Chapter 1 Introductory Issues: Trade History, Institutions, and Legal Framework 1. The International Economy and International Economics o Learn past trends in international trade and foreign investment. o Learn the distinction between international trade and international finance. Section Outline • International economics is growing in importance as a field of study because of the rapid integration of international economic markets. • The overall annual exports measured in billions of U.S. dollars from 1948 to 2008 reveals an exponential growth in outflows and inflows. • World exports as a percentage of the world gross domestic product (GDP) for the years 1970 to 2008 exhibit steady increase in the share of trade in the world economy. • The sum total value of FDI around the world taken as a percentage of the world GDP between 1980 and 2007, gives an indication of the importance of foreign ownership and influence around the world. • The General Agreement on Tariffs and Trade, or GATT, prompted regular negotiations among a growing body of members to reciprocally reduce tariffs (import taxes) on imported goods. • Eight rounds of negotiations were completed between 1948 and 1994. • Uruguay Round, the most recently completed round, was finalized in 1994. Countries agreed to lower tariff, eliminate quota systems, and adhere to certain minimum standards to protect intellectual property rights. • The World Trade Organization (WTO) was