Problem Set Week 1 6

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Week 1 (6) IntroductionChapters 1, 2.

Problem set

1.1
a. Give a definition of the process of (economic) globalization.

b. For many people, however, the globalization process is more than just economic globalization, and the advantages and/or disadvantages of globalization are spread over a much wider area than just international economics. Give a few examples.

1.2
a.How can globalization and international economic integration be measured (3 indicators)?

b.Use the three indicators of question (a) to describe the pattern of globalization over the last century.

c.What is “openness”? How is it measured? Does a low openness indicator indicate that a country is closed to trade with the outside world? See also fig. 1.2

1.3
Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canada’s is 60% larger). But Canadian trade is twice as large, relative to GDP as Australia’s. Why should this be the case?

1.4
Mexico and Brazil have very different trading patterns. While Mexico trades mainly with the United States, Brazil trades equally with the United States and with the European Union. In addition, Mexico does much more trade relative to its GDP. Explain these differences using the gravity model.

1.5
Equation (2.1) says that trade between two countries is proportional to the product of their GDPs. Does this mean that if the GDP of every country in the world doubled, world trade would quadruple? 1.6

Over the past few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade (trade among East Asian countries) has grown as a share of world trade. More than that, East Asian nations do an increasing share of their trade with each other. Explain.

1.7
A century ago, most British imports came from relatively distant locations: North America, Latin America, and Asia. Today, most British imports...
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