• 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)

    production of goods in which it can actually produce more than another country. If this process took place, then world production would increase, through trade, and each country would be at an advantage. This theory has been influential in the way that free trade has increased especially after the Second

  2. Explain the Heckscher- Ohlin model of international trade and assess the extent to which ...

    The second is that of the transport costs and trade policies countries which are seen to be less likely to export goods in which they have a comparative advantage, if their transport costs are high and if the foreign markets are protected or if the home market for another good is protected.

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

    A seller will wish to retain control of the goods until he is paid; a buyer to avoid payment until he is assured of delivery. * Political problems Most governments are keen to encourage exports and discourage imports. An exporter must therefore take into account the possibility that there may

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

    family), large, well-organised NGOs, prominent CEOs, distinguished journalists and academics (including well-known economists such as Joseph Stiglitz and Dani Rodrik). This vision, from within the international policy establishment, was powerfully reiterated by Mark Malloch Brown, the Administrator of the United Nations Development Program, at a public lecture at the London School of Economics in October 2001.6 Mr.

  1. Globalisation of GAP

    Gap inc. is a global brand, and owns stores around the world, as the table shows below. The company has entered into these markets using different strategies, and so therefore some have been successful and others have not. I will know analyze the strategies used by the company in order to create

  2. Managing Environment - A report on investing in Ghana.

    Environment The following environmental factors may affect a business: * Water-pollution * Air-pollution * Forestry * Preservation of natural habitats (wild-life ) * Green-peace (protecting the resources of the sea) * Anti-pollution acts * Oil spills * Natural disasters * Hunger / starvation Comment Since Gateway Communications is a services

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

    Manufactured goods, meanwhile, tend to be produced under more monopolistic conditions. Any technological innovation is likely to result in lower prices for the competitive primary producers and higher prices for the monopolist producers of secondary products.

  2. ECN353 International Economy

    trade model. This model is built on the primary Ricardian model. Heckscher and Ohlin affirm that this advantage exists because of the relative resource endowments of the countries trading. Moreover, the model predicts that the impact of being skilled or unskilled on attitudes towards trade and immigration should depend on

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