Английский язык экономика. Учебно-методическое пособие по научно-техническому переводу, аннотированию и реферированию

production is labour-intensive. Once South-East Asian countries got the technology, their relatively abundant labour endowment gave them a comparative advantage in making textiles. The domestic producers who lost their comparative advantage started complaining about competition from imports using cheap foreign labour.

In the long run, the country as a whole benefits from facing facts, recognising that its comparative advantage has changed and transferring production to the industries in which its comparative advantage now lies. Our analysis of comparative advantage promises us that there must be some industry in which each country has a comparative advantage. In the long run, trying to use tariffs to prop up industries that have lost their comparative advantage is both futile and expensive.

In the short run the adjustment may be painful and costly. Workers lose their jobs and must start afresh in industries where they do not have years of experience and acquired skills. But the principle of targeting tells us that, if society wants to smooth this transition, some kind of retraining or relocation subsidy is more efficient than a tariff.

Even though anti-capitalist protesters may sympathise with domestic workers who are losing their jobs and having to adjust, freezing the previous structure of employment is not merely undesirable but probably impossible. We now longer have decorators of cave dwellings or handloom weavers.

Text 5. The World Trade Organisation

In the nineteenth century world trade grew rapidly. The leading country, the UK, pursued a vigorous policy of free trade. US tariffs averaged about 50 %, but had fallen to around 30 % by the early 1920s. As the industrial economies went into the Great Depression of the late 1920s and 1930s, there was increasing pressure to protect domestic jobs by keeping out imports. Tariffs in the US returned to around 50 % and the UK abandoned the policy of free trade it had pursued for nearly a century. The combination of world recession and increasing tariffs led to a disastrous slump in the volume of world trade. Fig. 17 shows that it took a long time for world trade to recover.

After the war, there was a collective determination to restore world trade. The International Monetary Fund and the World Bank were set up, and many countries signed the General Agreement on Tariffs and Trade (GATT), a commitment to reduce tariffs successively and dismantle trade restrictions.

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Fig. 18. World exports (% of US GDP)

Under successive rounds of GATT, tariffs fell steadily. By 1960, US tariffs were only about one-fifth of their level in 1939. By 2000 Europe had completely abolished tariffs and other trade barriers for trade within the European union, and the US and China had reached agreement to allow Chinese membership of the WTO.

Thus, tariff levels throughout the world are probably as low as they have ever been. And world trade has seen five decades of rapid growth, arising at least in part from tariff reduction. Fig. 18 shows that lower transport costs have also been important.

Fig. 19. Falling transport costs

Sources: World Bank, World Development Report, 2005

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Non-tariff barriers to trade

Domestic firms can be protected by their governments in many subtle ways. Build a railway with a different width, favour domestic firms in defence procurement, drive on the other side of the road, create paperwork to ensure major delays at the border. One reason that the European Union is keen to harmonise standards is to reduce segmentation of the European market that shelters inefficient national firms.

A more direct form of protection is a quota on imports. A quota is a ceiling on import quantities.

Although quotas restrict the quantity of imports, this does not mean they have no effect on domestic prices of the restricted goods. With a lower supply, the equilibrium domestic price is higher than under free trade.

Thus quotas are rather like tariffs. The domestic price to the consumer is increased, and it is this higher price that allows inefficient domestic producers to produce a higher output than under free trade. Quotas lead to social waste for exactly the same reasons as tariffs.

Because quotas raise the domestic price of the restricted good, the lucky foreign suppliers who manage to sell goods make large profits on these sales. In terms of Fig. 1 in Text 4, the rectangle EFHI, which would have been tariff revenue for the government, now goes in profits to foreign supplies. It is the difference between domestic and world prices of the goods imported, multiplied by the quantity of imports allowed.

If these profits accrue to foreigners this means the social cost of quotas is much bigger than the social cost of the equivalent tariff. Sometimes, however, the government can auction licences to import and thus recoup this revenue. Private importers or foreign suppliers will bid up to this amount to get their hands on a valuable import licence.

Recap

•World trade has grown rapidly in the last 50 years, and is dominated by the developed industrial countries. Primary commodities make up a quarter of world trade; the rest is trade in manufactures.

•Countries trade because they can buy goods more cheaply from abroad. Cross-country differences in costs arise from differences in technology and factor endowments. Economies of scale also lead to international specialisation.

•Countries export the goods in which they have a comparative advantage, or make relatively cheaply. The equilibrium exchange rate offsets av-

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erage differences in absolute advantage. Every country has a comparative advantage in something.

•By exploiting international differences in opportunity costs, trade leads to a pure gain. Since different people share differently in the gain, some may actually lose.

•Intra-industry trade reflects scale economies plus consumer demand for variety.

•By raising the domestic price, a tariff reduces domestic consumption but raises domestic production. Hence imports fall.

•A tariff has two social costs: overproduction by domestic firms whose marginal cost exceeds the world price, and underconsumption by consumers whose marginal benefit exceeds the world price.

•When a country collectively affects the price of its imports, the optimal tariff induces individual importers to take account of their adverse effect on other importers for whom the import price is bid up.

•Other arguments for tariffs are either second-best solutions – a production subsidy or consumption tax would meet the objective a: lower social cost – or are fallacious.

•Tariffs have fallen a lot since 1945, partly in response to the damage high tariffs did in the 1930s. The World Trade Organisation attempts to negotiate further reductions and regulate existing agreements.

List of Reference Books

1.Англо-русский экономический словарь / Под ред. А.В. Аникина. – М., 1981

2.Воронцова И.И., Ильина А.К., Момджи Ю.В. Английский язык для студентов экономических факультетов. – М., 1999.

3.Graham Bannock, etc. Dictionary of Economics. – N.Y., 2004.

4.David Begg, Stanley Fischer, Rudiger Dornbusch. Foundations of Economics. – London, 2003

5.Derek T. Lobley. Applied Economics. – London, 1998.

6.Randolph Quirk. Longman Dictionary of Contemporary English. – London, 1992.

7.Alan Spooner. A Dictionary of Synonyms and Antonyms. – Oxford,

2005.

8.Buchholz Todd G. From Here to Economy. – N.Y., 1995.

9.Gertrude Williams. The Economics of Everyday Life. – London,

2002.

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Учебное издание

Зайцева Серафима Евгеньевна

АНГЛИЙСКИЙ ЯЗЫК

Экономика

Учебно-методическое пособие по научно-техническому переводу, аннотированию и реферированию

Редактор А.Ю. Ганшина

Компьютерная верстка А.В. Калинкиной

Национальный исследовательский технологический университет «МИСиС», 119049, Москва, Ленинский пр-т, 4

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Отпечатано в типографии Издательского Дома МИСиС, 119049, Москва, Ленинский пр-т, 4

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