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International Economics

 

© Triple Nine Communication Press

Singapore 2021

142 pages, 8.5 inch x 11 inch

ISBN : 978-1-68474-344-5

 

Author : Sebastiana Viphindrartin (Indonesia) , Suryaning Bawono (Indonesia)

Editor : Adriana Assyami (German), Lilik Sumarsih (Indonesia), Rian Pratama Putra (Indonesia)

Layout : Alex Norish (German)

Cover Design : Alejandro Gonzalo (Spain)

Translator : Lilik Sumarsih (Indonesia), Dian Sutejo (Indonesia), Alejandro Gonzalo (Spain)

Photos and Illustrations :

Albin Berlin (Sweden), Andrea Piacquadio (Hungary), Andrew Wilus (Poland), Anna Nekrashevich (Belarus), Anna Tis (Russia), Artem Podrez (Belarus), Benjamin Drean (France), Christina Morillo (USA), George Becker (Holland), Julius Silver (Germany), Karolina Grabowska (Poland), Lukas (Czech republic), Martin Damboldt (Germany), Mat Reding (French), Michael Steinberg (UK), Nataliya Vaitkevich (Spain), Polina Zimmerman (Russia), Rafael de Campos (Portuguese), Ryutaro Tsukata (Japan), Sebastian Voortman (Canada), Sora Shimazaki (Japan), Suryaning Bawono (Indonesia), Tima Miroshnichenko (Russia), Tom Fisk (Indonesia), Valentin Antonucci (France).

 

Published on 21 March 2021

In Singapore

 

Published on 23 March 2021

In Madrid

 

By

Triple Nine Communication Press

No 7 Temasek Boulevard#12-07

Suntec Tower One

Singapore, 038987

Singapore

Website : tripleninecommunication.com

Email : hello@tripleninecommunication.com

 

In collaboration with PT.Frost Yunior and STIE Jaya Negara Taman Siswa Malang

 

Distributed by Triple Nine Communication and partners.

 

Note : It is prohibited to quote or reproduce part or all of the contents of this book in any way, without the written permission of the publisher. This book is distributed to 78 countries on 4 continents (ASIA, EUROPE, AMERICA, AFRICA) with various publishers and partner distributors. You may find and purchase this book with the triple nine communications partner publisher in your country. You may also find this book published with a different ISBN from the official publications in Singapore and Madrid because partner publishers publish with different versions and with different ISBNs.

Foreword

 

This International Economics Textbook is for reading material written to enrich course material in the field of International Economics related to Theory and Practice and policies, including on Import-Export.

 

This book is the result of the collaboration of a business practitioner who has more than 10 years of experience in the field of international business and an academician and researcher who has studied economic theory and research for more than 20 years.

 

This book discusses a lot about economic theories in international trade and the direction of its policies, including practical international business guides that can be a basis for understanding in developing international business along with general government policies in terms of international economic policies that are often encountered in international business practice. The things discussed in this book are very important to be studied as a basis for understanding international economics for both students and practitioners of decision-making in companies who want to develop an international scale business.

 

This textbook contains four subjects which include:

1. Introduction
2. International Economic Theory
3. International Economic Policy
4. International Business

The four subjects are expected to provide provisions for students to understand international economics and to understand international business and trade practices as well as to understand the economic conditions of export destination countries and/or import destination countries if students continue their studies in the field of international business and trade and practice in the real world.

 

The author collaborates to bring together experience and knowledge in the field of international economics with the hope of providing an overview and transfer of knowledge to students who want to become entrepreneurs or practitioners of international business as well as teaching materials for students studying international business and the economy.

 

The author is working hard to develop this book to its full potential for students. However, constructive criticism and suggestions are open to writers for all parties for the sake of perfection in the development of international economics textbooks.

 

Best regards

 

Dr. Sebastiana Viphindrartin1, & Suryaning Bawono S.E.M.Si2

 

1An Academic and Economic Researcher at the Economics Department, Faculty of Economics and Business, University of Jember, Indonesia

2Business Owner, Chairman, CEO of several national companies in Indonesia and outside Indonesia, Head of Research Journal Publication at Tamansiswa State College of Economics, Malang-Indonesia

Chapter 1 Definition of International Economics

Illustration of international economics, Photo by Andrea Piacquadio (Hungary)

 

Like other major fields of economics, international economics consists of many theories and models, some of which are more mathematical. The field assesses the impact of trade and investment between countries, including international trade agreements or applicable policies that can have an impact on such trade and overall economic growth.

 

The international economy can also be considered part of the political sector and international relations, which are discussed further below. Dominantly, the international economy is broken down into two distinct areas - international trade and international finance.

