2.1 International economics: trade, institutions and growth notes

1. 2.1.1Trade theories: absolute and comparative advantage, Heckscher-Ohlin, terms of trade; free trade versus protection

   Countries gain from trade by specialising in goods they make at a lower opportunity cost (Ricardo), and they tend to export goods that use their abundant factor intensively (Heckscher-Ohlin); free trade maximises world output, while protection is defended for infant industries, jobs, balance of payments and security.

   Advanced · 11 min · Read here
2. 2.1.2Bretton Woods system and the IMF: par values, quotas, SDRs and lending facilities

   The Bretton Woods system (1944–1971/73) fixed every currency to the US dollar and the dollar to gold at US$ 35 an ounce, with the IMF policing the adjustable peg and lending to members in balance of payments trouble; the system broke down in the early 1970s, but the IMF survives with quotas, SDRs and a range of lending facilities.

   Advanced · 10 min · Read here
3. 2.1.3World Bank Group (IBRD, IDA, IFC, MIGA, ICSID) and regional banks (ADB, AIIB, NDB)

   The World Bank Group's five institutions give long-term development finance (IBRD to middle-income countries, IDA to the poorest), back private investment (IFC), insure it (MIGA) and settle investment disputes (ICSID); regional and newer banks such as the ADB, AIIB and NDB add finance, mostly for infrastructure.

   Advanced · 9 min · Read here
4. 2.1.4GATT to WTO: the world trading order, MFN, national treatment, agreements and dispute settlement

   The world trading order moved from GATT (1947), a provisional tariff agreement for goods, to the WTO (1995), a permanent organisation covering goods, services and intellectual property, built on non-discrimination (MFN and national treatment) and a binding dispute settlement system.

   Advanced · 9 min · Read here
5. 2.1.5Sources of economic growth: capital, human capital, productivity, trade and aid, non-economic factors

   Output grows when an economy adds capital, improves the skills and health of its workers, uses all inputs more productively (technology and efficiency), gains from trade and aid, and has the institutions, attitudes and stability that let these work.

   Advanced · 8 min · Read here

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