USA: +1(669)289-8683 
Sign in
Topic : Is the Author’s direction in article logical and is the text clear and well organized?
Power Points: accountable for submitting the section under her responsibility along with Power Points slides that are in conjunction with your section
a.
requires you to read them carefully, understand the topic of the research paper, understand the methodology used to study the specific topic and then evaluate the findings of the author(s).
b.
prepare a power point presentation on the article that provides a complete summary of the research/analysis, including your own critique or stance on the problem being studied.
‘nternat/ona, Trade-
Don’t Have More 0 f ft
E 0 ‘ r ” A N D
ofthe most important is £
6
m ° u s increase • h e e n o r –
t r a d e – Over the p a s t
l n t e ™ « i o n a i
sports as a sharer
7 e a r s ‘ w ° r W
b J e d to aimos 25 n °
U t p U t W d O U –
P « . J However d2rerL
0fW0rJd
° « t –
t h e ^-easing^tT t G o f b a J i 2 a t i ° n a n d
economic evidence J ^ T * ^ *
« n t barriers to ,W„ t W S 1 g n i f i –
– i s t – 2 ^ w i i si™
10™1 * a d e «UI W e w i i i sum • t r a d e sti”
deveiopments \ n 7 ^
A e J « e s t
, n t ernationai trade h m e a s u r e m e n t G f
m « i n i v f r o m a r
b a ™ e r s , drawing
– 7 on the sub^cTl!7/
reil–e sur”
a n d & i c van J f m e L
s Anderson
a u t h o r s ”
C ° ° P – n their survey,
Magnitudes of t l m a t C S o f Ae
^ernationai trade o ^ ^ f « M <* 0 n average h e y f l n d that
^ do^Lle henT°naJ f3de «»*
d e v eJo P ed countries ^ °
f g ° ° d s *
^ • ^ t ^ ^ ^ ^ o a of
Plenty 0 : ^ °
g ° ‘ S O ^ t there i s
S f f l i t n and his LTn
g , b a c k to A ^
A r d i n g t : ^ r s
a c t o T ^ a W e –
* * * * * * in doing onlT ^ ^
best suited to do a f
W t a s k s is
^ x i m u m e c o n o m i c e f f i ^ a d l i e V e s i t s
ater economists and
frorn firms to c o u n t s t ^ . ” B u m e n t
^ occurs when eachT E c ° n ° m i c ef&ien-
«aking and e x p o r f n ” T Y * * * ^ *
Action. v S t S 6 8 S p e d a l – a t i o n in p ^
Pay without trade Z n J ^ W o u J d
, a t f e c o n o m i s C l r t r a 1 ? * ^ 3 n d
U n f e t t e r e d , a socieTv m
I S a n d
“Offlic weii-being 7 m a x i m ‘ ^ s i t s e c o .
occurring. F 0 r examnlT?
d a b ° v e f r ° m
riers raise the c o s T f ‘ T ^ ^ ^
S°ods, U.S. c o n s l P C f a a S I n g p o r t e d
f – i g n goods, a X S n W ° U i d ^
fewer U.S. goods T W o ^
f o ‘ Products S T ^ J ° S a t l t t h e d e m a ^
imported u n d c X f Z T ^ h a d
Foundations of Global Business
34
O S T A P I K A N D Y l
would now be making more g « £ * *
relatively efficient at producing. I n the pres
ence of international trade barriers, there
would be less specialization, prices w o u d
t higher, and, overall, consumers m all
countries would be worse ott.
The Two Wlain Types of
Trade Costs
I n 19th-century England, economist
David Ricardo used these core ideas of he
benefits to international trade to argue
S L t a pressing political barner to t r g :
the Corn Laws, which proteced Br sh
agriculture and kept domestic food prices
h ^ h . Since then, economists h a v e ^ d
J L y other barriers to trade. We w 1
describe these barriers m terms of costs
f o l l o w i n g the convention used by
Anderson and van Wincoop.