 

International trade examines how goods and services move across international borders by applying a microeconomic framework that includes modelling and analysis.Thus, when examining international trade issues, it is not uncommon to look at factors such as:

Supply and demand; Customer and market behaviour; The differences between countries' trade policies; and Trade quotas or trade negotiations in place and their consequences. On the other hand, international finance studies the flow of capital between international borders by applying macroeconomic principles. The areas included in the area of international finance are:

Foreign exchange rates and currency movements, including the difference between fixed and floating exchange rates; Balance of trade and payments between economies; GDP, inflation, and employment rates, in a comparative international context.

 

To begin studying international economics, it should be preceded by first examining what international economics is and what is the position of international economics in Economics. Broadly speaking, Economics is divided into three parts, that is:

1. Descriptive economics (descriptive economics): economics that explains and describes the existing economic phenomena.
2. Theory economics: economics that studies the theoretical processes of economic life, namely the way an economic system lives and works. This theoretical economics is divided into two, namely: Microeconomic Theory and Macroeconomic Theory.
3. Applied economics: economics that studies the application of the general basics of analysis provided by theoretical economics to explain the causes and importance of events in descriptive economics.

 

Based on the division of economics as above, International Economics according to the discussion material can be said to include the three parts of economics mentioned above. This means that in the discussion of international economics there are topics that are descriptive, theoretical and applied. Descriptive economic elements you will encounter when you study chapters relating to international and regional economic institutions, such as:International Monetary Fund, World Bank or International Bank for Reconstruction and Development, the World Trade Organization, and Association of Southeast Asian Nations.

 

The elements of theoretical economics, among others, can be found in theories that suggest the occurrence of trade between countries, such as the Absolute Advantage theory proposed by Adam Smith, and the Theory of Comparative Advantage proposed by David Ricardo and John Stuart Mill. Meanwhile, you can find applied economics on issues related to international policy or foreign economic policy. Meanwhile, International Economics is a field of study that studies the implications of international trade in goods and services and investment or international finance. Broadly speaking, there are two sub-fields of study in international economics, namely: international trade and international finance.

 

The definition of international trade is a field of study that applies microeconomic models to help understand international economics. Where in international trade, among others, includes the tools and instruments that you are familiar with in the microeconomics course, namely: demand and supply analysis, producer and consumer behaviour, perfect competition, oligopoly and monopolistic market structures and the effects of market distortions. The aim of this field of study of international trade is to understand the effects on individuals and businesses of international trade itself, changes in trade policies and changes in economic conditions. Apart from elaborating on arguments in favour of free trade policies, international trade also discusses arguments in favour of various types of protectionist policies.

 

The international economy is the study of how much scarce resources are allocated to meet the needs of human life within the scope of international life. This means that the problem of resource allocation is studied in terms of the relationship between the economic actors of a country and other countries. International economics tries to explain how economic relations between one country and another can affect the allocation of resources either between two countries or between several countries. There are many forms of relations in relation to this international economy, including trade, investment, loans, assistance and international cooperation. The actors who carry out international economic relations include government, private sector and international organizations.

 

International economics includes several aspects, both micro and macro aspects. The micro aspect, for example, relates to the issue of buying and selling internationally (export-import), where this trading activity depends on the conditions of the production market as well as the production factor market, also includes foreign investment transactions, international transactions that are unilateral in nature and the balance of payments. Meanwhile, the macroeconomic aspect, for example, concerns issues where each market is interconnected with one another which can affect income or employment opportunities.

 

Several facts in international economic relations, among others, are the export-import relationship of goods, exchange rates of several foreign currencies (currencies) and several types of services that arise as a means of international relations. These facts in themselves raise important problems for the countries involved in it. International economic problems can be said to have arisen after the first world war (Young & ‎Kent,2020). After the end of the first world war, many countries reduced their imports in order to reduce unemployment and protect domestic industries that were growing after the war. As a result of such a sharp reduction in imports, the volume of international trade was reduced compared to before the great war, and the depression was widespread. After 1993 the volume of international trade increased again, although not as high as the amounts that had been achieved in previous years.

 

The implementation of international economic activities can occur in the form of cooperation, assisting assistance between one country and another. The process of how the international economy is carried out, what are the causes, what are the benefits and consequences, all of these are questioned and how far theories in international economics can solve.

 

When we talk about international economic goals, then we are can divide it into two more specific parts, namely the objectives of economic theory and the objectives of international economic policy. In general, the purpose of international economic theory is to make predictions, describe and explain these predictions. That is, international economic theory performs an abstraction from the details around economic events to separate several variables and relationships that are considered the most important in predicting and explaining economic events. In line with this, the explanation of international economic theory always assumes that the world consists of two countries, two commodities, and two types of factors of production. In addition, the international economy also assumes that there are no trade restrictions, perfect mobility of production factors within a country, but no mobility between countries, perfect competition in the market for all types of commodities and factors of production, and no transportation costs.

