Andrea Innes
Review Questions
March 8, 2012

Global Business Management
Terri Brown

3. Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition. Is such competition “unfair?” Do you think that this argument is in the best interests of (a) the unions (b) the people they represent (c) The country as a whole

The Comparative advantage theory says that if a country should specialize in producing those goods that it can produce most efficiently, while buying goods that it can produce relatively less efficiently from other countries. It also says that opening a country to free trade stimulates economic growth. If a low-wage countries can produce certain products more efficiently than high wage countries, the low wage countries should produce and export those products. Trade barriers are supposed to protect workers and the companies, but they are only a short-term fix. By protecting industries the government is not encouraging companies to be more efficient. Consumers end up losing on this deal because they have to pay higher prices and have fewer choices.

4. What are the potential costs of adopting a free trade regime? Do you think governments should do anything to reduce these costs? What?

Having a free trade regime will create job loss in some industries. One thing the government could do is provide retraining programs. On the other hand jobs are lost every day and they don’t get government help to find a new job.

5. Reread the Country Focus on “Is China a Neo-Mercantilist Nation?”
a) Do you think China is pursuing an economic policy that can be characterized as neo-Mercantilist?
b) What should the United States, and other countries, do about this?

I do think China follows a neo-mercantilist