Broadly, trade costs are all costs
incurred f r o m the time a good leaves he
actory or its place of production to the
time k is purchased by the end-user. Such
c o i s can be incurred internationally (for
• example at the border) or domestically
that is w i t h i n a country). I n the case of
consumer goods such as automobiles, tele
S n s , clothing, and food.trade costs are
the difference between the p n e c ^ t the
“factory gate” and the retail price.
International trade costs can be
broadly divided into t w o main categories:
border-related costs and internatton
transportation costs Border-related cos*
encompass the broad range of trade barn
“encountered between nations, excludinS
international transportation. Thes barrier
include costs that occur specifically at the
border, such as tariffs, quotas, and paper-
w o r k due to customs and other regula ions,
as well as those differences between coun-
t r i e l that could affect trade, such as d i f f c f
r c L ^ , I a n g u a ^ , ^ ( c o n t t a «
enforcement).7 Together w i t h – t e r – u o n a
transport costs, these items make up the
costs incurred internationally.
Border-related costs can be classified
based on whether they a ” . a t t ^ t o ^
(national) government policies. This allows
economists to assess the importance of bor-
der costs imposed by government^ohcy
relative to other border costs. Border
a d costs imposed by government policy
are further separated by economists into
t t o categories- tariffs and nontariff barriers
G r i f f s arc additional charges added
to the price of a good imported f r o m
another country. The charge ts usually
to a sales tax. N o n t a r i f f barriers are loo
l y defined as all other trade barrier
imposed by national B o v e m m c n ^
most familiar of these are quotas, which are
restrictions on the quantity o a good that
can be imported f r o m a country They also
ndude voluntary export restraints w h . h
occur when the exporting country volun
tarily” agrees to limit its exports to the
l o r t i n f country; anti-dumping actions,
peered of selling their goods at a pnee
below that in their home market; paper
w o r k and regulatory procedures encoun
L d specifically at the national borde
and “softer” measures, such as product
labeling and product quality standards.
Border barriers not due to govern-
ment policy include
information costs
TZs incurred by potential importers m
Kg out more about the goods they are
buying); costs due to exchange rate uncer-
S linguistic barriers, or other cultura
S r ‘ e n c e s ; and contract enforcemen
costs International transportation costs
ar freight charges and transport time
S o c i a t e d w i t h moving goods f r o m the
exoorting to the importing country. Ihese
: X include all freight and t i m e r s
associated w i t h moving a good f r o m he
factory i n the exporting country to the first
no t of entry i n the importing country.
Freight charges include trucking, shipping,
and air charges.
Measuring Trade Costs
We can measure trade costs two
wavs The first is to simply measure them
X S l y from concrete d a t . The second
involves an indirect approach whereby the
costs are inferred u s W a n
tte gravity model k ° o w n a s
‘ ” ‘ e r m ‘ i m a l r r s * ^ ” y We Do„; Have U „ r e o f / t
Border-Re/ated Costs
Tariffs are the eastVer- ,.
Jected on tariff r a t e S f o r ,7 ,
goods. There are 7 t h ° ” s a n d s of
o n e a P ; ^ r ^ P t
t h e c o u n ^
-ross ail tariff rates 7ki£
f – p l e to implement, 7t T 1 ^ • ‘ *
because it weighs all P f , 0 b J e m a t i c
less of wheth?^import o f T ” 7 ‘ “T^
imports In the ,U 6 V o i u m e o f
are negatived „*/ S o n aPples
. .ganveiy affecting imoor^ 1 0 n
precise y becan^ fU • • P o r t s – But
tive th/t ? 6 I r J m Pact is so ne R a -Mve that imports fall tn i s
^ve a zero we ght i n T ‘ ™>uld
JPProach tend t A ” W ° R D S ‘ T H I S
C c t o ^ t S f f ^ C ° U n d e r e u
S t i m a t e the true
most c l 7 S p I t e t h i s ^ortcoming l o s t calculations of overall ” u ” g ,
rates employ thi, f tar[ii mpjoy this second approach.
