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Econ 323 International Economics, Winter 2024

Assignment 1 (60 points, 10% of course grade)

This assignment is created to

1) help you establish a connection between data and your interpretation of data.

2) help you understand the Ricardian Model.

Q1  (24 points) Go to the G20 website (https://www.g20.org). Use the list of G20 members to create tables in Excel with information on them.

1) (3 points) Create a table with information on “Total Merchadise Exports (annual, million US dollar)” by “The World” and individual G20 members (only individual countries)  in 1980, 1990, 2000, 2010, 2019, 2020, and 2022. Note:

· You can download the data from https://stats.wto.org.

· You don’t need to include the two regions, African Union (AU) and European  Union (EU).

· Russia has no data in 1980 and 1990.

· Label this table “Table 1”. Insert Table 1 in your answer to Q1 part 1).

2) (3 points) Use the information in Table 1 to create the share of “Total Merchadise Exports” for G20 members: 100*“Total Merchadise Exports” of each member country devided by “Total Merchadise Exports” of “The World” in 1980, 1990, 2000, 2010, 2019, 2020, and 2022. Note:

· Keep the numbers to two decimal points.

· Label this table Table 2. Insert Table 2 in your answer to Q1 part 2).

3) (3 points) Based on the shares in Table 2, create a graph with time as horizental axis (from 1980 to 2022) and the shares in Table 2 as the vertical axis. Graph the trends of the shares for Canada, US, Germany, China, and India. (The data are discrete. If you just plot the data, you only get key points, and it will be hard to tell the trends. Connect the key points, then trends become clearer. In other words, use line graphs.) Based on your graph, what can you say about the relative importance of Canada, US, Germany, China, and India in world merchandise exports over the data period?

4) (3 points) Create a column of change in export shares from 2019 to 2020 using information in Table 2. Add this column to Table 2. What can we say about the change in relative importance of Canada, US, Germany, China, and India in world merchandise exports in the first year of the Covid-19 pandemic?

5) (3 points) Rank G20 members by their power in world merchandise exports in 2000 and 2020. List the 5 most powerful and 5 least powerful in 2000 and 2020. Explain the measure you use for the ranking. Note:

· You can use the information in Table 1 and/or Table 2 for the ranking.

· You are free to use other measures for the ranking if you attach the data and the source. 

6) (3 poins) Read the overview of the WTO’s special treatment of developing countries (https://www.wto.org/english/thewto_e/whatis_e/tif_e/dev1_e.htm). List the G20 members you believe should be given the special treatment in 2020.

7) (3 points) Create a table with information on “GDP per capita (constant 2015 US$)” in 2020, “Human capital index (HCI)” in 2020, and “life expenctancy at birth, total (years)” in 2020 for G20 member countries (You don’t have to include AU and EU in your table). Note:

· Data available at the World Development Indicators (https://databank.worldbank.org/source/world-development-indicators).  

· Label this table Table 3.

8) (3 points) Use the sorting feature in Excel and create another column in Table 3 to categorize the G20 countries into developed countries and developing countries. You can use any of the three indicators (or a weighted combination of the three) to create the column for “developed/developing country”. Write down the cutoff you use to create the indicator. Is China a developing country or a developed country according to your table?

Q2. (12 points) Use data from https://stats.wto.org/

1. (3 points) Create a table with information on the top 10 exporters of “transport equipment” in 2020. The table should have country name, value of exports in this industry (in US$billion) in 2019 and 2020, annual percentage change from 2019 to 2020. (Please don’t include “World” and “European Union” in your table. Your table should have individual countries only.)

2. (3 points) Use the table in part 1) to generate a bar graph that is similar to the one in the lecture slides entitled “top ten exporters of XXX, 2016”. Your graph title will be “top ten exporters of transport equipment, 2020”. (Again, please don’t include “World” and “European Union”.)

3. (3 points) Use the same method to create bar graphs of “top ten exporters of transport equipment, 2000, 2010, 2022 (without the annual percentage changes).

4. (3 points )Compare the bar graphs for 2000, 2010, 2020, and 2022, which aspect of the change over time in this industry is surprising to you?

Q3. (24 points) Suppose that all the assumptions of the Ricardian Model hold in a world with two countries: “England” and “Portugal”, and two goods “wine” and “cloth”.

To produce 1 box of wine, England needs 5 labor hours and Portugal needs 8 labor hours.

To produce 1 yard of cloth, England needs 15 labor hours and Portugal needs 10 labor hours.

England is endowed with 1500 labor hours and Portugal is endowed with 800 labor hours.

For all graphs you draw for Q3, put “wine” on the horizontal axis and “cloth” on the vertical axis.

1) (2 points)  Which country has an absolute advantage in producing cloth? Why?

2) (4 points) Calculate the opportunity cost of a box of wine in England and Portugal. Which country has a comparative advantage in producing wine? Why?

3) (2 points) Draw the production possibility frontier (PPF) of Portugal.

Suppose that England and Portugal have a free trade agreement. In the free trade equilibrium, a box of wine can be exchanged into 1/2 yards of cloth.

4) (5 points) Show the free trade equilibrium in England on a graph. Clearly label the consumption point, the production point, the free trade relative price, exports, and imports.

5) (4 points) Calculate the real wage of workers in England in autarky and in free trade equilibrium.

6) (4 points) Suppose you are an individual who lives in England and supplies 1 hour to the labor market in England. Draw the change in your budget constraint (BC) when England moves from autarky to trade. Are you better off or worse off in the free trade equilibrium compared to the autarky equilibrium? Explain your answer.

7) (3 points) Is free trade a Pareto improvement compared to autarky in the Ricardian model? Why or why not?