New theories of International Trade

1. New Theories of International Trade
By
R. K. Dhar

2. ▲Agglomeration of Interconnected Companies
Exchange of ideas among personnel
Building of support infrastructure
☆Some examples of industry Agglomeration in some countries:
Food additives and furniture in Denmark;
Cutlery and printing presses in Germany;
Ceramic tiles, footwear, and wool fabrics in Italy;
Air-conditioning machinery, musical instruments, and forklift trucks in Japan;
Pianos, travel goods and wig in Korea;

3. • Among firms and supporting infrastructure in clusters,
there are substantial economies of scale, positive spillover
effects(extranalities), and interlinkages that promote both
competition and cooperation.
• Agglomeration affect competition in three broad ways:
by increasing the productivity of companies in the area;
by driving the direction and pace of innovation;
by stimulating the formation of new businesses, which expands and strengthens
the cluster itself.
• "First-mover advantage" and the presence of industry
agglomeration can be overcomed by new entrants with
sufficient resources to bear the initial losses entry entails.

4. Samsung high-tech factory construction of $7b in Xi'an
☆Construction of the first phase of Samsung's NAND flash plant in
Xi'an, Shaanxi province, involved a total investment of $7 billion,
kicked off on Sep 13, 2012.
☆The South Korean company's plant, the biggest ever overseas
investment in western China, is located in Xi'an Hi-tech Industrial
Development Zone, will produce nanometer chips, mainly used in
smartphones and tablet PCs.
☆"The construction of the Samsung plant will greatly enhance the
international influence and competitiveness of Shaanxi's
information industry and lay a solid foundation to build a world-
leading information industry cluster in the province."
☆Xi'an has more than 2,600 enterprises engaged in the IT industry and
a number of world-famous IT enterprises, such as Applied Materials,
Qualcomm, GE, Erisson, Micon, Walsin, Simmtech Electronics, NEC,
ZTE and Huawei, have already entered the city's high-tech zone.

5. * A ground-breaking ceremony is held to mark the start of the construction of the second phase of
Samsung’s memory chip plant in Xi'an, Northwest China's Shaanxi province, March 28, 2018.
SAMSUNG ELECTRONICS CO LTD BEGAN BUILDING A NEW MEMORY CHIP PRODUCTION LINE IN XI'AN,
CAPITAL OF NORTHWEST CHINA'S SHAANXI PROVINCE
CURRENTLY, SAMSUNG HOLDS A MONOPOLY POSITION IN THE FIELD OF MEMORY STORAGE CHIPS. ITS
REVENUE FROM NAND IN THE FOURTH QUARTER OF 2017 ROSE 9.8 PERCENT FROM THE PREVIOUS
QUARTER ON THE BACK OF DEMAND FROM SMARTPHONE AND SERVER MARKETS

6. The Benefits of Trade
▲The overwhelming conclusion of all the theories of international
trade is that trade creates value for all the participants.
▲In theory, governments can increase national walfare by protecting
firms from trade competition while they are still struggling to gain
sacle efficiency, undertake R&D, differentiate their products, and
promote exports.
▲Management and goverments have focused their attentin on the
"hot" industries on the cutting edge of technology when they have
tried to identify the "winners of tomorrow" in export markets.

7. Real Exchange Rate
▲Trade flows are also influenced by:
Real Exchange Rates
Demand conditions over the business cycle
• An increase in a country's real exchange rate has many of the same
effects as a reduction in its tariff rate.
reduces export
increases import
• Real exchanges rates may change due to:
A gap between investment demand and domestic savings.
Short-term government macroeconomic policy.
Change in a country's terms of trade.
Discovery of valuable natural resources.

8. Asian Real Exchange Rate against the US

11. Demand
• Demand conditions over the business cycles in the
domestic market and in export markets, and source
countries for imports influence international trade.
• If the domestic economy is expanding relative to the
economies of other countries, exporters will tend to divert
production to the domestic market.
• If the domestic demand is slack, producers will tend to try
to push excess production onto export markets.