what I think one would expect in any book written for intelligent adults. As such, the book should prove useful not only to students but to anyone with some knowledge of economics and an interest in international trade.

The work as a whole is divided into three books: Book I, Survey; Book II, Theory; and Book III, Policy.

Book I is mainly descriptive, and the analysis introduced does not assume more than an elementary knowledge of economic principles. This introductory material is intended to be a unit in itself; but it is also an introduction to Book II in which the theory of international trade is treated in detail.

In Book II the traditional analysis of international prices, income flows, and balance-of-payments equilibrium is supplemented and modified in several ways. First, the balance-of-payments concept is integrated with the principles of national-income accounting; and the changes in exports and imports that accompany movements to equilibrium are related directly to changes in the various national-product accounts that make up the national product as a whole. Second, changes in prices and income that lead to balance-of-payments adjustments are analyzed in terms of price and income effects under various assumptions regarding price and income elasticity, exchange-rate policy, and the like. The equilibrium conditions are the general ones emphasized in Pro fessor . . .

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