r r ^ e c ^ : U t T g ( | °
t h e r border-related
crs ;«, ‘ ejpecially nontariff trade barri
i s s r * s
r a r i f f barriers info r r C ° n V e r t S m e n ° n –
f r » ” ‘ c se s S – T d l r e C t N a t i o n
t h e ;mtidum , n
S ° Aversion. For
t h c st-‘udard worW d u m P i n S P”ce to
‘ ” ‘ • ‘ • ‘ • r e s t o t a l , P ? C C ° C ° n V e r t the
C 1 , ‘ ^ s u r e V a r e s
q U I V a I I n t S – T b e S e d i f f e r –
»* ^ – ^ I n t a n d T ” ^ ? 1 1 ^ **”
rate to yield an estimate of
border-related trade costs imposed bv ™
ernment policy. P Y g o v ”
r e l a t e d ^ trade costs not
related to government policy P m n
generally rely on a mJh• • e C O n o m i s t s
and indirec m P
C ° m b m a t l o n °f direct
indirect measurement based nn th*
gravity model. For examnle T
not sharing o example, the costs of
snaring a common currencv nr a
mon language as w P l f
7 C o m ”
” > ™ s e , „ dtstance on trade f ) o w s
. More sophisticated version, Z ,u
common current U uun\nes snare a
P r i d e s a statistical „ e S £ ” S ^ ” ”
^ – U n i v a l e n t o / t S L ^ r r S
35
International Transport Costs
TU* f„ •
Soods, balance ^ S T
tion reaper m terms of time. In addi-
36
O S T A P I K A N D Y l
I-
ft.
A Breakdown of Trade Costs*
Table 1
Description
time costs
+ shipping costs
Total Transport Costs
tariffs and NTBs
language costs
currency costs
information costs
+ security costs
Total Border-Related Barriers
TOTAL
Percent Markup overthe
Price of the Good
9
11
21
7
14
6
3
44%
74%
* T n e t a b l e p r e s e n t S —
Anderson and van Wincoop explore
research on measuring freight costs, where
shippers and handlers are interviewed
industry trade journals are examined, and
customs data are analyzed. Customs data
provide b o t h t o t a l imports including
freight charges and total imports exclud-
ing freight charges. These customs data
facilitate the calculation of total f r e i g h t
charges associated w i t h importing.
Anderson and van Wincoop u l t i –
mately draw f r o m an article by David
Hummels f o r a measure of international
transport costs because he incorporates
time into transportation costs. I n his arti-
cle Hummels develops methodologies to
translate time costs into dollars, f r o m
which the costs can then be expressed as a
percentage of the value of the good trans-
ported. Then, the freight costs and the time
costs can be totaled to yield an overall mea-
sure of international transport costs.
Estimates of Trade Costs
Before beginning the discussion of
estimating trade costs, we advise the reader
to review Table 1 and Figure 1. Table 1 con-
tains a breakdown of the two main interna-
tional trade costs and their components.
Figure 1 illustrates the importance of taritts
and other border-related costs, on the one
hand, and international transport costs, on
the other hand, via a hypothetical example
of a pair of shoes produced i n a foreign
country and shipped to the U.S.
Tariffs
To arrive at a single overall t a r i t t
measure for a country, economists typical-
ly calculate average tariffs according to the
trade-weighted method discussed above.
Average tariffs can differ across countries
f o r a number of reasons, but the most
National Trade: Why We Don’t Have
s Figure 1
More of It
START HERE
case st„dv. It is a hy^tC ‘L ‘”7 ” ^ °« »•>
Tl,, path folded£™2*.»f« commoni,, t n d c d
•Mrent „„de costs discssed ™™£Z ‘”^ effc« ^K
C I
.2>i
o I
°:
u . 1 I
«fa«on i n t r a d e a s t | l „ c u™^”EWouldEonerarc the s a m c
CD
•tan t«r,ft i ^ dteiZ
rab’y ‘OWer
»u»tifL
arir?- d ^
between countriS „ J f 7 ” ”
i «
^tdt;:Pr^^f
a”d’
tariffs. A t the h.Vh j 7 p e r c e n t
4-5 percent. I n between were New Zealand
Bu84ŝ nf0 (Eurthirh’d
and the
Griffs of about 2 to 3 peTcent ^
Nontariff Barriers
related sectors18 T V ‘ W O o d –
nontariff barriers, most notably
Foundations of GlobalBusln*s_
38
O S T A P I K A N D Y l
exert more of a tax than do tariffs.
