Essentials of International Economics, Feenstra - Downloadable Solutions Manual (Revised)

Solutions Manual
to End-of-Chapter
Questions




S-1

,
,The Global Economy
1
1. Figures 1-1 and 1-3 rely on data from the year 2006, and Figure 1-6 relies on data
from 2005, to map worldwide trade, migration, and foreign direct investment. Up-
dated data for migration and foreign direct investment were not available at the time
of writing this chapter, but are available for worldwide trade. In this question you are
asked to update the numbers for world trade.
a. Go to the World Trade Organization Web site at www.wto.org and look for their
trade data under “resourced” and “statistics.”1 Look for the most recent edition of
their International Trade Statistics publication, then go to “Trade by Region” and find
the Excel spreadsheet with “Intra- and Inter-regional Merchandise Trade.” Print out
this table. If you cannot find the Web site or spreadsheet, use the 2008 table for “In-
tra- and Inter-regional Merchandise Trade,” which is printed below:
Intra- and Inter-regional Merchandise Trade, 2008 (Billions of U.S. dollars)
Destination

North South & Middle
Origin America Central America Europe CIS Africa East Asia World

Value
World $2,708 $583 $6,736 $517 $458 $618 $3,903 $15,717
North America 1,015 165 369 16 34 60 376 2,036
South &
Central America 169 159 121 9 17 12 101 600
Europe 475 96 4,695 240 186 189 487 6,447
Commonwealth
of Independent
States (CIS) 36 10 406 135 11 25 77 703
Africa 122 19 218 2 53 14 114 558
Middle East 117 7 126 7 37 122 569 1,021
Asia 775 128 801.0 108 121 196 2,181 4,353
Source: WTO, International Trade Statistics 2009




b. From this table, what is the total amount of trade within Europe? What percent-
age is this of total world trade?
Answer: $4,695 billion, which is 29.9% of the world total



1
The trade statistics are at http://www.wto.org/english/res_e/statis_e/statis_e/its2009_e/its09_world_trade_dev_e.htm.




S-3

, S-4 Solutions ■ Chapter 1 The Global Economy



c. What is the total amount of trade (in either direction) between Europe and
North America? Add that to the total trade within Europe, and calculate the per-
centage of this to the world total.
Answer: North America → Europe: $369
Europe → North America: $475
Adding that to intra-European trade, we obtain 35.2% of the world
total.

Europe → Europe/World 29.87% $4,695
North America → Europe $369
Europe → North America $475
Europe - North America total $844
(Europe + North America)/World 35.24% $5,539

d. What is the total amount of trade within the Americas (i.e., between North
America, Central America, South America, and within each of these regions)?
What percentage is this of total world trade?
Answer: $(1,015  165  169  159)  $1,508 billion, which is 9.6% of the
world total

North America → North America $1,015
North America → Central and South America $165
Central & South America → North America $169
Central & South America → Central & South America $844
Central & South America - North America Total $1,508
Americas/World 9.59%

e. What is the total value of exports from Europe and the Americas and what per-
centage is this of the world total?
Answer: $(2,036 + 600 + 6,447) = $9,083 billion, which is 57.8% of the world
total

North America $2,036
Central & South America $600
Europe $6,447
Total $9,083
Total/World 57.79%