...why trade occurs. 2. Analyze and discuss the sources of comparative advantage in national economies. 3. Analyze the international movement of productive factors in order to identify business opportunities and/or threats. 4. Explain the economic effect of tariffs, nontariff barriers, and various forms of trade policies adopted by national governments. Activity mode aims to provide quality study notes and tutorials to the students of ECO 305 WK 4 Assignment 1 International economics in order to ace their studies. ECO 305 WK 4 ASSIGNMENT 1 INTERNATIONAL ECONOMICS To purchase this visit here: http://www.activitymode.com/product/eco-305-wk-4-assignment-1-international-economics/ Contact us at: SUPPORT@ACTIVITYMODE.COM ECO 305 WK 4 ASSIGNMENT 1 INTERNATIONAL ECONOMICS ECO 305 WK 4 Assignment 1 - International economics Part 1 Write a 4-6 page paper in which you: 1. Explain the concept of comparative advantage and the principle theories of why trade occurs. 2. Analyze and discuss the sources of comparative advantage in national economies. 3. Analyze the international movement of productive factors in order to identify business opportunities and/or threats. 4. Explain the economic effect of tariffs, nontariff barriers, and various forms of trade policies adopted by national governments. Activity mode aims to provide quality study notes and tutorials to the students of ECO 305 WK 4 Assignment 1 International...
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...political objectives are sometimes at odds with its economic proposals to improve a nation’s market efficiency and international competitiveness. Chapter Seven begins by discussing the reasons why and the ways in which governments intervene in the international trade process. It then examines the economic and the noneconomic effects of those actions upon participants in that process. Finally, the chapter considers the principle instruments of trade control, including both tariffs and nontariff barriers, and concludes with a discussion of ways in which firms can deal with adverse trading conditions both at home and abroad. CHAPTER OUTLINE OPENING CASE: TEXTILE AND CLOTHING TRADE [See Fig. 7.1.] The United States and Europe have a long history of protecting their domestic textile and garment manufacturing industries. Negotiated in response to political pressures from firms and workers in those countries, the Multifiber Arrangement (MFA) of 1974 permitted importing countries to (i) place tariffs on imported textiles and clothing and (ii) negotiate quotas with exporting countries. The arrangement included more than forty countries whose firms were heavily tied to the U.S. and European...
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...Barriers to International Trade- Non-Tariff Barriers and Infrastructure on freight transportation Intro Average applied tariffs on industrial products have declined from 15.5 per cent in 1990 to 7.9 per cent in 2003.[1] Yet, the volume of international trade is still less than one would expect from observed differences in factor endowments, tastes and technology between countries (Trefler, 1995). A possible explanation of the missing trade is non-tariff barriers to trade, including transport costs and other costs related to searching for international suppliers or customers, entering into contracts and shipping the goods or services from the domestic producer to the foreign customer. These transaction costs have several dimensions. First, there are the direct monetary outlays on communication, business travel, freight, insurance and legal advice. These are partly determined by the physical and cultural distance between the trading partners, but also the quality of infrastructure and the cost and quality of related services. EXAMPLE A second dimension of transaction costs is time. The proverbial "time is money" suggests a linkage between monetary outlays and the time dimension, but time also plays a role in its own right. This is particularly the case in industries that have adopted just-in-time business practices and have an international supply network. Just-in-time business practices imply that producers have small inventories of intermediate goods and the...
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...Tariff barriers Tariffs, which are taxes on imports of commodities into a country or region, are among the oldest forms of government intervention in economic activity. They are implemented for two clear economic purposes. First, they provide revenue for the government. Second, they improve economic returns to firms and suppliers of resources to domestic industry that face competition from foreign imports. Tariffs are widely used to protect domestic producers’ incomes from foreign competition. This protection comes at an economic cost to domestic consumers who pay higher prices for import competing goods, and to the economy as a whole through the inefficient allocation of resources to the import competing domestic industry. Therefore, since 1948, when average tariffs on manufactured goods exceeded 30 percent in most developed economies, those economies have sought to reduce tariffs on manufactured goods through several rounds of negotiations under the General Agreement on Tariffs Trade (GATT). Only in the most recent Uruguay Or Simply Import duties or taxes imposed on goods entering the customs territory of a nation. Imposes for revenue collection, protection of domestic industry, political control. Non Tariff Barriers Nontariff barriers (NTBs) refer to the wide range of policy interventions other than border tariffs that affect trade of goods, services, and factors of production. Most taxonomies of NTBs include market-specific trade and domestic policies affecting...
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...Chapter 19 is about international trade, and what the benefits of international trade are. US Trade Patterns Imports are the goods and services that we buy from people and firms in other countries. Imports represent 18% of total GDP. Exports are the goods and services that we sell to people, firms, and governments in other countries. The U.S is the world's largest exporter, but exports represent a small fraction of total output. The trade balance is the difference between the value of exports and imports. When imports exceed exports we have a negative trade balance called a trade deficit. The opposite is a trade surplus. Motivation to Trade Specialization increases total output. Without imports a country cannot consume more than it produces. Because just by changing the mix of output in at country total world output increases, that country has a motivation to trade. This works because when nations specialize in production, they can export one good and import another and end up with more total goods to consume than they had without trade. PURSUIT OF COMPARATIVE ADVANTAGE The ability of a country to produce a specific good at a lower opportunity cost than its trading partners is called comparative advantage. Nations export goods with relatively low opportunity costs, and import goods with relatively high opportunity costs. Some countries may have absolute advantage, that is, the ability of to produce a specific good with fewer resources than other countries. ...
