Modern Patterns of International Trade

1. When developing countries turn to economists for advice on trade, they are usually pointed towards David Ricardo. According to his law of comparative advantage, formulated some 195 years ago, countries should specialise in whatever they are best at producing, leaving their trading partners to pro­vide everything else.

2. In Ricardo’s illustrative model, the answers were clear: Portugal, blessed with a fine climate, should cultivate wine; England, blessed with capitalists, should manufacture cloth. The Portuguese gained from importing English cloth (even if they could make it more efficiently) because it freed them to concentrate on wine. As for the English, even the most ardent mercantilist would agree that viniculture should be left to others.

3. But if a country’s God-given advantages were clear to Ri­cardo, they are less so in modern practice. Capital is mobile across borders, and the gifts of nature count for little now because manufacturing eclipses agriculture in world trade. A country’s place in the global economy seems neither predestined nor pre­dictable. As some modern economists put it, economic development is a haphazard process of “self-discovery.” Com­parative advantage is almost impossible to spot in advance.

4. Bangladesh, for example, is good at exporting hats, having sold $175m-worth to America in 2000. At one level this is not sur­prising. Bangladesh is overcrowded and underserved by capital; much of its arable land is periodically under water. As any econ­omist could tell you, it therefore has a comparative advantage in labour-intensive manufactures. But why does Bangladesh specialise in hats rather than, say, bed-sheets? And why did Pak­istan, a country with a similar mix of land, labour and capital, export $130m-worth of bed-sheets to America in 2000 but a mere $700,000-worth of hats?

5. Many examples of coun­tries that have happened upon a lucrative export niche include: cut flowers from Colombia, software from India, footballs from Pakistan. Nothing written by Ricardo, or by anybody theorising since, could have told a budding Bangladeshi entrepreneur to make hats rather than bed-sheets.

6. Sometimes governments tryto force the issue. In 1896 Japan’s rulers deemed that their country should have a steel industry to match the best in Europe. Imperial say-so substituted for econ­omic know-how, but met with little success. The government went to great lengths to replicate European technology, import­ing German engineers, machines and designs. Only after a steel mill had been built did it become apparent that German mills could not run on Japanese coke.

Vocabulary and Cultural Notes:

1. developing country – країна, що розвивається;

2. to turn (to) [tə:n] – звертатися (до когось / чогось); зосереджуватися (на комусь / чомусь); спрямовувати (на щось / когось);

3. advice (on smth) [əd`vaıs] – поради, рекомендації (щодо чогось);

4. to be pointed (towards) – бути спрямованим (на);

5. David Ricardo [`deıvıd rı`kα:dəu] (19 April 1772 – 11 September 1823) – англійський економіст, класик політичної економії, послідовник і водночас опонент Адама Сміта; був прихильником концепції економічного лібералізму, що не припускає жодного державного втручання в економіку і передбачає вільне підприємництво та вільну торгівлю.

6. law of comparative advantage [kəm`pærətıv əd`vα:ntıG] – закон порівняльних переваг (порівняльна перевага – це здатність виробника (країни, регіону, фірми, індивіду і т.д.) виробляти певне благо з меншими альтернативними витратами, ніж інший виробник);

7. to specialise (in) [`spe∫əlaız] – спеціалізувати(ся) (на, в);

8. whatever [wOt`evə] / [ h wAt`ev^ər] – який би не, будь-який;

9. illustrative model [`ıləstrətıv `mOd^əl] – ілюстративна (пояснювальна, показова) модель;

10. blessed (with) [blest] – благословенний (ощасливлений);

11. to cultivate [`kAltıveıt] – розвивати, культивувати; вирощувати; вдосконалювати;

12. freed [fri:d] – вільний (від – of, from); невимушений; добровільний;

13. ardent [`α:d<sup>ə</sup>nt] / [`α:rd^ənt] – гарячий, палкий; ревний; жаркий; палаючий; яскравий, сяючий;

14. mercantilist [`mə:k ə ntılıst] – меркантиліст (прихильник теорії меркантилізму – системи поглядів економістів XV-XVII ст., орієнтованої на активне втручання держави у господарську діяльність. Термін був запропонований Адамом Смітом, який критикував праці меркантилістів);

15. viniculture [`vıniֽkAlt∫ə] / [`vıniֽkAlt∫^ər] – виноградарство; вітікультура;

16. to count (for) [kaunt] – відповідати (за щось); бути вартим (чогось); значити;

17. to eclipse [ı`klıps] – переважати, перевищувати; затемняти; затьмарювати;

18. predestined [₍ֽ₎pri:`destınd] – визначений (наперед); зумовлений; обумовлений; приречений; упереджений;

