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Trade and Globalization

Trade and Globalization 1 Trade and Globalization TABLE OF CONTENTSTRADE AND Globalization .. 2 INTRODUCTION .. 2 A SNAPSHOT OF Trade .. 3 PRIMER 1: THE ECONOMICS OF INTERNATIONAL Trade .. 8 INTERNATIONAL Trade IN HISTORY .. 8 WHY DO NATIONS Trade ? .. 9 WHY DO NATIONS EXPORT? .. 10 CURRENCIES AND EXCHANGE RATES .. 13 WHY DO NATIONS IMPORT? .. 15 Trade SPECIALIZATION .. 17 THE THEORY OF COMPARATIVE ADVANTAGE .. 19 COMPARATIVE ADVANTAGE VERSUS ABSOLUTE ADVANTAGE .. 21 THE Trade BALANCE .. 23 PRIMER 2: GOVERNMENT REGULATION OF Trade ..26 EFFORTS TO MANIPULATE Trade FLOWS .. 26 IMPORT RESTRICTIONS .. 27 EXPORT SUBSIDIES.

globalization. The volume of world trade increased twenty-seven fold from $296 billion in 1950 to $8 trillion in 2005.1 Although international trade experienced a contraction of 12.2 percent in 2009—the steepest decline since World War II—trade is again on the upswing.2

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