 |
| | | |
Recent general developments in the world economy raise concerns that have
preoccupied international economists for more than two centuries, such as the nature of the international adjustment mechanism and the
merits of free trade compared with protection. As always, in international economics, however, the interplay of events and ideas has led to
new modes of analysis.
|
At the start of the 21st century, international aspects of economics remain as important and controversial as ever
In the last decade alone, major currency and financial crises have rocked industrializing countries from East Asia to Latin America;
countries in Europe have given up their national currencies in favor of a common currency, the euro; and growing trade and financial linkages
between industrial and developing countries have sparked debate and even open protest inspired by claims that economics "globalization"
has worsened worldwide ills ranging from poverty to pollution.
|
| Three notable examples of recent progress are the asset market approach to exchange rates;
new theories of foreign trade based on increasing returns and market structure rather than comparative advantage; and the intertemporal
analysis of international capital flows, which has been central both in refining the concept of "external balance" and in examining the
determinants of developing country borrowing and default.
| | | | |
 |
|
.gif)
