International Economics

International economics combines the excitement of world events and the incisiveness of economic analysis. We are now deeply into the second great wave of globalization, in which product, capital, and labor markets are becoming more integrated across countries. This second wave, which began in about 1950 and picked up steam in the 1980s, has now lasted at least as long as the first, which began in about 1870 and ended with World War I (or perhaps with the onset of the Depression in 1930). As indicators of the current process of globalization, we see that international trade, foreign direct investment, cross-border lending, and international portfolio investments are growing faster than world production. Information, data, and rumors now spread around the world instantly through there Internet and other global electronic media. As the world becomes more integrated, countries become more interdependent. Increasingly, events and policy changes in one country affect many other countries. Also increasingly, companies make decisions about production and product development based on global markets. My goal in writing and revising this book is to provide the best blend of events and analysis, so that the reader builds the abilities to understand global economic developments and to evaluate proposals for changes in economic policies. The book is informed by current events and by the latest in applied international research. My job is to synthesize all of this to facilitate learning. The book combines rigorous economic analysis with attention to the issues of economic policy that are alive and important today. Is written to be concise and readable; Uses economic terminology when it enhances the analysis, but avoids jargon for jargon's sake. I follow these principles when I teach international economics to undergraduates and master's degree students. I believe that the book benefits as I bring into it what I learn from the classroom. CURRENT EVENTS AND NEXT EXAMPLES: It is a joy and a challenge for me to incorporate the events and policy changes that continue to transform the global economy, and to find the new examples that show the effects of globalization (both its upside and its downside). Here are some of the current and recent events and issues that are included in this edition to provide new examples that show the practical use of our economic analysis: International outsourcing-the offshoring of various business services including call centers and software development-is a next form of international trade that is growing rapidly and that is affecting workers who previously thought that their jobs were insulated from international competition. China's policy of fixing the exchange rate value of its yuan to the U.S. dollar has led to a rapid buildup of China's holdings of official reserve assets, bases on its