19. pre­dictable [prı`dıktəb^əl] – передбачуваний; прогнозований;

20. haphazard (process) [ֽhæp`hæzəd] / [ֽhæp`hæz^ərd] – безсистемний; випадковий, необдуманий;

21. “self-discovery” [ֽselfdı`skAv ə ri] – самовідкриття;

22. to spot [spO:t] / [spα:t] – побачити, відмічати; пізнавати, розпізнавати; визначити;

23. in advance [əd`vα:n<sup>t</sup>s] / [əd`væn^ts] – авансом; заздалегідь;

24. Bangladesh [ֽbæŋglə`de∫] – Бангладеш (країна, що займає східну частину стародавнього регіону Бенгалія. Назва держави буквально називається “Країна Бенгалія”. Бангладеш – одна з країн із найбільшою густотою населення. Значною мірою цьому сприяють надзвичайна родючість дельти річки Ганг і регулярні повені, які спричинюються мусоновими дощами. Утім перенаселення й бідність стали справжньою бідою Бангладеш. Військові та державні перевороти, які періодично повторюються, призвели до повного підриву економіки країни);

25. overcrowded [ֽəuvə`kraudıd] / [ֽouv<sup>ə</sup>r`kraudıd] – переповнений (людьми);

26. underserved [ֽAndə`sə:vd] – не забезпечений у повній мірі обслуговуванням (доглядом, тощо);

27. arable land [`ærəb<sup>ə</sup>l `lænd] – орна земля;

28. labour-intensive manufacture [ֽleıbə r ın`ten<sup>t</sup>sıv ֽmænju`fækt∫ə] – трудоємке виробництво (виробництво, в якому затрати на робочу силу при виготовлення одиниці продукції відносно великі);

29. bed-sheet – простирало, простирадло;

30. to happen upon (smth) – наштовхнутися (на щось); зустрітися (з чимось);

31. lucrative [`lu:krətıv] – прибутковий; вигідний; дохідний; рентабельний;

32. export niche [ni:∫] / [nıt∫] – експортна ніша;

33. Colombia [kə`lOmbiə] / [kə`lAmbiə] – Колумбія (офіційна назва Республіка Колумбія) – держава на північному заході Південної Америки. Столиця – Богота.

34. software [`sOf t weə] / [`sO:f t wer] – засоби програмування; програмне забезпечення; комплекс програм;

35. (anybody) theorizing [`θıəraızıŋ] / [`θi:əraızıŋ] – будь-хто, хто займається теоретизуванням (теоретичними побудовами);

36. a budding Bangladeshi entrepreneur [`bAdıŋ ֽbæŋglə`de∫i] – такий, що подає надії (розвивається), бангладешський підприємець;

37. to force the issue [`ı∫u:] – форсувати питання; добиватися негайного прийняття рішення;

38. to deem (that) [di:m] – гадати; вважати; рахувати; презюмувати;

39. to match – приводити у відповідність; відповідати;

40. imperial [ım`pıəriəl] / [ım`pıriəl] – імперський; імператорський;

41. say-so [`seı səu] / [`seı sou] – авторитет, вага, вплив; право прийняття остаточного рішення; розпорядження, дозвіл (з боку авторитетної особи);

42. to substitute (for) [`sAbstıtju:t] / [`sAbstıtu:t] – замінювати (на щось);

43. to meet (with) – зазнавати; зустрітися (з), натрапити (на);

44. to replicate [`replıkeıt] – копіювати; повторювати (досвід тощо);

45. a steel mill – сталеливарний завод;

46. to become apparent [ə`pær ə nt] – проявлятися; ставати очевидним;

47. to be run (on) – працювати (на);

48. coke [kəuk] / [kouk] – кокс.

Task 5. Agree or disagree with the following statements.

1. The law of comparative advantage was formulated some 195 years ago.

2. In Ricardo’s illustrative model, the answers were not clear: a country’s place in the global economy seemed neither predestined nor pre­dictable.

3. Most ardent English mercantilists would claim that England should concentrate on viniculture.

4. A country’s God-given advantages count for little in the global economy of the 21^st century.

5. A country’s place in the global economy is predestined and pre­dictable.

6. Com­parative advantage is almost impossible to spot in advance.

7. Overcrowded and underserved by capital nations with unfavourable agricultural conditions have a comparative advantage in labour-intensive manufactures.

8. A country’s economic development these days can be compared to a haphazard process of “self-discovery.”

9. Many coun­tries that have happened upon a lucrative export niche.

10. Imperial say-so can never substitute for econ­omic know-how.

Task 6. Match the passages in the text (Task 4) with their topics. Write the number of the paragraphs on the line.