 

When viewed from the policy, in general, there are 6 main objectives of international economic policy, namely: autarchy, economic welfare, protectionism, stable levels of high employment, the balance of payments favourable balance of payments, and economic development (economic development). The international economic policy continues to develop and experience changes from time to time. Some of the main contemporary issues related to international economic policy today include: maintenance of the global multilateral trading system, international competitiveness, economic integration, new protectionism, the emergence of newly industrialized countries (NICs), transition from a centrally planned economy to a market economy, exchange rate instability, debt burden developing countries, environmental protection, control of multinational companies.

 

Economic life seems inseparable from the elements of everyday life. Economic life is very close to all human interactions because indeed economic life has become a definite item, an activity that must be carried out by humans. Economic life can be carried out in the smallest environment even to international economic life which of course has more and more complicated provisions. In fact, the existing provisions are an agreement of previous people who have done the same thing to be continued by the next generation.

 

International economy? What do you think about when you heard the word international economics? Yes, that is true. Economic activities carried out on the international scene. Well, to be precise, international economics is one of the branches of economics which in this study is discussed and studied and also analyzes transactions and problems in the international economy itself, one of which is export and import activities. In addition, trade and financial and monetary affairs as well as government-owned and non-government economic organizations that have a linkage of interaction between countries are also part of the international economy. Because they are considered to be one of the branches of the existing economics, the problems that arise in reality do not have in stark contrast to the existing problems of the applications of the economics you are usually familiar with. One of them is regarding product selection and the scarcity of products, both goods and services, which usually have a lot of demand from the public.

 

For that, for those of you who are really interested in international economics, there are a number of rights that you need to know about some of the following characteristics in relation to the international economy:

 

1. Open market conditions or what is known as market liberation as well as the large flow of money transfers that are increasingly sophisticated with increasingly developing technology.
2. Continued emergence of multi-national companies where these companies have an impact on economic dependence on the country that owns the company.
3. The emergence and emergence of all the competition are getting tougher from day to day between several countries and companies in their efforts to improve product quality, company performance, work effectiveness and efficiency.

 

The aim of international economic activity is to be able to increase the prosperity of a country that is better for all levels of society. Well, this goal can be achieved if there are various kinds of international economic activities, such as export-import, insurance, crediting, investment, and other fields.

 

International Economics is a branch of economics that studies and analyzes transactions and problems in International Economics (Export-Import), which includes trade and finance or monetary and economic organizations (private and government) and economic cooperation between countries. As part of economics, the main problems faced by international economics are the same as economics, namely the problem of product scarcity and the problem of product choice, which means that products are goods and services as well as ideas that are needed and produced by humans.

 

The problem of scarcity and choice of goods (goods and services and ideas) arises because of the demand and supply of unlimited needs and wants and unlimited wants and demand and supply of resources. These economic problems can be international in nature because of the demand and supply that comes from within the country and from abroad.

 

The importance of international economic studies because at this time the influence of world economic globalization is marked by characteristics, namely: Market openness or market liberalization and the flow of money and technology transfer. The dependence of a country's economy on the outside world where Multi-National companies exist.

 

Competition is getting tighter between countries or between companies to increase: optimal productivity, efficiency, and effectiveness. As a consequence of globalization, the study of International Economics is very important to measure the ability of a country in the arena of globalization. The international economy includes all economic activities carried out between countries, nations and between individuals from one State to another.

 

1.1. International Economy and International Trade

 

International Trade Illustration, Photo by Rafael de Campos (Portuguese)

 

Understanding of international economics due to international trade. Where in conducting international trade an understanding of the international economy is required. So it becomes a natural thing if international economics is a branch of economics that studies economics in a definitive, theoretical and practical or applicable way.

 

The definition of international trade is trade carried out by residents of a country with residents of other countries on the basis of mutual agreements (Berman,2020). The population in question can be between individuals (individuals with individuals), individuals and companies from other countries, between individuals and the government of a country or even between the government of a country and the government of another country. This activity is the process of exchanging goods and services from one region to another. This activity arises because of the differences in the needs and resources of each trading actor.

 

In this era of globalization, technology is increasingly developing so that it helps trade activities between countries and

Impressum

Verlag: BookRix GmbH & Co. KG

Tag der Veröffentlichung: 23.03.2021
ISBN: 978-3-7487-7807-3

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Widmung:
Dr Sebastiana Viphindrartin is an Academic and Economic Researcher at the Economics Department, Faculty of Economics and Business, University of Jember, Indonesia Suryaning Bawono S.E.M.Si is Business Owner, Chairman, CEO of several national companies in Indonesia and outside Indonesia, Head of Research Journal Publication at Tamansiswa State College of Economics, Malang-Indonesia