《国际商务 International Business》课程教学资源（PPT课件）05 trade theories and policies

InternationalBusiness (5)Huang HuipingEconomicSchool.Whut

International Business (5) Huang Huiping Economic School. Whut

Part3Cross-BorderTradeand InvestmentLearningObiectives(Chapter5-6)Review different theories that explain trade flowsbetween nations;Review thevarious policyinstruments usedtorestrict imports and promote the exports;Understand the implications that the Internationatrade theories and the policies hold forbusinesspractice

Part 3 Cross-Border Trade and Investment Learning Objectives (Chapter 5-6) ❖ Review different theories that explain trade flows between nations; ❖ Review the various policy instruments used to restrict imports and promote the exports; ❖ Understand the implications that the International trade theories and the policies hold for business practice

4International Trade4.1 International Trade TheoryMercantilism Absolute Advantage TheoryComparative TheoryH-O TheoryThe Product Life-Cycle TheoryThe New Trade TheoryNation's Competitive AdvantageImplicationforBusiness

4 International Trade 4.1 International Trade Theory ❖ Mercantilism ❖ Absolute Advantage Theory ❖ Comparative Theory ❖ H-O Theory ❖ The Product Life-Cycle Theory ❖ The New Trade Theory ❖ Nation’s Competitive Advantage ❖ Implication for Business

(1)Product LifeCycletheoryMany manufacturedgoods undergoapredictabletradecycle.During this cycle,a nation initially is an exporter, then losesitsexportmarkets,andfinallybecomesanimporteroftheproduct.Aproductgoesthroughfivestages:new-productphase(1)(2)product-growthphase(3productmaturityphase(4)productdeclinestage(5)productdeclinestage

(1) Product Life Cycle theory • Many manufactured goods undergo a predictable trade cycle. • During this cycle, a nation initially is an exporter, then loses its export markets, and finally becomes an importer of the product. A product goes through five stages: (1) new-product phase (2) product-growth phase (3product maturity phase (4) product decline stage (5) product decline stage

The product cycle modelQuantityStage1Stage2Stage4Stage5Stage3(New(Product(product(product(abdicateproduct)growth)decline)market)maturity)！importconsumptionexportInnovatingcountryproductionproductionimitatingexportcountryconsumptionimport0TimeBCD

production Stage 1 (New product) Stage 2 (Product growth) Stage 3 (product maturity) Stage 4 (product decline) Stage 5 (abdicate market) Time Quantity 0 A B C D consumption consumption Innovating country production imitating country export import import export The product cycle model

Implications of the Product Life Cycle theoryOffers an accurate explanationoftheinternationaltradepattern:For international business:-thelocationofproduction,-the time to enterforeign market:-the entry way

Implications of the Product Life Cycle theory ❖ Offers an accurate explanation of the international trade pattern. ❖ For international business: - the location of production; - the time to enter foreign market; - the entry way

(2)TheNewTradeTheoryTheoryof IncreasingReturns toscaleMainviews(1)There is still a basis for mutually beneficial trade based oneconomies of scale, even if two nations are identical ineveryrespect.(2)The benefits will be from increasing productivity anddecliningofunitcost.(3) Learning effect: cost saving from learning by doing(4)Iftheoutputrequiredtorealized significantscaleeconomies represents a substantial proportion of totalworld demand of that product, theworld market may beable to support onlya limited numberof firms producingthatproduct

(2) The New Trade Theory Theory of Increasing Returns to scale Main views (1)There is still a basis for mutually beneficial trade based on economies of scale, even if two nations are identical in every respect. (2)The benefits will be from increasing productivity and declining of unit cost. (3) Learning effect: cost saving from learning by doing. (4) If the output required to realized significant scale economies represents a substantial proportion of total world demand of that product, the world market may be able to support only a limited number of firms producing that product

Implications of TheoryofIncreasing Returns toscale.First-moveradvantage:theeconomic andstrategic advantage that accrueto early entrants into anindustry.WheredoestheFirst-moveradvantagecome from?good luck?Innovation?Entrepreneurship?Governmentintervention?Airbus &Boeing examplesTherequired minimum scale of productionandthe maximum demand oftheproduct in the world

Implications of Theory of Increasing Returns to scale ❖ First-mover advantage :the economic and strategic advantage that accrue to early entrants into an industry. ❖ Where does the First-mover advantage come from? - good luck? - Innovation? - Entrepreneurship? - Government intervention? ❖ Airbus & Boeing examples ❖ The required minimum scale of production and the maximum demand of the product in the world

表1两家企业竞争空中客车公司生产不生产波音公司0-5生产-51000100不生产00

生 产 生 产 空中客车公司 不 生 产 不 生 产 波音公司 －5 －5 0 0 100 100 0 0 表1 两家企业竞争

政府每年向空中客车公司提供25单位的补贴表2补贴对空中客车公司的影响空中客车公司生产不生产波音公司200生产-51000125不生产00

生 产 生 产 空中客车公司 不 生 产 不 生 产 波音公司 －5 20 0 0 100 125 0 0 表2 补贴对空中客车公司的影响 政府每年向空中客车公司提供25单位的补贴：