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...gas companies must hire Nigerian workers, unless they can demonstrate that particular positions require expertise not found in the local workforce. Positions in finance and human resources are almost exclusively reserved for Nigerians. Nigerian port practices continue to present major obstacles to trade. Importers report erratic application of customs regulations, lengthy clearance procedures, high berthing and unloading costs, and corruption. These factors can contribute to product deterioration, which may result in significant losses for importers of perishable goods. Nigeria uses nontariff measures to achieve self-sufficiency in certain commodities under its backward integration program Consequences of Trade Restrictions A combination of tariffs, quotas, and subsidies can serve economic, and sometimes political, objectives, but they can also impose significant costs. Tariffs or quantitative restrictions protect domestic industries and workers from foreign competition by raising the prices of imported goods. In this respect, some argue that import restrictions should be viewed as a tax on domestic consumers. According to some experts, the costs of protecting the jobs of workers in vulnerable industries, which are ultimately borne by taxpayers or consumers, far exceed the potential cost of retraining and finding new jobs for those workers. A similar analysis can be applied to export subsidies. Subsidizing exports can cost governments much more money than would programs...
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...* Quizzes Home * Summary * Submissions Selected * Reports ------------------------------------------------- Top of Form Xiaoshu Zhang (username: xzhang2) | To Submissions ------------------------------------------------- Attempt 1 Written: Mar 3, 2012 1:28 AM - Mar 3, 2012 1:57 AM ------------------------------------------------- Submission View Your quiz has been submitted successfully. Quiz 8 Chapters 19 and 20 | Question 1 | | 1 / 1 point | Critics charge that intermediaries ________. | | are too few in number | | | are inefficient | | | provide only necessary services | | | underprice their services | | | are too competitive | Question 2 | | 1 / 1 point | ________ calls for meeting the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. | | The sustainable marketing concept | | | Innovation | | | Consumerism | | | Environmentalism | | | The strategic planning concept | Question 3 | | 1 / 1 point | What are deficient products? | | products that have neither immediate appeal nor long-run benefits | | | products that give high immediate satisfaction but only hurt consumers in the long run | | | products that have low appeal but may benefit consumers in the long run | | | products that are either unsafe or inferior | | | any product in the decline stage of the product life cycle | Question 4 |...
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...In 1972, under the leadership of President Richard Nixon, the United States resumed its economic relationship with the nation of China; in 1979, a bilateral trade agreement was signed by the two countries. Today, China has become one of the largest trading partners with the United States, trailing only behind Canada and Mexico. The United States benefits with this trade agreement due to the large and growing consumer market for U.S. firms and the Chinese imports cost less due to the low labor cost in China. The nation of China benefits due to the increased integration with world economy through overseas education and trade, creating awareness on issues such as environment and human rights. The numerous benefits of this union between two powerhouses of the world economy bring many negative issues. The first issue that affects many Americans today is the loss of jobs due to outsourcing and importing rather than producing goods here in the United States. From the years 2001 to 2010, the trade deficit with China caused the loss of 2.8 million jobs in the U.S. This affects the Untied States’ economy by increasing the number of Americans receiving unemployment insurance and food stamps. One example of this outsourcing is Nike, Incorporated which produces an estimated forty percent of its shoe output in Chinese factories. However, Nike Inc. justifies this outsourcing because profit margins are dependent on labor cost. Another issue with the union between U.S. and China is the lack...
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...Introduction: In today’s global economic world, every nation connect with other nations for trade purpose and according to their trading partners each nation has its industries, technological development, investment policies, employment and income level, service sectors, living standard. (Carbaugh, 2013) It generate new concept called “Globalization.” Globalization is the process which involved transfer of goods, services and resources among different nations through the economic integration, trade, immigration, foreign direct investment. It increases degree of interdependence among the nations. According to Swedish author Thomas Larsson, “Globalization is the process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world” (Larsson, 2011) There is relationship between Globalization and economic growth. Globalization play important role in international trade. It brought entire world close to each other, which increase competition at international level. It helped to developed new technology, to increased productivity of industries and their workers, also raised workers wages and it lead to economic growth of every countries. (Haase, 2012) The major impact of globalization was reduction in trade barriers and countries open their economy for free trade. First, European and American people experience...