1.	____	Major exporters of hats and bed-sheets;
2.	____	an attempt of imperial say-so to substitute for econ­omic know-how;
3.	____	the application of Ricardo’s illustrative model in trading practices of two European countries;
4.	____	examples of countries that have happened upon a lucrative export niche;
5.	____	the essence of an economic law formulated in the 18^th century;
6.	____	modern trends in global economy which changed the universal character of the law of comparative advantage.

Task 7. a) Match the terms in column A with their definitions in column B:

A

B

1. say-so 2. mercantilist 3. developing country 4. labour-intensive manufacture 5. law of comparative advantage

a)manufacture, which requires substantial amount of human labour to produce the industrial products. This means, the proportion in which labour is used for production is much higher than the proportion of capital; b) (in economics) the idea that a nation is better off when it produces goods and services for which it has a comparative advantage; c)a person supporting the economic theory which holds that the prosperity of a nation is dependent upon its supply of capital, and that the global volume of international trade is “unchangeable”; d)power or act of deciding or allowing something; a person’s arbitrary or unauthorized assertion or instruction; e)a poor agricultural country that is seeking to become more advanced economically and socially;

b) Translate into Ukrainian paying attention to the words in italics:

1. No new employees come into the organization without his say-so. 2. Under mercantilist economic doctrine, Britain’s North American colonies were intended as a source of raw materials and as a market for manufactured goods produced in the UK. 3. Developing country is a term generally used to describe a nation with a low level of material well being. 4. The World Bank considers all low- and middle- income countries as “developing”. 5. Countries with more advanced economies than other developing nations, but which have not yet fully demonstrated the signs of a developed country, are grouped under the term newly industrialized countries. 6. It is important to distinguish between capital-intensive and labour-intensive methods of production. 7. Comparative advantage is best viewed as a dynamic concept meaning that it can and does change over time. 8. Some businesses find they have enjoyed a comparative advantage within their own market in one product for several years only to face increasing competition on the part of rival producers from other countries.

Task 8. In the text (Task 4) find the the opposites of:

1.bad at;	4.uncertain;	7.unpredictable;	10.underdeveloped;
2.to lose;	5.inefficiently;	8.unenthusiastic;	11.deliberate; nonrandom;
3.absolute;	6.disadvantage;	9.underpopulated;	12.unpromising; shrinking.

Task 9. a) Match items in column A with their synonyms in column B.

A	B
1.comparative	a)accidental; casual;
2.ardent	b)to identify; to notice;
3.to eclipse	c)to believe; to consider;
4.haphazard	d)authority;
5.to spot	e)to reproduce;
6.lucrative	f)promising;
7.budding	g)profitable;
8.to deem	h)to outshine; to exceed;
9.say-so	i)very enthusiastic;
10.to replicate	j)relative;

b) Give the English equivalents for:

1. Порівняльна перевага; 2. палкий меркантиліст (палкий прихильник меркантилізму); 3. обійти (перевищити, затьмарити) торгівлю сільсько-господарською продукцією; 4. випадковий (безсистемний) процес; 5. визначити (щось) наперед; 6. вигідна експортна ніша; 7. багатообіцяючий (такий, що подає надії) підприємець; 8. уряд вважає, (що...); 9. імператорське право прийняття кінцевого рішення; 10. скопіювати (змоделювати) європейську технологію.

Task 10. Read and translate the passage.

Comparative advantage was first described by Robert Torrens in 1815 in an essay on the Corn Laws. He concluded it was to England’s advantage to trade with Portugal in return for grain, even though it might be possible to produce that grain more cheaply in England than Portugal. However, the term is usually attributed to David Ricardo who explained it in his 1817 book On the Principles of Political Economy and Taxation in an example involving England and Portugal.

Task 11. Complete the sentences using the most appropriate items.

1. When developing countries turn to economists for advice on trade, they are usually pointed towards …

A. Adam Smith;

B. David Ricardo;

C. Robert Torrens;

2. The law of comparative advantage suggests that countries should specialise in whatever they are best at …

A. consuming;

B. producing;

C. utilizing;

3. According to Ricardo’s illustrative model Portugal should develop …

A. viniculture;

B. coalmining;

C. manufacturing;

4. A country’s God-given advantages … in modern practice.

A. remain crucial;

B. count for little;

C. are not used;

5. A country’s place in the global economy seems …

A. neither predestined nor pre­dictable;

B. predestined and predictable;

C. unpredictable;

6. Bangladesh has a comparative advantage in …

A. labour-intensive manufactures;

B. agricultural production;

C. viniculture;

7. Colombia exporting flowers, India exporting software, Pakistan exporting footballs are examples of countries …

A. where imperial say-so substituted for econ­omic know-how;

B. that found and fit a lucrative export niche;

C. which take their comparative advantage;

8. Com­parative advantage is almost impossible to spot in advance because...

A. manufacturing eclipses agriculture in world trade;

B. capital is mobile across borders;

C. all the above;

9. It incurs from the text (Task 4) that the law of comparative advantage …

A. has lost its universal character;

B. was groundless from the very beginning;

C. is completely refuted by modern practices.

Task 12. Translate into English.

