(EKONOMI INTERNASIONAL) TEORI TEORI PERDAGANGAN INTERNASIONAL part 2

Summary

This lecture on international trade theory delves into the Opportunity Cost Theory, explaining its connection to the Production Possibility Curve (PPC) and Indifference Curves (IC). It highlights how countries engage in trade based on differing production preferences and resource allocation. The lecture also touches on alternative theories, such as skill and technology, economies of scale, and product lifecycle. Ultimately, the lecture emphasizes how these theories help explain the dynamics of international trade and the benefits it offers to countries through efficient production and improved welfare. The session concludes with a reminder for students to engage in discussions and complete assignments.

Takeaways

• 😀 The lecture begins with an introduction to the International Economics course and a recap of theories from previous sessions, including Absolute Advantage, Comparative Advantage, and Factor Proportions Theory.
• 😀 The focus of this session is on Opportunity Cost Theory, presented by Gottfried Haberler, which integrates the concept of opportunity cost into international trade.
• 😀 Opportunity Cost Theory, also known as the Production Possibility Curve (PPC), illustrates the maximum combinations of output a country can produce given limited resources.
• 😀 The example provided shows a country choosing between producing clothing or smartphones, with production trade-offs resulting from fixed resources.
• 😀 The PPC curve can move inward (indicating inefficiency or negative impacts like war or recession) or outward (indicating greater efficiency or technological advancements).
• 😀 A real-world example discussed is technological improvements in the smartphone industry, which can expand the PPC outward by increasing productivity.
• 😀 The lecture also explores how the availability of resources, improved technology, and human capital can shift the PPC outward, leading to higher production capacities.
• 😀 International trade occurs when countries with different PPCs and indifference curves (ICs) trade goods that they are relatively more efficient at producing.
• 😀 The example of two countries (A and B) with different preferences shows how trade allows them to achieve higher satisfaction by importing and exporting based on their consumption and production needs.
• 😀 The lecture introduces alternative trade theories, including economies of scale (where larger production lowers costs), the relationship between labor skills and productivity, and the role of technological advancements in production.
• 😀 The Product Lifecycle Theory suggests that as products standardize and technologies advance, more developed countries export new, non-standardized goods, while developing countries focus on exporting standardized products.

Q & A

What is the opportunity cost theory in international trade?

The opportunity cost theory, proposed by Gottfried Haberler, integrates the concept of opportunity cost into the production process of a country. It helps explain why international trade occurs when countries allocate their resources efficiently between different goods and services.

What is the Production Possibility Curve (PPC) and how does it relate to opportunity cost?

The PPC is a curve that illustrates the maximum possible combinations of outputs a country can produce given its available resources. It shows the trade-offs between producing different goods, with opportunity cost being the cost of forgoing one product to produce another.

How does the PPC shift in response to changes in a country's resources?

The PPC can shift inward or outward depending on resource utilization. If resources are not used efficiently or are reduced (due to factors like war or economic recession), the PPC shifts inward. Conversely, discoveries of new resources, technological advancements, or increased workforce can shift the PPC outward, allowing for greater production.

Can the PPC curve move in both directions? How?

Yes, the PPC can move inward or outward. If resource use becomes inefficient or if negative factors like economic recession occur, the PPC moves inward. On the other hand, positive factors such as new resource discoveries, technological advancements, or increases in labor force can cause the PPC to move outward, leading to higher production possibilities.

How does technological improvement affect the PPC?

Technological improvements increase productivity, allowing a country to produce more goods with the same amount of resources. This shifts the PPC outward, demonstrating a higher potential for output in both industries (e.g., smartphones and clothing).

What role does international trade play in the opportunity cost theory?

International trade occurs when countries with different PPCs and comparative advantages can exchange goods. Countries export goods they produce more efficiently and import goods they can produce less efficiently, leading to mutual gains and higher levels of consumption than if they remained isolated.

What is the significance of indifference curves (IC) in international trade?

Indifference curves represent consumer preferences for different combinations of goods. In the context of international trade, differences in ICs between countries explain why they trade. When countries have different preferences for products (like smartphones or clothing), trade allows them to achieve a higher level of satisfaction by importing the goods they prefer.

How do differences in consumer preferences affect international trade?

Differences in consumer preferences (shown by varying indifference curves) lead to differing demands for goods in different countries. This drives the need for trade, as countries import products that they cannot produce efficiently and export those they can produce more effectively, meeting their consumers' needs.

What factors can lead to changes in the PPC, making it shift outward?

Factors that cause the PPC to shift outward include the discovery of new resources (e.g., oil), technological advances, improvements in education and training, and demographic changes like increased immigration or higher birth rates, all of which expand a country's production capacity.

How does the concept of economies of scale influence international trade?

Economies of scale refer to the reduction in per-unit costs as production increases. Countries with large-scale production can offer goods at lower prices, making it advantageous for them to export these goods, while smaller countries may import such goods to benefit from lower prices rather than producing them locally.