...Chapter 1: International Interdependence 1.4 ADVANTAGES & DISADVANTAGES OF INTERNATIONAL TRADE Pg 22-27 Advantages of International Trade The fundamental reason for international trade is to sell something that we don’t need and to buy something we do need. Trade creates jobs, attracts investments, attracts new technology and materials, and offers Canadians a wider choice in products and services. People spend, save, or pay taxes with the money they earn in their jobs. The government uses taxes to provide services, which creates more jobs. When people save, the capital markets lend money to others, who will spend it on consumer goods, or open or expand a business, therefore creating new jobs. When people spend money, it creates demand, which creates new jobs. If something occurs to slow this expansion, the cycle reverses. Ex. higher taxes, higher interest rates. Meeting our needs Trade is always balanced if it is fair. If 2 people trade baseball cards and one gives another 6 cards, they should get 6 back. Many businesses can create a surplus inventory of goods and services. Canadian farms produce more food than Canadians can eat, Canadian manufacturers make more products than Canadians use, and Canadian service providers can provide service to other countries. Canadians cannot produce fruits like bananas and oranges, and some products we cannot make. These products are imported. Both trading partners get something they need by trading something they...
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...Advantages and disadvantages of free trade In international trade theory, globalization and free trade results over the long term in "commodity price equalization" across countries; or if capital, labor and technology are highly mobile, free trade and globalization is only for rich countries. “Free trade” means freedom to trade. Freedom is a concept and principle that everyone holds dearly, except dictators and bullies [1]. We are going to analyze the advantages and disadvantages of free trade in both cases: the poor and rich countries. The aim of this work is to look into the particularities of free trade. In order to achieve this aim we shall present tasks as following: * Define the concept of free trade; * Explore advantages of free trade; * Find out of disadvantages of free trade. Free trade occurs when there are no artificial barriers put in place by governments to restrict the flow of goods and services between trading nations. When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers from international competition and redirect, rather than create trade flows. It is in the case of poor countries due to we can’t be competitive with development countries such as Germany, Europe. Some groups, however, have a double standard. They want all their consumption needs and production inputs to be liberalized and to be available at bargains, but want their own products and services to be protected from competition. It doesn't...
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...Trade Report International trade is one of the best things a country can do for its economy. It creates amazing opportunity for countries to specialize in what they make best after weighing out their opportunity costs, make more money, increase their production, and create relationships with other countries. There are many advantages to international trade but there can also be some disadvantages as well. When a country is making a decision on whether or not they are going to trade internationally, they need to weigh out each advantage and disadvantage with each country they are trading in. Advantages versus Disadvantages As a country is deciding on international trade they need to see what their own opportunity costs are as well as if the country they are doing business with is going to benefit from the trade as well. One thing that needs to be looked at first is the strength one country’s currency against the other. This can create an advantage as well as a disadvantage because if the country’s currency is weak compared to the others than it would better to export and vice versa. One advantage that was found during the simulation was the fact that Rodamia was able to specialize in the production of corn. The production of corn was the largest part of their agriculture. They were also able to specialize in exporting many of their industry specialties because this was also thirty percent of their GDP. With being able to specialize in these areas the country was able to maximize...
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...Chapter Outline I. Introduction II. International Trade Versus Interregional Trade ( international trade occurs for the same reasons as interregional trade ( gains from technology and gains from trade III. Trade in an Individual Product ( trade in cloth (U.S./India) — Figure 2.1 ( supply and demand ( the effects on India and the U.S. IV. Trade Based on Absolute Advantage A. Absolute Advantage ( PASSPORT: Football Games, Rats, and Economic Theory ( PASSPORT: Mercantilism ( Table 2.1 B. The Gains from Specialization and Trade with Absolute Advantage ( gains from trade — Table 2.2 ( the labor theory of value V. Trade Based on Comparative Advantage A. Comparative Advantage ( Table 2.3 ( David Ricardo ( Babe Ruth B. The Gains from Specialization and Trade with Comparative Advantage ( PASSPORT: Principal Exports of Selected Countries — Table 2.4 ( Change in world output — Table 2.5 VI. Trade Based on Opportunity Costs A. Opportunity Costs ( PASSPORT: Labor Costs as a Source of Comparative Advantage — Table 2.6 B. The Gains from Specialization and Trade with Opportunity Costs ( Table 2.7 ( Autarky VII. The Production Possibilities Frontier and Constant Costs A. The Production Possibilities...
