Managing International Trade (Theories and

Policies)

Team 3

Shannon Quinn, Garrett Davidson

Nathan Gennera, Eric Scmitt

The topic we want to focus on is new trade theory and we have found two articles relating to this topic

International Trade Theories

This specializes in increasing output, and the ability to increase and enhance economies of scale.

This also increases learning effects. These are cost savings that come from leaning by doing

Overall, this theory is trying to get rid of the old idea that countries trade because they think other countries have better resources and climate. When really, a lot of countries that trade like Canada and America have about the same type of climate and various resources. Economies of scale is what is important and how you go about trading.

This logic explains how each country may specialize in producing a few brands of any given type of product, instead of specializing in different types of products.

New Trade Theory

Paul Krugman is an American economist who has worked at Princeton University and writes for the NY Times.

Paul won the Nobel Prize in Economies for his work in creating and bringing about the new trade theory.

“A lot of world trade is between countries that are very similar”

Paul Krugman

Paul Krugman Interview on New Trade Theory

In the fiscal year of 2011, Panasonic expects to lose about 10 billion while Samsung is making profits of 15 billion, and Apple is making profits of 22 billion.

Since 2000 the big five Japanese electronics firms have lost two-thirds of their value!

Why???

Too many Japanese firms make similar things

Japanese Manufacturing

Companies often stay in market’s in which they cannot compete

Instead, stick with what you do best

From Summit to Plummit

Article from the Wall Street Journal

What is Skoda Auto and TPCA? Skoda Auto TPCA

Skoda, Toyota Take Different Paths to Tackle Overcapacity

• TPCA cuts production

Different Plans of Skoda Auto and TPCA

Skoda Auto boosts total output

What it Comes Down to•Skoda’s reasons for boosting production

•TPCA’s reasons for cutting production

•Economies of scale is the winning formula WINNING!

What is the perfect competition principal?

What does it mean for countries to have comparative advantages?

How do you think our presentation is relevant for today class?

New Trade Theory Discussion

http://www.economist.com/node/21547815

http://blogs.wsj.com/emergingeurope/2012/02/17/skoda-toyota-take-different-paths-to-tackle-overcapacity/

http://www.econ.umn.edu/~tkehoe/papers/raphael.pdf

http://www.youtube.com/watch?v=fb6-PIM0NtQ

Sources