Hello students,

In today’s article, we will explore International Economics, delving deeply into its meaning and significance. This article will provide you with detailed insights about International Economics, so make sure to read it carefully until the end to gain a comprehensive understanding of the topic.

Let’s begin and learn about International Economics, starting with its definition and meaning.

What is International Economics?

“Generally, the exchange of goods and services between nations is defined as international trade.”

According to ‘Wasserman‘ and ‘Haltman‘, “The scope of study and practice in International Economics includes the trade of goods, services, gifts, capital, and precious metals, wherein the ownership of these commodities is transferred exclusively between residents of two nations.”

According to Clement, Feisther, and Rothwell, “Trade is only possible in a world where the movement of goods and the mobility of productive factors are relatively imperfect.”

According to Prof. Herald, “International trade is the science and art of exchanging goods, services, and other items between two or more nations.”

International trade has been given importance since ancient times. International trade is first described under the eminent principle. After Adam Smith, David Ricardo and John Stuart Mill developed and expanded this theory.

In the 20th century, the nature of international trade underwent fundamental changes. As challenges in international trade emerged, corresponding changes were made to its theories. Economists like Frank D. Graham, Bertil Ohlin, Jacob Viner, Haberler, and Paul Einzig made significant contributions to the development and explanation of international trade theories.

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Subject Matter of International Economics

The subject matter of international economics is as follows:

(1) Principle –

Under International Economics, various theories of international trade are studied.

For instance, the Mercantilist and International Trade Theories, Adam Smith’s Theory of Absolute Advantage, the Comparative Cost Theory, the Opportunity Cost Theory, the Heckscher-Ohlin Theory, the Leontief Paradox, the Stolper-Samuelson Theorem, and the Factor Price Equalization Theory are prominent examples.

(2) Monetary Aspects of International Trade

It includes terms of trade, the foreign trade multiplier, foreign exchange and exchange rate determination theories, exchange controls, balance of payments, price stability, and exchange rate stability, among others.

(3) Commercial Policies

It includes commercial policies such as free trade and protectionism, methods of protectionism, import duties, monopolistic unions and international unions, tariff policies, currency depreciation, imperial preferences, state trading, bilateral and multilateral trade, customs unions, and so on.

(4) International economic cooperation

In International Economics, we study all the institutions that promote international trade and have been established to address related issues. The main ones include:

• International Monetary Fund (IMF)
• World Bank
• The issue of international liquidity
• UNCTAD (United Nations Conference on Trade and Development)
• European Common Market
• Trade among the countries of the Asia-Pacific region
• World Trade Organization (WTO), etc.

(5) Direction and Structure of Foreign Trade

The study of various aspects related to foreign trade, such as diversification and modern trends, trade and balance of payments, import-export policies, export promotion and import substitution, depreciation and revaluation, foreign capital and economic development, etc., is also included in the subject matter of International Economics.

Now, let’s understand the nature of International Economics.

The nature of international economics

Any systematic knowledge of a subject is referred to as science. Science involves the study of the cause-and-effect relationships of a fact.

Similarly, in International Economics, we study various laws and theories. These are also developed in a systematic manner.

It helps in presenting a collection of facts, which in turn provides insights into the nature, characteristics, and other conclusions of international relations. Therefore, International Economics can undoubtedly be referred to as a science. However, like other subjects, it studies human behavior and is thus categorized as a social science.

Systematic knowledge of a subject is called science, while the systematic application of rules and principles related to that subject is referred to as art.

In International Economics, not only are rules and principles developed like in science, but they are also applied to individual and public policies, programs, and actions to solve the problems arising in this field. This makes it clear that International Economics is also an art.

Wasserman and Haltman have outlined the following reasons for considering International Economics as an art:

1. International Economics provides solutions to the problems arising in international trade.
2. International Economics explains the application of rules to solve practical problems.

The above analysis makes it clear that International Economics is both a science and an art.

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Conclusion:

So friends, in this article, we have learned about International Economics. We have gained detailed insights into the meaning, definition, and importance of International Economics.

We hope you liked this article and that it provided you with a basic understanding of International Economics. If you found this information helpful, please share this article with your friends so they can also gain knowledge about International Economics.

We will meet again with a new article and fresh information. Until then, keep learning and exploring.

Thank you!