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Economics began with a debate over issues of free international commerce, and the debate continues. Domestic industries lobby with politicians for protection against foreign competition. Government policy is designed to influence trade and investment in cooperation with favored industries. Governments negotiate free trade and investment agreements. Government fiscal and monetary policies ultimately depend on international financial markets. Wages and income rise and fall with international trade and investment, even in rich developed economies like the US.
This textbook describes and predicts production, trade, and investment across countries. It carefully describes the foundations of international trade and investment, including constant cost, neoclassical, and modern theories of production, industrial organization, and trade. The theory is presented using graphs and numerical examples. Many problems are offered, leading to a thorough understanding. Over 200 boxed examples illustrate the theory. The text integrates issues of microeconomic trade with macroeconomic policy and finance. The emphasis is on the powerful forces of international markets and the limitations of government policy.
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