What Do Undergrads Need to Know About Trade

Published: 2020-05-29 11:51:05
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Category: Economics

Type of paper: Essay

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Krugman criticizes that most of the undergraduate students’ knowledge about international economics is wrong. He argues that the most important thing for students to learn about the trade is to know that the pop internationalism is nonsense and why it is. To explain his ideas, he lists out six common misconceptions about international trade: We need a new economic paradigm”; competing in the world marketplace”; productivity; high-value sectors”; jobs”; and a new partnership. In this paper, Krugman gives many critical arguments. He makes me know that how to understand international trade, how to identify the correct international trade doctrines in the market, and how to look at today’s international trade disputes, pros and cons from a more objective and scientific perspective.
I agree with most of his ideas he said in this article, such as, Trade is only an economic activity, obeying the same principles as other economic activities.; High productivity is beneficial because it enables the country to produce more and thus be able to consume more, not because it helps to the compete in the global economy." When discussing trade policy about jobs, it should proceed from its impact on efficiency, rather than on the illusion of how much employment is increased or decreased.”I also have some different opinions on his ideas about the competing in the world marketplace. Krugman said that international trade is not about competition, it is about the mutually beneficial exchange.
I think in the international trade, both import and export countries can be benefited from trading. The import countries get what they need while the export countries sell what they are redundant. However, international trade also creates winners and losers. When one country’s export is higher than import from another country, we call it trade surplus; when one country’s export is lower than import from another country, we call it trade deficit. If a country has a higher surplus, it usually earns more foreign currency and provides more job opportunities for its domestic people. If a country has a higher deficit, it usually earns less foreign currency or takes on more debts. Its domestic employment will also be affected. Many counties want to increase their trade surplus rather than deficit with others countries.
Therefore, I think international trade creates mutually beneficial exchanges, at the same time, it also creates competing.
Krugman said, imports, not exports, are the purpose of trade." I agree that imports are the purpose of trade, but I think exports also can be the purpose for some countries. When some countries produce goods and services that they cannot use or consume at domestic, they will try to increase their export to other countries. China is such an example. As the largest exporter, China solves domestic employment problems, overcapacity problems, earning a large amount of foreign exchange, and achieving rapid economic growth through exports. China also has relatively abundant resources, and relatively complete industrialization, infrastructure. Therefore, I think its demand for export is higher than import.

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