International Economics

International economics is a large discipline concerned with the interactions and transactions between nations in the world. This definition is the simplest to students majoring in this exciting field. According to Henry Thompson, a professor at Auburn University in Alabama, USA, in his book “Global Markets and Competition” published in April 2011 by World Scientific Publishing, international economics “describes and predicts production, trade, and investment across countries”. In this sense, problems such as the rise and fall of income of nations, foreign exchange rates, and labor migration largely depend on international trade between nations. In international economics, there are a number of critical issues to be researched: international trade, international finance, labor migration, and globalization.

International trade was first studied by Adam Smith with his world famous classic book “An inquiry into the wealth of nations” (University of Bristol) in which he stated that the road to riches of nations was international trade characterized by countries exchanging goods with each other based on the supply and demand governed by the Invisible Hand of the market. In this context, he emphasized upon the minimum intervention of governments in the markets. Financial rewards would be bestowed on the sellers who could meet the buyers’ needs. Since his times, international trade has been widely developed in a much more complicated manner. Today, according to scores of researches, through international trade, both developed and developing nations can benefit by taking advantage of comparative advantages and economies of scales (Davis, 1995). Comparative advantages are the relative advantages of a nation in producing a commodity compared with another (World Trade Organization). By investing more resources into producing the goods with comparative advantages, a nation can harvest more profits and enhance its wealth. However, international trade seems to be unfair...