Don’t print all pages – there are about 90 pages. Econ 448 International Economics Exam #1 Fall, 2013

Economics 448 International Trade Exam #3

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Economics 448 International Trade Exam #3 Professor Twomey

Please PRINT your name on the BACK of the last sheet. Answer on these sheets, using the flip sides if you need more space. Please ask for clarification if the questions are unclear. The weights of the questions are as indicated. Time: unlimited, as long as it’s under two hours. Good luck.

  1. Identify the following with a sentence or at most two: (20 points)

  1. Montreal Protocol

  2. Maastricht

  3. CIS countries

  4. Raul Prebisch

  5. Mercosur

  1. (15 points) Which of the following probably violate the rules of the WTO? Explain each answer briefly

  1. A country’s government places a tax on domestic production to reduce pollution caused by this production

  2. A country’s government prohibits imports of foreign goods produced using production methods that would violate this importing country’s environmental protection laws

  3. A country’s government places a tax on domestic consumption of goods (both imported and domestically produced) to reduce pollution caused by this consumption

  4. A country’s government restricts imports of a good to reduce pollution caused by consumption of this good

  1. (15 points) What is meant by import substitution industrialization? What are its goals?

Some third world countries have tried it. Did it work?

Identify and explain two (separate) arguments about why it might work.

Identify and explain two separate arguments about why ISI might not work.

Export promotion has often been recommended in its place. Identify three third world countries – and, roughly the time periods – where it has been successful.

  1. 10 points) Identify and distinguish between the causes of economic and of political failures of trade embargoes.

  1. (15 points) With regard to international immigration:

  1. Identify two distinct potentially valid reasons why a country might restrict outward migration

  2. Identify two different potentially valid reasons why a country might restrict inward migration.

6) (15 points) Consider John Dunning’s model of the factors determining foreign direct investment, as discussed in the textbook, and referred to in class as the OLI theory. Identify and explain briefly those factors.

Consider two stereotypical countries, Japan and Mexico; one with high technology, resource scarce, etc., and the other the opposite. For each of those two countries, either inward or outward FDI, give an example of one industry (real or fictitious) that illustrates each motive for FDI flows.
The median on this exam was 75; the high was 86.

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