1. Закон порівняльної переваги був сформульований Робертом Торренсом і розтлумачений Девідом Рікардо приблизно 195 років тому. 2. Коли країни, які розвиваються, звертаються до економістів за порадою щодо торгівлі, їх зазвичай відсилають до Девіда Рікардо. 3. Відповідно до моделі Д. Рікардо Португалія, обдарована Богом чудовим кліматом, повинна культивувати вино. 4. Якщо переваги, даровані країні Богом, були очевидні Д. Рікардо, сьогодні вони є не настільки очевидні сьогодні. 5. Подарунки природи сьогодні мають менше значення, оскільки промисловість переважає сільськогосподарське виробництво у світовій торгівлі. 6. Місце країни в світовій економіці більше не здається ні попередньо визначеним, ні передбачуваним. 7. Як вважають сучасні економісти, економічний розвиток є безсистемним процесом само відкриття. 8. Відносну перевагу майже неможливо попередньо визначити. 9. Бангладеш – перенаселена країна, якій не вистачає капіталу. 10. Існує чимало прикладів країн, які натрапили на дохідну експортну нішу. 11. Інколи уряди намагаються форсувати питання. 12. У 1896 році японські правителі вирішили, що їхня країна повинна мати сталеварну індустрію, не гіршу за європейські зразки.

Task 13. Read and translate the passage.

Exporters from the 49 least developed countries (LDCs) are significantly more exposed to environmental trade barriers (ETBs) than those from any other group. Though only half of the LDC exports consist of products potentially affected by ETBs, among these products some 40% are directly affected, compared to less than 20% for developing, transition and developed countries.

These poorest countries of the poor may have to face even tougher hurdles in the future as a result of growing environmental concern worldwide. This is especially the case for agricultural products that are among the most exported products by LDCs.

Task 14. Think and answer.

1. What countries are usually called developed / least develoiped / developing / transition? Which of the terms is the more appropriate to characterize Ukraine these days? Why?

2. Who are developing countries that seek for advice on trade pointed to?

3. When did Robert Torrens first describe comparative advantage?

4. Why is David Ricardo credited with the formulation of the law of comparative advantage?

5. What does the law of comparative advantage suggest?

6. What must Portugal / England produce according to Ricardo’s illustrative model?

7. How would Ukraine fit into the above model? What God-given advantages does Ukraine have?

8. Why do gifts of nature count for little now?

9. Does agriculture eclipse manufacturing in world trade these days?

10. Does a country’s place in the global economy seem either predestined or predictable?

11. What do contemporary economists view as a haphazard process of “self-discovery”?

12. Is it possible to spot com­parative advantage in advance? Why?

13. What are some examples of coun­tries that have happened upon a lucrative export niche? Does Ukraine belong to such countries?

14. Can imperial say-so effectively substitute for economic know-how? Why?

15. What issue did Japan’s government try to force in 1996? Was it a success? Why did German mills fail to operate in Japan?

16. In your opinion, what did Japan’s government have to do in that situation?

17. What did it actually do? (look for relevant information in available sources).

Task 15. Say what you know about …

1. Two basic reasons for which nations engage in international trade.

2. The criteria for classifying countries as developed / developing.

3. The law of comparative advantage and the history of its formulation.

4. Ricardo’s illustrative model and the way England / Portugal fit it.

5. A country’s economic development as a haphazard process of its “self-discovery.”

6. Lucrative export niches.

7. Difference between labour-intensive and capital-intensive industries.

8. The importance of government say-so in economic development of a country.

Task 16. Comment on the following sayings.

1. “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” (P.J. O’Rourke)

2. “Things may be cheaper over the hill, but there is a cost to the community in buying over there, instead of here.” (Margaret House)

3. “Trade and commerce, if they were not made of Indian rubber, would never manage to bounce over the obstacles which legislators are continually putting in their way.” (Henry David Thoreau)

Task 17. Write a composition on one of the following topics.

1. How “seven big questions” influence my life.

2. Is it possible to be a homo economicus?

3. The economy is us.

4. The economy is / isn’t the foremost concern for me.

5. Understanding economic indicators.

6. To trade or not to trade?

7. Modern patterns of international trade.

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