• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain how differences in Opportunity Cost gives rise to international trade - Discuss the most important influences on the UK's International Competitiveness.

Extracts from this document...

Introduction

Economics: International Trade The United Kingdom's Balance of Payments on the current account is consistently in deficit. This is due to a poor performance of international trade. a) Explain how differences in Opportunity Cost gives rise to international trade. b) Discuss the most important influences on the UK's International Competitiveness. a) International trade is important to the economic growth and development of countries. Both developed and developing countries prosper from increasing interdependence and trade. Put simply, the standard of living that a country enjoys depends almost entirely on its ability to best satisfy people's wants and needs with the scarce resources available. That is, how well a society can translate its scarce resources into goods and services that are most desired will determine whether a poor country can break its cycle of poverty and whether a rich country can take its economy to new heights. Many factors determine a country's ability to produce goods and services: the amount and quality of the factors of production (labour, physical capital, human capital, and natural resources), technology, political stability, and a policy climate that fosters reliance on markets to allocate scarce resources and promotes free trade. ...read more.

Middle

A different sort of example may help to clarify this point. Even if a company CEO were a better typist and better at managing the company, the CEO would still be wise to hire a secretary to do the typing. Because the opportunity cost of his or her time spent typing is higher than the secretary's. That is, the margin of the CEO's superiority in managing is greater than his or her margin of superiority in typing. Comparative advantage is extremely important, because it has significant policy implications for a country. In general, it shows that a country can benefit from trade across a wide range of circumstances, suggesting that protectionist policies limiting free trade are much less likely to promote economic growth. Comparative advantage shows us that increased globalisation is much like technological improvements; it allows a country to consume more goods and services using the same amount of scarce resources. A country has comparative advantage over another in the production of a good if it can produce it at a lower opportunity cost. ...read more.

Conclusion

These problems are compounded by a shortage of skilled managers. R&D and innovation. The latest international comparisons show UK R&D performance falling even further behind our main international rivals. This has consequences not only for our ability to develop innovative ideas (another area of weakness revealed by the indicators) but also to adopt and adapt ideas developed overseas. UK strength in science is not yet paying the dividends it should in terms of commercial results. Enterprise. Although the UK has a supportive business environment for entrepreneurs, attitudes to risk taking more generally are perceived as being out of step with an entrepreneurial society. This contributes to a cautious approach towards innovation in large firms and to difficulties small firms face in obtaining finance or attracting experienced managers. Investment. The UK has suffered from decades of under investment, both public and private. Business expenditure on fixed capital per worker still compares poorly with other G7 countries, despite the need to build up our stock of capital per worker to levels seen elsewhere. Finance may be a constraint for some companies but workforce skills, the quality of management and attitudes to risk seem to be more of a problem. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    The removal of barriers to the movement of goods resulted in specialisation of nations in exports. World trade grew and with it UK imports and exports, Sawyer (2004, page 7). To understand international trade you have to look at in a globalised economic perspective.

  2. Why has GDP growth been so slow in Somalia?

    The displaced are then forced to move out of traditional lands into new areas, thus changing demographic constitutions. The 'stronger' clans are likely to grow or maintain strength if they have a significant proportion of government in their clan - this way laws may be swung in their favour and land is easier to win.

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    Second, the nation-state is in retreat. National governments, acting separately and independently, are unable to cope with global problems such as pollution, disease, job losses, and health, education and gender issues. The core prescription follows: "global solutions" are needed to provide "global public goods". Global governance should take the form of partnerships involving governments, international organisations,

  2. Critically discuss the role and importance of international commercial arbitration as an alternative dispute ...

    The latter may pose difficulties in the negotiation of the contract and translation may lead to less than perfect results. Commercial problems Any seller is concerned that his buyer should be creditworthy. In the absence of assurances as to the creditworthiness of a trading partner, a business will seek some form of security.

  1. Explain the evolution and characteristics of the debt problems of LDCs. In the light ...

    The plan acknowledged that debt reduction would have to form part of the strategy. The Brady Plan allowed countries to reduce the value of their debts to commercial banks in exchange for free-market financial and economic reforms imposed through the IMF and World Bank, or to 'buy back' their debt at reduced rates, or to exchange it for bonds.

  2. Globalisation of GAP

    We can see that in 1987 when the Gap invested in stores in the UK the share price was $2.87. Even after entering such a mass market and increased possible customers which should inevitably lead to increased sales and therefore profit, in the following years the share price did not reflect this.

  1. International trade - In this case I choose the country Canada. When doing a ...

    If there wasn't enough competition, this would mean that producers would make more profits. But this will attract other companies to join the industries. All of this, it is a benefit for the consumer. With this system it has two requirements.

  2. Critically evaluate Brazil's International Trade Policy in terms of key trade issues and primary ...

    is the branch of economics concerned with the exchange of goods and services with foreign countries. In the context of globalisation, International trade has become an even more important topic now that so many countries have begun to move from state-run to market-driven economies.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work