...05.04 Trade Analysis—Template Name: Rebecca M Houck Instructor: Ms. Lord Use the chart in the lesson to identify one developing country and one developed country to compare to the United States. Use the tables below to record data for each country. Then respond to the analysis questions. Table 1: Identify one developing and one developed country along with the United States. Complete a trade analysis for agricultural products. Corn Citrus Number of additional worker hours to produce one unit of citrus instead of one unit of corn United States 2 4 2 Developing Country South Africa 6 10 4 Developed Country Romania 8 10 2 Table 2: Identify one developing country and one developed country along with the United States. Complete a trade analysis for industrial products. Apparel Computer Software Number of additional worker hours to produce one unit of computer software instead of apparel United States 2 4 2 Developing Country South Africa 4 12 8 Developed Country Romania 6 8 2 Analysis—Using the data you collected, answer each of the following analysis questions in well-written paragraphs in your own words. Identify...
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...International Trade Theory Chapter Outline OPENING CASE: The Ecuadorian Rose Industry INTRODUCTION AN OVERVIEW OF TRADE THEORY The Benefits of Trade The Pattern of International Trade Trade Theory and Government Policy MERCANTILISM Country Focus: Is China a Neo-Mercantilist Nation? ABSOLUTE ADVANTAGE COMPARATIVE ADVANTAGE The Gains from Trade Qualifications and Assumptions Extensions of the Ricardian Model Country Focus: Moving U.S. White Collar Jobs Offshore HECKSCHER-OHLIN THEORY The Leontief Paradox THE PRODUCT LIFE CYCLE THEORY Evaluating the Product Life Cycle Theory NEW TRADE THEORY Increasing Product Variety and Reducing Costs Economies of Scale, First Mover Advantages and the Pattern of Trade Implications of New Trade Theory NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND Factor Endowments Demand Conditions Related and Supporting Industries Firm Strategy, Structure, Rivalry Evaluating Porter’s Theory Management Focus: The Rise of Finland’s Nokia FOCUS ON MANAGERIAL IMPLICATIONS Location First-Mover Advantages Government Policy SUMMARY CRITICAL THINKING AND DISCUSSION QUESTIONS CLOSING CASE: Trade in Information Technology and U.S. Economic Growth Learning Objectives 1. Understand why nations trade with each other. 2. Be familiar with the...
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...International Trade Theories For starters, international trade theories are theories that explain international trade. Since trade is basically the exchanging of goods and/or services between entities or people, then international trade would be the exchanging of goods or services between countries. International trade happens in an effort to benefit the countries involved, in some way. According to the U.S. Chamber of Commerce, “America cannot have a growing economy or life wages and incomes of our citizens unless we continue to reach beyond our borders and sell products, produce, and services to the 95% of the world’s population that lives outside the United States. More than 38 million Americans jobs depends on trade.” (U.S. Chamber of Commerce). This paper will address different international trade theories, specifically mercantilism, absolute advantage, comparative advantage and balance of trade, to give a better understanding of international trade as well as why the government gets involved, how this may impact our company and why managers of international businesses should know these theories. “Mercantilism is a trade theory holding that a country’s wealth is measured by its holdings of ‘treasure,’ which usually means its gold.” (Daniels, Radebaugh & Sullivan, 2011 pg. 219). This theory states that countries should export (get others to buy from you) more goods and/or services than they import (others selling to you) in order to receive payment (gold) from other...
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...The Ecuadorian Rose Industry snowcapped volcanoes that rise to more than 20,000 feet. The bushes are protected by 20-foot-high canopies of plastic sheeting. The combination of intense sunlight, fertile volcanic soil, an equatorial location, and high altitude makes for ideal growing conditions, allowing roses to flower almost year-round. Ecuador apparently has a comparative advantage in the production of roses. Ecuador's rose industry started some 20 years ago and has been expanding rapidly since. Ecuador is noW the world's fourth largest producer of roses. Roses are the nation's fifth largest export, with customers allover the world. Rose farms generate $240 million in sales and support tens of thousands of jobs. In Cayambe, the population has increased in 10 years from 10,000 to 70,000, primarily as a result of the rose industry. The revenues and taxes from rose growers have helped to sophisticated pave roads, build schools, and construct irrigation systems. Maria works Monday to Saturday, and earns $210 a month, which she says is an average wage in Ecuador and substantially above the country's $120 a month It is 6:20 AM, February 7, in the Ecuadorian town of Cayambe, and Maria Pacheco has just been dropped off for work by the company bus. She pulls on thick rubber gloves, wraps an apron over her white, traditional embroidered dress, and grabs her clippers, ready for another long day. Any other time of year, Maria would work until 2 PM, but it's a week before Valentine's...