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...Thanh Nguyen Econ 335 Tuesday 7PM CWID 892948886 Failure of Trade Barriers in Vietnam Auto Industry Since the “Doi Moi” reforms in 1986, Vietnam continues to pursue a transition from a centrally planned economy into a more market-oriented one. Vietnam is a member of ASEAN Free Trade Agreement, APEC and Trans-Pacific Partnership. Vietnam also signed in the 2001 bilateral trade agreement with the US and became a member of the WTO in January of 2007. Regardless, Vietnam’s government is applying high import tariff in all commodity productions and in the auto industry in particular. As a result, Vietnam is one of the countries which have the highest price for automobiles in the world. It’s more than two time higher than in developed countries and about 1.5 times higher than other countries in the ASEAN area. Buying a car is a dream for many. The high taxes being imposed on automobiles would be cut sharply to stimulate the demand and attract the investment to the automobile manufacturing. In 1994, US President Bill Clinton ordered an end to the trade embargo on Vietnam. It remarked an important step in relationship between Vietnam and the US, and also was an incentive to develop Vietnam economy. Since 1990s, Vietnamese government has decided automobiles industry is a leading industry to develop other industries such as the chemical industry, mental and electronics. Following that a range of leading join venture manufactures set up such as Ford, Toyota, and...
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... Protectionism often leads to two types of intervention: tariffs and nontariff barriers. A tariff is a tax imposed by government on imported products, effectively increasing cost of acquisition for the customer. A nontariff trade barrier, such as a quota, is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs. Governments intervene in trade and investment to achieve political, social, or economic objectives. Barriers are often applied to benefit specific interest groups, such as domestic firms, industries, and labor unions. A key rationale is to create jobs by protecting industries from foreign competition. Governments may also intervene to support home-grown industries or firms. In various ways, government intervention alters the competitive positions of companies and industries, and the status of citizens. (pp. 195-196; concept; Learning Objective 1; moderate; AACSB: Analytic Skills) RATIONALE FOR GOVERNMENT INTERVENTION 2. In a short essay, explain the four main motives for government intervention in international trade and investment activities. Provide examples to clarify each reason. Answer In the broadest terms, there are four main motives for government intervention. First, tariffs and other forms of intervention can generate much revenue. For example, Ghana and Sierra Leone generate more than 25 percent of total government revenue from tariffs. Second,...
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...Organization • To discuss the pros and cons of global, bilateral, and regional integration • To describe the static and dynamic effects and the trade creation and diversion effects of bilateral and regional economic integration • To define different forms of regional economic integration • To present different regional trading groups, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation (APEC) • To describe the rationale for and success of commodity agreements Chapter Overview Regional economic integration represents a relatively new phenomenon in the history of world trade and investment. Chapter Eight first examines the roles of the General Agreement on Tariffs and Trade and the World Trade Organization in determining the ground rules of the world trade environment. It then introduces the basic types of economic integration and explores the potential effects of the process. Next it examines in detail both the European Union (its structure and its operations) and the North American Free Trade Agreement and briefly describes a variety of other regional economic groups. The chapter concludes with a discussion of various commodity agreements and producer alliances, including the Organization for Petroleum Exporting Countries. Chapter Outline OPENING CASE: TOYOTA IN EUROPE Known for its low-cost, efficient production operations, and with 2004 global sales of approximately 6.78 million units...
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...discusses the operation and effects of tariffs. The chapter first defines import tariff, export tariff, specific tariff, ad valorem tariff, and compound tariff. Next discussed is the effective rate of tariff protection and the process of tariff escalation. Attention then turns to postponing import duties via bonded warehouses and foreign trade zones. The chapter examines the welfare effects of an import tariff for a small importing country and a large importing county. It is noted that if a nation is small compared to the world its overall welfare necessarily falls if it levies a tariff on imports. If the importing nation is large relative to the world, the imposition of an import tariff may improve its welfare. The chapter then examines the merits of trade restrictions. Among the arguments for trade barriers are 1. Job creation, 2. Protection against cheap foreign labor, 3. Fairness in trade, 4. Maintenance of the domestic standard of living, 5. Equalization of production costs, 6. Infant-industry argument. Types of Tariffs Tariffs can be specific, ad valorem, or compound. 1.A specific tariff is expressed in terms of a fixed amount of money per physical unit of the imported product. For example, a U. S. importer of a German computer may be required to pay a duty to the U. S. government of $ 100 per computer, regardless of the computer’s price. Therefore, if 100 computers are imported, the tariff revenue of the government equals $ 10...
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...ECFI 644 International Economics Instructor: Dosse Toulaboe By Zhenjie Song (Leo) The Impact of Tariff and Non-Tariff Barriers International Trade Introduction In nowadays, tariff and non-tariff barriers have affected the trends and structure of international trade, the geographic direction, and importing and exporting countries relations (Stigler, 1971). This research paper mainly will talk about the tariff, non-tariff, and the relationship and impact of them. Tariff A tariff is simply a tax or duty placed on an imported good by a domestic government. Tariffs are usually levied as a percentage of the declared value of the good, similar to a sales tax. Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. Tariff could be an old and popular method of obtaining revenue from international business and economic activities. Generally, government levy tariffs for three main reasons. The first is that the tariff can protect fledgling domestic industries from foreign competition; the second is that the tariff can protect aging and inefficient domestic industries from foreign competition; the last reason is that the tariff can protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price...
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...Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and...
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