International economics deals with economic interactions that occur between independent nations.
The role of governments in regulating international trade and investment is substantial.
Analytically, international markets allow governments to discriminate against a subgroup of companies.
Governments also control the supply of currency.
There are several issues that recur throughout the study of international economics.
The Gains from Trade
Many people are skeptical about importing goods that a country could produce for itself.
When countries sell goods to one another, all countries benefit.
Trade and income distribution
International trade might hurt some groups within nations.
Trade, technology, and wages of high and low-skilled workers.
The Pattern of Trade (who sells what to whom?)
Climate and resources determine the trade pattern of several goods.
In manufacturing and services the pattern of trade is more subtle.
There are two types of trade:
Interindustry trade depends on differences across countries.
Intraindustry trade depends on market size and occurs among similar countries.