Other Border-Related Bamers
Using the gravity model described
K number of researchers have been
L indirect trade cos* at border,
Anderson and van Wincoop
m a i n findings as follows: (1) The c
ot- QnarinE the same language are ruu& ,
7 nerc nt of the value of the goods traded.
m The os of employing different curren-
( 2 ) T ^ a b o u t 14 percent. (3) Information
c i e s 1 S about 1 4 P c Q s t s a r e
costs are 6 percent., v ,
total value of trade m
border costs, a ^ ^ ^ 0 3 ) – ! =
. ^ d 07\*(1.14)”(1.06 {l.VJ)
International Transport Costs
, n As of 1998, about half the value of
costs. As o i y;;. > Hummels
U.S. exports are shaped by ai r. H
i m p u t e s a willingness to pay for v
and translates that into a F «
value of the goods shnpM His « n m
U.S. time costs is 9 P e r c e n t – c o s t e s t i „
^ ^ cost of
n T o y n l t l ) = 0.21, or 2 1 percent of
( i •’ ; of the good at the factory gate,
^ t m m a r i z e , Anderson and van
w i n c T ? r r ^ n a n ~ t ; i
costs: border b a m rs a ^ ^
transport costs. They &
existing empirical research
mation ot tne ov n n n t a r i f f barriers,
barriers, h ^ * – ‘ * , 44 per¬
° , are an additional 2 1 percent.
^ o n T p e T e n t o f t h e factory gate Pt,e.
Conclusion
Anderson and van W i n c o o p r e p o
results on transport costs. f r o m another
article b7 David H o m n ^ . ^
0 1 1 T a C a g e – r o – all of the costs,
^ 2 ^ = ^
Barriers to international trade impede
t o c e a s e d ^ ^ ^ ^ c r a l l
C 1 C n t erf societies, m i l e d «
economic well being o r m e s has
seized the attenuu r r p q e a r c r i e r s have
media, and – o — t s re earch
recently collected a great deal ot
t h a t indicates that barriers, tc>w£«£ ^
q u i t e high. The types an̂ d ^ ^
these barriers m develope
highlighted i n an ^ ^ ^ ^ p .
by James A n d e r s o n ^ d ^ m c u r r e n t
Combining the results
r e S e a r c h on trade costs, ^ ^ m t t t .
Wincoop f i n d that border b a t n e o ^ ^
national transport costs are e ^ ^ e _ _ . 7 4 ;
74 percent tax on the factory g ^ P ^ a ,
p e r L t seems like a high n u n ^ ^ ^ ;
sales tax that high! H o w is t t h a t m
l y globalizing wor d ^ of c £ o f ;
tional trade are still so high, r o r
were no costs to international d e t >
b a m „ s a „ 2 „ o w i l ) e v e r b e r e a | . ^ a „ d
costs and increases in J t r a d e
T ” f “>d =”ltural barriers). 0 r i e
van Wincoop show that f r . r „ . •
=r^ a & r f*E
“hole, would be better off.
Endnotes
– I d GDP), ^ c e ^ o d ? x S r –
h a r e
io
reviews research on barriers rn C e g , o w *
trade. Examining anorhZ 7 “”ernational
– t i o n , S ^ ‘ S S ^ S A f^^’
countries. P ° f g o o d s « these
rage, One o f X t £ £ ^ £ .»*»-
nomics, comparative advantaee shn T°~
countries can gain f m m 7 S
e ™ w s that
even if o j ^ ^ , ^ 7* ̂ h ‘
ducing every singfe ^ p r o d u c t l v e at pro-
Textbooics on t Z , ^ a n 0 t h e r COUnV.