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...The Ecuadorian Rose Industry snowcapped volcanoes that rise to more than 20,000 feet. The bushes are protected by 20-foot-high canopies of plastic sheeting. The combination of intense sunlight, fertile volcanic soil, an equatorial location, and high altitude makes for ideal growing conditions, allowing roses to flower almost year-round. Ecuador apparently has a comparative advantage in the production of roses. Ecuador's rose industry started some 20 years ago and has been expanding rapidly since. Ecuador is noW the world's fourth largest producer of roses. Roses are the nation's fifth largest export, with customers allover the world. Rose farms generate $240 million in sales and support tens of thousands of jobs. In Cayambe, the population has increased in 10 years from 10,000 to 70,000, primarily as a result of the rose industry. The revenues and taxes from rose growers have helped to sophisticated pave roads, build schools, and construct irrigation systems. Maria works Monday to Saturday, and earns $210 a month, which she says is an average wage in Ecuador and substantially above the country's $120 a month It is 6:20 AM, February 7, in the Ecuadorian town of Cayambe, and Maria Pacheco has just been dropped off for work by the company bus. She pulls on thick rubber gloves, wraps an apron over her white, traditional embroidered dress, and grabs her clippers, ready for another long day. Any other time of year, Maria would work until 2 PM, but it's a week before Valentine's...
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... Free trade in the United States has assisted the country to thrive and be successful. Free trade has made its mark on Americans for wealth and prestige. Free trade has brought Americans accustomed to a way of living and that is why there is free between states. There are other factors as to why free trade is free between states and why free trade is not necessarily free for countries. The following will explain. Free trade has given Americans a benefit in the United States. The NAFTA (North American Free Trade Agreement) has given Americans the ability to trade freely with Canada and Mexico. It is only beneficial that there be free trade between the United States, Canada, and Mexico. All three feed off of each other and will only benefit from each other’s resources and abilities. For example, USDA.gov explains, “In 2007, Canada and Mexico were, respectively, the first and second largest export markets for U.S. agricultural products” (usda.gov). Exports to the two markets combined were greater than exports to the next six largest markets combined. This only allows for trade to increase between the two countries. Canada is benefitting the same exact way. With trading with the United State, Canada is benefitting from the agriculture that they are lacking in the North. With the three countries so closely tied together, this is how and why free trade is evident in the States. There is a reason why it is not like that with other countries. Canada, United...
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...businesses and the framework in which they operate. In this unit you must explain the importance and differences of international trade. You will explain key economic terms and demonstrate an understanding of how to trade internationally. Many of the tasks will cover several Passes and Merit Criteria. Barr’s are soft drink manufacturers who are famous for manufacturing Irn Bru. They have just appointed you as their marketing manager and are keen to explore the idea of selling Irn Bru abroad. They have identified Germany as a possible option. They have asked you to research into the benefits and costs of doing business internationally. They have asked you to write a report and then present your findings to the board. P1) P1 explain the international Business environment in Which a selected organisation Operates You decide to look at a company that is successfully trading internationally. * Write a profile of a multi-national company Where is its headquarters? Where does it sell its goods or services? What percentage of its market are in different countries etc? How long has it traded in different countries? Turnover etc? * Answer the following questions? What is Globalisation? What are the benefits and costs of Globalisation? What is an import? What is an export? What is the balance of trade? * Show the UK’s balance of trade figures. Do we import more than we export? What are the main goods that we import in the UK? What are the main good that...
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...01. What is trade Protectionism? Trade protectionism is basically a rules and regulations of a government to maintain or to make a limitation on the import of goods and services to protect/promote domestic product and also to create new jobs. Basically Protectionism is the economic policy of government to save our domestic product and industry by imposing tariffs on imported goods, restrictive quotas, and also variety of other government regulations to prevent foreign product not to take -over of domestic markets Here the government gives an instructions and objectives on which product can be imported in the country and which products cannot be imported from the other part of the nations. Domestic products mean the products, which is made in own industries. These are the industries face tremendous pressure to maintain competitive market prices of their products with foreign goods. That is why government uses trade protectionism to develop the domestic products and also helps the domestic product industries to compete in global market. The supporters of trade protectionism believe that it allows domestic producers to survive and grow, producing more jobs. Because if the domestic product industries develop well and have the ability to compete in the global market, later on there will be more jobs and people will be employed and also be skilled. In the 17th and 19th century, business people used to follow an economic principle called mercantilism. The main theorem...
