Why do countries trade? Explain the advantages of specialisation and free trade. Why do governments use protection?
Practice Essay Question: Why do countries trade? Explain the advantages of specialisation and free trade. Why do governments use protection? International trade has the purpose of sufficing demand for goods and services not readily available within a country. Specialisation and free trade can bring about a situation where countries may take advantage of the concepts of absolute and comparative advantages. However, in the face of globalisation, countries still practice methods of protection (such as tariffs, quotas, subsides, local content rules or voluntary export restraints), using the main justifications including: the infant industry argument, protecting domestic employment, the anti-dumping argument, the defence and self-sufficiency argument and the cheap foreign labour and environmental exploitation argument. International trade refers to the trading between the nations of the global economy. This enables a country to satisfy the demand for goods and services not being readily available in the economy (lack of supply) or another nation produces the goods more efficiently than the country in question. Looking at trading relationship between Australia and Japan, Japan has limited natural resources, so it buys it from Australia due to Australia's competitiveness. Conversely, Australia lacks capital equipment, so it purchases this from Japan. Another reason that countries
Balance of Payments Policies
Theories Balance of Payments Policies Next theory - Interpreting the Balance of Payments >> In the case of an overall balance of payments deficit i.e. where the current and capital accounts are in deficit, LDCs such as Zambia have a number of policy options open to them. . Improve the current account balance by promoting export expansion or limiting imports or both. These objectives can be brought about by a number of measures: o Expand the export of copper and other primary commodities o Expand the export of secondary goods through adopting policies of import substitution o Introduce protectionist measures such as quotas, tariffs and other non-tariff barriers o Changing the value of the exchange rate through a devaluation or allow the currency to float and depreciate o Follow restrictive deflationary monetary and fiscal policy that reduces domestic demand and hence imports and reduces inflationary pressures in the economy 2. Improve the capital account balance by encouraging capital inflows. Again a number of possible measures are open to the government: o private foreign direct or portfolio investment o borrowing from foreign commercial banks o borrowing from foreign governments o borrowing from multilateral agencies such as the IMF Next theory - Interpreting the Balance of Payments >> Home Field Trips Trade Tour Interpreting the Balance of
International trade - In this case I choose the country Canada. When doing a research the best information you must find, is the SLEPT analysis. Using this analysis, you are able to know more about the Social, Legal, Economic, Politics and the Technology
Introduction International trade is becoming more and more important for certain businesses. Those companies need to find out about which country they can sell their goods or services. This is quite important for every business, if they want to do a foreign trade. Further you'll find why different theories are a benefit for international trade. About the non-European country and the business 'Gemos Flowers'. There are various classifications of businesses that are involved in selling their goods abroad. They might do this by exporting to one or more specific customers, by creating sales without operations or by adopting a more structured multi-national approach. Before a business wants trade in another country, he or she first has to do some research to find out whether the country is profitable or not. In this case I choose the country Canada. When doing a research the best information you must find, is the SLEPT analysis. Using this analysis, you are able to know more about the Social, Legal, Economic, Politics and the Technology in Canada. Enjoy reading this report! Name: Denise Chan Class: 2IBS1 Cohort: 2004 - 2008 E1. A detailed explanation of how international trade leads to the benefits and costs identified using relevant theories Theory of David Ricardo David Ricardo was born in 1772 at London, England. He was a British political economist and one
Give a reasoned definition of the term Globalisation
Give a reasoned definition of the term Globalisation Globalisation is an abstract concept. It does not refer to a concrete object, but to (an interpretation of) a societal process. Therefore the concept cannot be defined easily. For some, globalisation refers to Americanisation, for others it is about the growing importance of the world market, yet others use it to describe a cultural or an ideological reality: globalisation as the victory of 'market plus democracy'. For most authors, globalisation is a complex concept that involves political, economic and social-cultural changes. The events of September 11th instantly ricocheted across the world; this shows that in the fabric of everyday life, as Immanuel Kant said we are all 'unavoidably side by side'. This does not merely apply to moments of catastrophe, but in the trading arrangements, in the nature of financial markets, in the emerging human rights regime, in the nature of environmental change from ozone depletion to global warming, in areas that are fundamental to human health, such as welfare, sexuality and AIDS, etc. Furthermore, in this complex web of 'new agendas', conflict and incompatibility are perhaps inevitable Thus; globalisation is often seen not just as a 'one way process', but also as a dialectal dynamic. This essay seeks to characterize 'globalisation', by investigating issues on the 'new agenda', and
Using the London and Singapore congestion charges as examples, discuss the effectiveness of a congestion charge in correcting market failure
Using the London and Singapore congestion charges as examples, discuss the effectiveness of a congestion charge in correcting market failure Market failure is the misallocation of resources in a free market through overconsumption or overproduction of goods and services, causing negative externalities. In these examples, the free market is that of road space usage, and the market failure is caused by the externality of overconsumption of road space, with a limited supply at one moment in time. Using the diagram above, we can see the effect that a form of tax, i.e. a congestion charge, would shift the supply curve to the left, hoping to increase the price of travel from P1 to P2, and also decrease the consumption of travel from Q1 to Q2. This price increase, as well as hoping to decrease consumption, hopes to include the external cost of the economic transaction, so that the marginal private cost (MPC) becomes equal to the marginal social cost (MSC), and thus the private member of the economic transaction becomes responsible for all costs incurred. To an extent, this form of taxation does work, however there becomes a point where those who have not been priced out of the market will not change their consumption at any conceivable price level, either due to their price elasticity of demand for the consumption of road travel, or because the extra price to be paid represents a
There are several strategies unions can pursue to improve employment conditions and worker's rights in the global apparel and footwear industries.