-ample, C o T ^ Z J T ^ l
Frankel, and Ronald J o n S L ” ‘ J f 6 7
Krugman and Maurice ObstfeM , b y P a u J
Retailed description of c ^ S ^
associated with iZl °! T °n t J l o s e c o s t s
S o S L ^ r s ? ; g o o d s s u c h « a « o .
wheat, t t a S T S T ^ ^ a n d
the “factory gate” DrZ between
effect of these c o T ^ i ^ r * ^
For example f a m ” I deferences on trade.
& d that SS/SStt^S” ^
tries with larger sharefnfrt W e e X 1 C o u n ”
They hypotheS tha I f l 5 6 P°Pulati^
^ o A h S ^ ^ t ^ T 0 . a n d c u j t u r a l
tion and contract e n W 7 i n f o r m a –
^ d e and ”
Dumping occurs when exports are ,„M • t
eign markets at a price below U • j ^ fof”
Price or product;™ h e i r domestic
Policy). An a n t i d„m
( a C C ° r d i n g t 0 U-S-
a d o l t tTdir^f” ̂ «*
that a foreign fiV™ • 7 ‘ a n a c c “sation
Foundations of Global Business
, O S T A P I K A N D Y l
April 1984, the U.S. government increased the
tariff rate On heavyweight motorcycles from 4.4
to 45 percent. From 1983 to 1984, the total
customs value (the value at the “entry gate” of
a country)’of heavyweight motorcycle imports
(700-790 cubic centimeters of engine displace-
ment) fell from $5.7 million to $55,000.
1 1 In their survey, Anderson and van Wincoop
cite Messerlin’s article.
1 2 Ad valorem duties, which are taxes levied as a
percentage of the value of the imported goods,
are cpnverted directly.
1 3 The tariff-equivalent of the effect of not having
a common currency could be calculated if the
gravity regression includes both tariff rates and
a variable for whether or not the two countries
share a common currency. Then, the regression
would indicate how much a one-percentage-
point change in tariffs reduces trade, and it
would also indicate how much not sharing a
common currency would reduce trade. From
these two pieces of information, the tariff
equivalent of not sharing a common currency
can be calculated.
1 4 From these two measures it is possible to cal-
culate the average free on board (f.o.b.) price
(the price on the mode of transport before any
trade costs) as well as the average cost, insur-
ance, and freight (c.i.f.) price. The difference
between these two numbers is one way of mea-
suring transport costs.
1 5 See the 2001a article by Hummels.
1 6 Another reason would be if a country happens
to heavily import those goods that face high
tariff rates. This would be unusual, however,
because high tariff rates presumably discour-
age imports.
“United Nations Conference on Trade and
Development’s Trade Analysis & Information
System: TRAINS, and general insight from the
work of Jon Haveman available at: www.
macalester.edu/researcn/economics/PAGE/HAV
EMAN/Trade.Resources/TradeConcordances.
<> html.
1 8 In 2005 the World Trade Organization’s textile
quota system known as the Multi-Fiber
Agreement (MFA) was phased out. However,
subsequent dramatic changes in trade flows
have caused countries to invoke other methods
to control the amount of textiles traded.
1 9 All percentages reported are simple averages of
the nontariff barrier coverage ratios over the
appropriate categories of goods (that is, the
share of total goods in a category that are sub-
jected to nontariff barriers).
2 0 When border costs are small, the multiplicative
formula yields numbers very similar to what
would be obtained by adding up the costs.
Hnwrner. when border costs are large, the
formula yields numbers quite different from
those obtained by simple addition.
2 1 See Hummels’ 2001b article.
2 2 See Hummels’ 2001a article.
2 3 This is a sharp decrease from 32 percent in
1950.
2 4 Between 2000 and 2005, euro-area trade
increased by 10.3 percent, which was larger
than the increase between 1993 and 1998
(8.3 percent). This is consistent with (but not
proof of) the notion that the adoption of the
euro reduced trade costs, thus increasing trade.
References
Anderson, James E., and Eric van Wincoop. “Trade
Costs,” Journal of Economic Literature, 42
(September 2004), pp. 692-751.
