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:
1. Inter-industry trade depends on differences across countries.
2. Inter-industry trade depends on market size and occurs among similar countries.
How Much Trade?
-Many governments are trying to shield certain industries from international competition.
-This has created the debate dealing with the costs and benefits of protection relative to free trade.
1.Advanced countries’ policies engage in industrial targeting.
2.Developing countries’ policies promote industrialization:
3.Import substitution versus export promotion industrialization