There are several strategies unions can pursue to improve employment conditions and worker's rights in the global apparel and footwear industries. As a strategy consultant to a union such as Unite, I would focus on four methods: Linking labor standards to trade, implementing a global worker education initiative, forcing organizations to create a corporate code of conduct that will be enforced by several independent monitors, and monetizing labor practices. Using global trade as a vehicle for improving enforcement of labor rights as well as corporate codes of conduct will help to protect the fundamental rights to associate and organize trade unions, which provide, in my opinion, the only sustainable mechanism for ensuring that workers have a voice in the larger economic debate. The initiatives would also help protect against excessive working hours, underpayment, and inadequate occupational health and safety standards. But first, before focusing on the latter methods, I would educate the rank and file to understand the importance of international solidarity for all workers. I would also initiate exchange programs between union members nationally and internationally to share experiences and ideas on specific company issues. It is also important to form alliances and joint actions with social movements on issues of mutual concern to gain more man power for the campaign.
International Diversification and the Home Bias Puzzle
International Diversification and the Home Bias Puzzle The idea behind international diversification is that by adding foreign assets to a domestic portfolio, investors reduce portfolio-level volatility and, thereby, generate better risk-adjusted returns. In any given period, portfolio returns in international markets may be higher or lower than returns generated in an investor's domestic market. However, over long holding periods international diversification seems to have delivered on the promise of reducing portfolio volatility and enhancing risk-adjusted returns. Although international diversification is thought to reduce the volatility of returns, it is not actively pursued by many investors. The first argument put forward against international diversification is that there is increasing correlations in the stock markets around the world. While correlations change over time as the markets become more integrated the correlation between markets will increase. There is empirical evidence showing that stock markets tend to move together in the long run and it seems that stock markets take a long time to adjust to this long run. Garrett and Spyrou (1999) investigate the existence of common trends in the increasingly important emerging equity markets of the Latin American and Asia-Pacific regions. While they find evidence of common trends, they do not rule out long run
HOW DID JAPAN ACHIEVE INTERNATIONAL COMPETITIVENESS IN TEXTILE INDUSTRY? EXPLAIN THE ROLE OF THE GOVERNMENT AND THE CONTRIBUTION OF PRIVATE INDUSTRY
A nation's textile industry can tell us much about its economic history. Textiles usually stand at the forefront of early industrial efforts, with labour intensive production of commodity goods for the local market. Mills provide jobs, serve local demand for clothing and other textile products, and offer a productive investment outlet for local capital, bringing multiple benefits to state and society in the process of industrialisation.1 The textile industry has frequently been central to industrial development both in industrialized and in developing countries. With its labour intensive character and its relatively simple production techniques this industry can easily tap into the craft skills readily available in developing countries. The textile industry is a spearhead of industrial development, both in strategies of import substitution and export oriented industrialization. This paper reviews forces underlying the lingering comparative advantage. And then I am going to talk about the domestic adjustment process in the industry, with particular attention to the forces underling the increase in its labour productivity. In the second part I am going to emphasize on the role of Japanese textile industry it analyse the scope for specialization and the role of government policies. Moreover, I also talked about its change in the competitive environment of the industry. The
Why did the colonial powers develop a need for African Slavery?
Why did the colonial powers develop a need for African Slavery? The European colonial power's reliance and use of the African slave trade has become notorious for the vast scale of its commercial operation that relied on inhumane and destructive principles.1 In it we see societies at the apparent height of civilised progress devise a highly brutal system of human trade. Why colonial powers developed a need for African slavery is an analysis of colonialism, wealth, Africa and a consideration of the ideology of institutions that could obstruct or promote it. The ascendancy of economic and political freedoms, specifically those geared to capitalism, would fuel the development of desire for African slaves with the ideological blessing of both Church and State. An examination of first British and then Iberian colonies in the seventeenth century proves an excellent analysis for why a colonial power developed a need for slavery. Initially demand for workers in the New World was satisfied by white 'servants' and preferential demand was given to them over non-whites for their civility and common language; both crucial if their employers were to gain maximum productivity from them.2 While blacks first arrived in Virginia in 1619 they enjoyed the same legal status as any white servant due to a lack of legislation to even define them as slaves. After their term of service ended they
Why were exchange rates so stable under the Classic gold standard?
Mr Ali R Allana: Historical Perspectives 1800-1939 Candidate no: Y1711748 Why were exchange rates so stable under the Classic gold standard? The period known as the 'Classic Gold Standard' occurred between 1880 and 1914 and saw the rapid expansion of countries onto the gold standard. A country is generally considered to be under a Gold standard when it ties its domestic currency to a fixed amount of gold. To maintain this standard, a Government should aim to buy and sell gold at the price chosen. The first gold standard era of Britain lasted from 1821 to 1919. Gold was chosen because it completed the three properties of commodity money needed (medium of exchange, a unit of account and a store of value). By 1900, a succession of countries had set Gold as the standard, including Holland, Denmark, Sweden, France, Italy, the US, Russia and Japan with Germany initiating a trend away from silver in 1871. Different countries accorded gold currency more importance than others. However it is possible to identify the most regularly occurring features of the Gold standard economies, though in reality few countries exhibited all the trends. The first and most basic requirement of the gold regime was Gold-convertibility - a unit of currency that can in theory be exchanged at a fixed rate to gold. This was not made a legal right in some countries. Austria-Hungary