Caves, Richard E., Jeffrey A. Frankel, and Ronald
W. Jones. World Trade and Payments: An
Introduction, 10th edition. Addison Wesley:
New York, 2006.
Ceglowski, Janet. “Has Globalization Created a
Borderless World?” Federal Reserve Bank of
Philadelphia Business Review (March/April
1998), pp. 17-27.
Harrigan, James. “OECD Imports and Trade
Barriers in 1983,” journal of Intemational
Economics, 34:1-2 (1993), pp. 91-111.
Hummels, David. “Time as a Trade Barrier,”
manuscript, Purdue University (2001a).
Hummels, David. “Toward a Geography of
Trade Costs,” manuscript, Purdue University
(2001b).
Krugman, Paul, and Maurice Obstfeld.
International Economics: Theory and Policy,
6th edition. Addison Wesley: New York,
2002.
Leduc, Sylvain. “International Risk Sharing:
Globalization Is Weaker Than You
Think,” Federal Reserve Bank of
Philadelphia Business Review (Second
Quarter 2005), pp. 18-25.
Messerlin, Patrick. Measuring the Cost of
Protection in Europe. Institute of Inter-
national Economics: Washington, D.C.
(2001) .
Rauch, James E., and Vitor Trindade. “Ethnic
Chinese Networks in International Trade,”
Review of Economics and Statistics, 84:1
(2002) , pp. 116-29.
ARTICLE ASSIGNMENT INFORMATION
Information coming from Syllabus:
Team Article Presentation Details
a. During the first week, you will be required to form teams of 2-3 students. You can do this by self-selecting yourself into Groups (left menu bar of Blackboard) along with fellow students you wish to work with. The groups are automatically capped at 3 and will not permit additional enrolment. This team will stay constant throughout the course and will work on the Article Presentation as well as the Term Paper.
b. Each team will be randomly assigned a specific article from the empirical readings in your course pack, or another current event/article to be announced by the instructor. These readings are usually either an analytical or empirical research paper that tests the theories in the earlier part of your course pack. Each of them requires you to read them carefully, understand the topic of the research paper, understand the methodology used to study the specific topic and then evaluate the findings of the author(s).
c. The team will then prepare a power point presentation on the article that provides a complete summary of the research/analysis, including your own critique or stance on the problem being studied.
d. Finally, the team will make a brief presentation to the class on the specific assigned date. All team members must participate in the presentation. Prepare the presentation as if you are teaching that article to the class.
Team Article Presentation
The Instructor will assign a specific article from the custom text which your team will present to the class including a thorough analysis of the article. The articles in the reading are essentially analytical or empirical research studies and will require some effort to understand, synthesize, and present to the class. Prepare to make this presentation as if you are teaching that article to the class. You will need to make a Power Point presentation that should be uploaded to Blackboard by the end of the sixth week. The grading rubric for this presentation is as follows.
Team Presentation Rubric (Online Format)
|
Presentation Component |
Unacceptable |
Acceptable |
Good |
Excellent |
|
Coverage of article |
Very incomplete, significant gaps, or biased summary of article |
Complete but cursory presentation of the articles, does not necessarily identify the big picture |
Generally thorough and balanced but awkward, needs better sequencing and identification of the big picture |
Thorough coverage of article, identifies key issues and balanced treatment of perspectives |
|
Understanding and Critique |
little or no reasoning, explanation, or evidence provided |
Reasoning and evidence presented but not well organized or poor sources |
Good logical reasoning and evidence, but not integrated |
Logical reasoning integrated with authoritative references on key points |
|
Graphics and Visuals |
Poor quality graphics and presentation of material is illegible and inconsistent, no intro, overview or agenda |
Graphics quality acceptable but does too much or too little especially on key points, poor intro sketchy agenda, background |
Well done graphics, fluid introduction and agenda, but could emphasize key points better and summarize better, could be more polished and complete |
Well-designed and attractive graphics that simplify or summarize key ideas; original graphics, clear intro and agenda |
*Maximum points team can earn is 9.
