Econ 4320 International Economics

Fall 2019 Final

Trade Policy (with a bit of trade patterns)

Go to: http://atlas.cid.harvard.edu/explore? And pick a country that starts with the same letter as either your first name or your last name. For your country:

49530057023000What are the top 3 exports? What are the top 3 imports? For example, if your name was Uncle Sam, your export data should look like:

Now clear the country entry, click the “PRODUCT” button, and type in the largest export industry as the product—ignore the “unspecified” category. (eg, for the US, ICT). You’ll now see the report for trade in that good for all countries worldwide. Is your country a big or small country in its largest export? How about your country’s next 2 largest exports? How about for imports? For the US, the largest export is ICT (and note, the red shade means “services”, so all of the US’s major exports are services—remember that the next time you hear about the trade deficit in goods). If you had chosen the USA, your data would look like:

What trade model best explains trade in your country’s top export? What trade model best explains trade in your country’s top import? Explain your answer.

If you were an economic advisor for your chosen country, would you recommend an export subsidy, an export tax, or neither for any of your 3 primary exports? Explain why with a graph (no graph = no points).

If you were the top economic advisor for your chosen country, would you recommend an import tariff, import quota, or neither for any of your 3 primary imports? Does the degree of competition matter to your recommendation? Explain why with a graph (no graph = no points).

Suppose to your shock and horror your country elects Kim Jong-un as President (or Prime Minister or whatever the label is in your country). Kim calls you into his office to fire you as an economic advisor. You’ve got one chance to change his mind on trade (you’ve already decided to quit and flee the country, but you are willing to make one last argument on trade). So, make your best argument for free trade for your country. Don’t insult Kim by ignoring any good counter-arguments he may raise.