Solutions Manual - Robert Feenstra Alan Taylor (Solutions Manual ...

S-1 Solutions Manual to End-of-Chapter Questions International Economics 3e Robert Feenstra Alan Taylor (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) 1 / 4

Trade in the Global Economy

• Figures 1-2 and 1-6 rely on data from 2010, and Figure 1-5 relies on data from 2005,

to map worldwide trade, migration, and FDI. Updated data for migration and FDI were not available at the time this chapter was written, but it is available for world- wide trade. In this question, you are asked to update the numbers for world trade shown in Table 1-1.

• Go to the World Trade Organization’s website at http://www.wto.org, and look

for its trade data under “Documents and resources” then “International trade statis- tics.” Look for the most recent edition of its International Trade Statistics publication, then go to “Trade by region,” and find the Excel spreadsheet with “Intra- and interregional merchandise trade.” Print out this table. If you cannot find the web- site or spreadsheet, use the 2011 table for “Intra- and Inter-Regional Merchandise Trade” that appears below to answer the following questions.12

• From this table, what is the total amount of trade within Europe? What percent-

age is this of total world trade?

Answer: The total amount of trade within Europe is $4,667 billion. This is

26.2% of the world total trade. (The total world trade is $17,816 billion. Share

= $4,667/17,816 = 26.2%.)

S-3 Destination North South and Middle Origin America Central America Europe CIS* Africa East Asia World World $

2,923 $ 749 $ 6,881 $530 $538 $672 $5,133 $17,816

North America 1,103 201 382 15 37 63 476 2,282 South and  Central America

181 200 138 8 21 18 169 750

Europe

480 119 4,667 234 199 194 639 6,612

Commonwealth  of Independent  States (CIS)

43 11 409 154 12 24 117 789

Africa 102 19 205 2 77 21 146 594 Middle East 107 10 158 6 38 110 660 1,251 Asia 906 189 922 110 152 242 2,926 5,538

Source: WTO, International Trade Statistices 2012

Intra- and Inter-regional Merchandise Trade, 2011 (Billions of U.S. Dollars) 12 The trade statistics for 2011 were obtained from Table I-4 at: http://www.wto.org/english/res_e/statis_e/its2012_e/ its12_world_trade_e.htm.

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• What is the total amount of trade (in either direction) between Europe and

North America? Add that to the total trade within Europe, and calculate the percentage of this to the world total.

Answer: $(480 1 382) 5 $862 billion. Adding that to intra-European trade, we

obtain 31% of the world total [$(862 + 4667)/$17,816 = 31%].

• What is the total amount of trade within the Americas (i.e., between North

America, Central America, South America, and within each of these regions)?What percentage of total world trade is this?

Answer: $(1,103 + 201 + 181 + 200) = $1,685 billion, or 9.5% of the world

total ($1,685/17,816 = 9.5%).

• What is the total value of exports from Europe and the Americas, and what per-

centage of the world total is this?

Answer: $(2,282 + 750 + 6,612) = $9,644 billion, or 54.1% of the world total

($9,645/17,816 = 54.1%).

• What is the total value of exports from Asia, and what percentage of the world

total is this?

Answer: $5,583 billion, which is 31.1% of the world total.

• What is the total value of exports from the Middle East and the Commonwealth

of Independent States, 13 and what percentage of the world total is this?

Answer: $(789 1 1,251) 5 $2,040 billion, which is 11.45% of the world total

($2,039/17,816 = 11.45%).

• What is the total value of exports from Africa, and what percentage of the world

total is this?

Answer: $594 billion, which is 3.3% of the world total

• How do your answers to (b) through (h) compare with the shares of worldwide

trade shown in Table 1-1?

Answer: The shares computed in (b) through (h) are quite similar to Table 1-1.

The numbers won’t change much as they are one year apart.

• The quotation from Federal Reserve Chairman Ben Bernanke at the beginning of

the chapter is from a speech that he presented in Jackson Hole, Wyoming, on August 25, 2006, entitled “Global Economic Integration: What’s New and What’s Not?” The full transcript of the speech is available at http://www/federalreserve.gov/ newsevents/speech/bernanke20060825a.htm. Read this speech and answer the fol-

lowing questions:

• List three ways in which international trade today does not differ from the trade

that occurred before World War I.

Answer:

i) Physical distance is the same.

ii) New transportation methods allow for more trade.iii) Governments foster open trade, as well as financial flows.iv) Some groups are opposed to free trade.

v) The range of goods that are tradable has broadened.

S-4   Solutions  n  Chapter 1   Trade in the Global Economy 13 The Commonwealth of Independent States consists of: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine. 3 / 4

• List three ways in which international trade today does differ from the trade that

occurred before World War I.

Answer:

i) Intra-industry trade has increased.

ii) Information and communication technologies permit trade in services.iii) Scale and pace of growth in trade is faster.iv) Core-periphery pattern is no longer relevant.

v) Fragmentation of production processes has occurred.

vi) Capital markets are more mature, and gross flows are larger.Solutions  n  Chapter 1   Trade in the Global Economy  S-5

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