What is International Economics? - Economist

International Economics is the study of economic interactions between countries. It addresses many topical issues, such as:

How is the rapid growth of trade with China and India likely to affect the structure of production and wages in Europe?

And the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them.

Definition International Economics

International economics traditionally has been the subject book and courses separate from the rest of the economics field.

At the same time, the interaction between international economics and the remainder of economic theory has been rich and, like international trade itself, beneficial to both parties. 

Many of the analytical techniques that economists now use in all areas of the discipline were developed by economists working specifically on international problems.

Similarly, many recent advances in international economics have come from the incorporation of new idea from other areas of economics.

Why does the separate study of international questions persist? The answer is that the economic significance of political boundaries persists. 

Most people would agree that life in small New England college town differs radically from life in Los Angeles. But from an economist's point of view, residents of both places share a great deal. All use U.S. dollars as a currency or means of payment. 

All live under a common set of federal laws and a common political and economic system and may share a common language. All share in the fortunes of the U.S. economy, gaining benefits from the country's resource endowment and being affected by U.S. policy decisions. 

The Californian is free to relocate in New England if he or she desire, and the New Englander is free to migrate to California. As a result of these shared features, most economic transactions between the New Englander and the Californian face a smaller set of barriers that do economic transactions between an U.S. resident and a resident of a foreign country.