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...International Trade Simulation Student January 22, 20xx XECO/212 This is a report for the President of Rodamia to discuss the advantages and the disadvantages of international trade between Rodamia and the surrounding countries around Rodamia. This report is also going to discuss the absolute and comparative advantage. Based on the information from this report, there is going to be a possible recommendation to the President of Rodamia whether or not to trade internationally. There are times international trade becomes very important and vital to a countries economy because most economies operate on the basic economic principal of supply and demand. It is not possible for every country’s domestic supplier to meet the domestic demands of that country and when this happens, that country can opt for international trade. Many countries chose international trade because their domestic suppliers are not able to produce the goods that can be brought in from other countries. However international trade has advantages and disadvantages. One advantage of international trade is that Rodamia could import goods that are made more efficiently by other countries. Our domestic suppliers may not have the equipment or man power to make certain goods and trading internationally allows Rodamia to give its consumers more options at lower prices. By allowing other countries to trade with Rodamia, this allows domestic suppliers to create goods and have excess stock...
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...Running head: International Financial Markets International Financial Markets Unit 1 Individual Project Michelle McCollough June 8, 2007 American InterContinental University Abstract The below paper will discuss starting an operation in a foreign country. I will compare and contrast the United Kingdom and Hong Kong. I will also explain which country would be best to begin a business in. International Financial Markets Introduction Acme is planning on having a greenfield production facility overseas. The two foreign countries that I have decided to compare for starting business in is the United Kingdom, which is part of the European Union and Hong Kong. Hong Kong is not part of the European Union. I will first analyze the UK and then Hong Kong. Analysis of the United Kingdom (UK): The United Kingdom of Great Britain and Northern Irelane is a state that consists of the nations of England, Scotland, Wales, and Northern Ireland. This is also under the UK sovereignty and is not apart of the UK itself, however are the “Crown dependencies of the Channel Island and the Isle of Man.” The said dependencies seek their own policies over taxes, employment, education, and health. They are subjected to UK control on matters such as defense (Doing Business in the UK, 2005). The UK has an island of 242,500km2. The UK’s population in 2002 was 59.2 million and in 2006 the population was 60.6 million. The languages...
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...ACADEMIC PAPERa Longitudinal patterns of comparative advantage in the textile complex – part 1 An aggregate perspective Peter Kilduff and Ting Chi Department of Consumer, Apparel and Retail Studies, University of North Carolina at Greensboro, North Carolina, USA Abstract Purpose – This paper seeks to present a preliminary investigation into long-term patterns of trade specialization among leading textile- and apparel-exporting nations, assessing patterns of comparative advantage across the textile machinery, man-made fiber, textile and apparel sectors of the textile complex to determine whether these conform with both trade specialization and industry evolution theories. A model of evolutionary change in intra-complex specialization is defined and evaluated. Design/methodology/approach – A revealed comparative advantage index is employed to evaluate international competitiveness for 30 nations over a 42-year period. With repeated measures, ANOVA is used, to determine the significance of the observed patterns across five income-defined groups of nations. Findings – Long-term patterns of specialization broadly reflect expectations of factor proportions theory and industry evolution models. Product and income group characteristics combine to influence comparative advantage. Higher income nations generally remain stronger in more capital-intensive sectors, while lower income countries have emerged to dominate labor-intensive sectors. However, inclusion of a more...
