1. The global economy ( Світова економіка)

Nations trade with one another for the same reason that individuals and business firm within a country trade: both sides expect to benefit from the transaction. They benefit because trade enables them to exchange things they don’t need for the things they do need and want.

Manufacturing can also be performed more efficiently in some parts of our country than in other. Natural resources, labor supply and transportation facilities have promoted the development of certain industries in particular regions of the country.

Differences in terms of climate, natural resources, labor supply, capital and technology make it possible to specialize in the production of some products. Despite the many advantages of trade between nations, most countries, including our own, often restrict that trade in a number of ways.

The firs are tariffs. Tariff is a duty, or tax, on imports. There are two basic types of tariffs. Revenue tariffs are levied as a way to raise money. Protective tariffs are levied to protect a domestic industry from foreign competition.

Than quotas. Quotas limit the amount of foreign competition a protected industry will have to face.

There are many other devices that directly affect the flow of trade among nations. Expect subsidy – a payment by a country to its exporters that enables them to sell their products abroad at a lower price than they could sell them for at home. Selling the same product for a lower price abroad than at home is called dumping. “Administrative red tape” – the deliberate use of governmental rules and regulations to make it difficult to import goods from abroad.

2. International markets for commodities (Міжнародні ринки товарів)

When transportation costs are low and governments not interfere much in transactions that cross nationals boundaries, firms and individuals frequently look across those boundaries for opportunities to buy or sell. For many commodities there are international rather than domestic markets, and for most commodities there are international effects on markets.

Commodities that are produced in a foreign economy, but which are consumed by individuals within a domestic economy, are imports, while commodities which are produced within a domestic economy, but which are consumed by individuals in a foreign economy, are exports.

If the world price of commodity is below the domestic price, there will be an incentive to import the commodity, purchasing it from foreign producers.

Money once again solves the problem of coincident or reciprocal wants: individuals or firms who want to import a commodity can make the exchange using money, while those individuals or firms who want to export do so in exchange for money. As long as money can be used in international transactions, exporters and importers do not need to be the same individuals. The complexity arises because foreign firms usually want to be paid in money useful in their own economy. Conversely, domestic firms who want to export usually want to be paid with money useful in the domestic economy, while foreigners to whom they must sell if they are to export usually want to pay for the commodities using money from their own economy.