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...likely bring significant benefits to the company and its shareholders. However, opportunities always come with challenges. The risks for international trade need to be carefully considered to ensure the effectiveness of the import from and export to Thailand. The advantages and disadvantages that Blade could gain from importing from and exporting to a foreign country such as Thailand will be presented in the following manners: a. Advantages Blade could gain from importing from and/or exporting to Thailand As a financial analyst for Blade, I suggest there are two advantages from exporting to and importing from Thailand's market: increasing domestic competitiveness, and sales and profits (Ashish, n.d.). This policy will increase domestic competitiveness, which can dramatically improve the competence level of Blade in the eyes of the opponents. The biggest benefit is clearly shown, as the company can import/export products from/to Thailand at a much lower cost. If the company can have a smooth negotiation with suppliers and distributors in Thailand, the profits earned will mark a remarkable success, which ensures a cheaper price of products for consumers and higher revenue for shareholders. Thus, sales and profits will be gained as expected. b. Disadvantages Blade could face as a result of foreign trade The disadvantages of foreign trade...
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...Chapter 1 Globalization and the Multinational Enterprise ( Questions 1-1. Globalization and the MNE. The term globalization has become very widely used in recent years. How would you define it? Narayana Murthy’s quote is a good place to start any discussion of globalization: “I define globalization as producing where it is most cost-effective, selling where it is most profitable, and sourcing capital where it is cheapest, without worrying about national boundaries.” Narayana Murthy, President and CEO, Infosys 1-2. Globalization and Value Creation. What does an MNE need in order for it to create value through the globalization process? Global business, like any business, is the social science of managing people to organize, maintain, and grow the collective productivity toward accomplishing productive goals, typically to generate profit and value for its owners and stakeholders. A multinational enterprise (MNE) needs three fundamental elements in order to build firm value: (1) an open marketplace; (2) high quality strategic management; and (3) access to capital. 1-3. Value Creation and the Concept of Capitalism. How does the concept of capitalism actually apply to the globalization process of a business, as it moves from elemental to multinational stages of development? Open markets and insightful leadership is all for nought if the MNE cannot gain ready access to affordable capital. It is capital that allows the investment...
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...7/20/2014 Advantages and Challenges of Exporting - submitted by Tekle S. - International Business and Trade, Education and Training, Business Development … Hom e About Se rvice s C lie nts Login R e giste r The Knowle dge Brok e rs C ontact Se arch [ STAR T ] Ex pe rtAle rts™ Pop Top Vide os Type s Ex pe rtise C ountrie s Article s FAQ Back to Articles Overview Advantages and Challenges of Exporting Recom m end 41 people recommend this. Contributed by: Tekle S. (ID 584) Any company, before committing its resources to venture in the export business, must carefully assess the advantages and disadvantages of exporting into a new market. Whether it is unintentional or a deliberate move companies need to evaluate and carefully assess the advantages and challenges of exporting before committing resources. Visit Tekle S.'s Expert Profile In C ategory: Trade C opyright © Tekle S. (ID 584) , a prequalified Trainer from Brentwood, United States Article Stats Added: 16/01/07 787 Words 14119 x Read Any company, before committing its resources to venture in the export business, must carefully assess the advantages and disadvantages of exporting into a new market. While some companies enter the export business unintentionally after receiving order to purchase from foreign buyer that found their product. Others make a deliberate move and conduct thorough research before entering new market. Whether it is unintentional or deliberate...
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...Globalization and how it is related with the International Relations; 2. Advantages and Disadvantages of the Globalization; 3. Effectiveness of the Globalization Conclusion NTRODUCTION In my work I talk about the Globalization and its relation with the Globalization where I dwelled upon the Globalization. In the second part I did survey and focused on the advantages and disadvantages of globalization as the statistics show.After hammering out the two factors I wrote about de facto effectiveness of the Globalization and at the end I stated my estimation and conclusion. International Relation and Globalization As more nations, people, and cultures adapt to the ever changing international community, diplomats, politicians, and representatives must meet and deal with accordingly to the needs and wants of nations. Diplomacy can be exerted in many forms; through peace talks, written constitutions, field experiences, etc. Culture is a familiar term and remains unchanged by definition. However, globalization and international relations have constantly altered culture both positively and negatively. Globalization increases worldwide technology, and the readability of fast, effective communication and consumption of popular products. Globalization links cultures and international relations on a variety of levels; economics, politically, socially, etc. International relations have used globalization to reach its goal: of understanding cultures. International relations focus on how countries, people...
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...Journal of Comparative Business and Capital Market Law 5 (1983) 347-351 North-Holland ADVANTAGES AND DISADVANTAGES OF COUNTERTRADE * Jacques de MIRAMON ** 1. Introduction Countertrade practices have expanded during the past decade. Long associated primarily with East-West trade, they appear to be spreading to other areas. The international community, however, has not been effective in addressing these practices which are, in large measure, contrary to the basic tenets of free and multilateral trade. The Eastern countries had refused to discuss the matter with their trading partners until a meeting with Western countries at the U.N. Economic Commission for Europe (Geneva) in November 1981. Unfortunately, this meeting ended in a deadlock. In light of the fundamental differences between centralized Eastern European economies and the decentralized Western markets, it is not surprising that the two sides have divergent opinions on countertrade. The Eastern European countries are almost unanimously in favor of such deals, the inference being that they find countertrade mainly to their advantage. Western opinion of countertrade, however, has been mostly unfavorable. 2. Reasons why the Eastern European countries find countertrade attractive With few exceptions (e.g. Hungary), there has been no public discussion of the advantages and disadvantages of countertrade in the Eastern European countries. The ambiguity of the terms used, especially the confusion between industrial and commercial...
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...securities— derivatives, whose value is based on market value changes in the underlying securities. The health and security of the global financial system rely on the quality of these assets. 1-3. Eurocurrencies and LIBOR. Why have eurocurrencies and LIBOR remained the centerpiece of the global financial marketplace for so long? Eurocurrencies and LIBOR (and there are LIBOR rates for all eurocurrencies) reflect the “purest” of market driven currencies and instrument rates. They are largely unregulated, and therefore reflect freely traded assets whose value is set by the daily global marketplace. 1-4. Theory of Comparative Advantage. Define and explain the theory of comparative advantage. The theory of comparative advantage provides a basis for explaining and justifying international trade in a model world assumed to enjoy free trade, perfect competition,...
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...List of Contents 1. Background 3 2. Globalization Problems 4 3. Types of Globalization 5 3.1 Economical globalization 5 3.2 Political globalization 5 3.3 Social globalization 5 3.4 Cultural globalization 5 4. Pro or against globalization? 6 4.1 Advantages of globalization 6 4.2 Disadvantages of globalization 6 4.3 Institutes 6 5. Conclusion 7 6. Sources 7 1. Background Globalization is simply becoming world-wide or making it world-wide. It exists at a lot of places in different sizes. Globalization is to create a good world economy. This could be done by big multinational companies. The reason why I mention the multinationals is because of the influence that they (can) have on the economy worldwide. After all, the world trade plays the biggest part in it. However globalization and the free world trade don’t automatically mean that the well-being is divided all over the world. But where did it start? Who started it and why is it so important for the well being of the world? Well, the globalization existed during different levels/steps. People/companies with power from the past created our current globalize civilization. The first level was when the South conquered the North and applying economical structures. Consequences were the slavery. The second level was the colonization. The North plundered the South, recreated maps and set up one religion and forced their language to be the official language. The third level...
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...Shaw 3/20/2011 Trade in today’s society is one of the major ways goods get around the world. This includes services provided in the United States, as well as those around the world. It is both mind boggling and perplexing the number of goods traded on a daily basis. With this major amount of trading there are both advantages and disadvantages. Let’s look at some of these advantages and disadvantages of trading internationally as well as some issues that arise due to international trade, the role of the government in the trading process, and the role of the World Trade Organization (WTO). An advantage of international trade is that it allows for the enhancement of domestic competitiveness. This allows an organization to get offers from other countries in the future which gives them the variety to choose from in the long term. Another advantage to trading internationally is that an organization can reduce their dependence on existing markets. If a market is low on a substance that is needed, then the organization can trade for it internationally with a country with a plentiful supply of what you need. Also, international trading will extend the sales potential of existing products. The more exposure that the product gets in international markets, the more profits a company sets to gain, thus creating better sales opportunities in the long run for the company doing the trading. With these advantages, there comes some disadvantages. One disadvantage is the need to hire...
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