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...Maria Tovar Trade Surplus and Trade Deficit China overtakes USA as worlds trading partner China´s Trade Surplus Vs. USA´s Trade Deficit Countries that have open economies are those who carry out economic activities with other countries and trade goods and services. Countries can export, which means selling domestic goods and services to another country or they can import, which means buying goods and services from another country. An economic surplus makes reference to having a positive balance of trade; when a country´s exports exceed its imports. On the other hand, a trade deficit is when a country´s imports exceed its exports and has a negative commercial balance. As the video: “China overtakes USA as a world´s trading partner,” suggests, China currently has a trade surplus. Between 2000-2008 China´s imports have grown 403% whilst its exports have grown 474%. China´s exports are currently higher than its exports due to its economic strategy, which will be explained below. The video explains why China has overtaken the US as world´s trading partner, and thus why China has a trade surplus and the US a trade deficit. American and many other companies are now producing and assembling their products in China due to the low manufacturing costs in this country. It is more profitable for American companies to produce and assemble their products in China not only for the low labor costs, but also for the low transport costs. Even though this harms the US´s economy, companies...
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...CHAPTER SIX INTERNATIONAL TRADE AND FACTOR MOBILITY THEORY OBJECTIVES • To understand theories of why countries should trade • To comprehend how global efficiency can be increased through free trade • To become familiar with factors affecting countries' trade patterns • To realize why countries' export capabilities are dynamic • To discern why the production factors of labor and capital move internationally • To grasp the relationship between foreign trade and international factor mobility CHAPTER OVERVIEW Chapter Six provides a conceptual foundation for the exploration of the international trade process. First, it examines the basic theories of mercantilism, absolute advantage, and comparative advantage. Then it explores patterns of trade in light of the theories of country size, factor proportions, and country similarity. It also considers the role of distance and explains the relevance of Product Life Cycle Theory and Porter's Diamond of national competitive advantage. The chapter concludes with a discussion of factor mobility and its relationship to the international trade process. CHAPTER OUTLINE OPENING CASE: COSTA RICAN TRADE, FOREIGN INVESTMENT, AND ECONOMIC TRANSFORMATION [See Map 6.1.] Costa Rica, a Central American country of barely 4 million people, has successfully transformed its primarily agricultural economy to one that includes strong technology and tourism sectors as well. Bordering both the Pacific Ocean...
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...Financial Accounts International Trade Flows Distribution of U.S. Exports and Imports U.S. Balance of Trade Trend International Trade Issues Events That Increase International Trade Trade Friction Factors Affecting International Trade Flows Impact of Inflation Impact of National Income Impact of Government Policies Impact of Exchange Rates Interaction of Factors Correcting a Balance of Trade Deficit Limitations of a Weak Home Currency Solution International Capital Flows Distribution of DFI by U.S. Firms Distribution of DFI in the U.S. Factors Affecting Direct Foreign Investment Factors Affecting International Portfolio Investment Agencies that Facilitate International Flows How Trade Affects an MNC’s Value Chapter Theme This chapter provides an overview of the international environment surrounding MNCs. The chapter is macro-oriented in that it discusses international payments on a country-by-country basis. This macro discussion is useful information for an MNC since the MNC can be affected by changes in a country’s current account and capital account positions. Topics to Stimulate Class Discussion 1. Is a current account deficit something to worry about? 2. If a government wants to correct a current account deficit, why can’t it simply enforce restrictions on imports? 3. Why don’t exchange rates always adjust...
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...Located in Southeast Asia, the Socialist Republic of Vietnam is bordered to the north by the People’s Republic of China, to the west by Laos and Cambodia, and to the east and south by the South China Sea. The country is a mere 127,000 square miles but has a population of almost 86.2 million. The language is Vietnamese, and the principal religion Buddhism, although there are a number of small minorities, including Confucian, Christian (mainly Catholic), Caodist, Daoist, and Hoa Hao. In recent years, the country’s economy has been up and down, but average annual per capita income still is in the hundreds of dollars as the peasants remain very poor. One of the reasons that Vietnam has lagged behind its fast-developing neighbors in Southeast Asia, such as Thailand and Malaysia, is its isolation from the industrial West, and the United States in particular, because of the Vietnam War. From the mid-1970s, the country had close relations with the U.S.S.R., but the collapse of communism there forced the still-communist Vietnamese government to work on establishing stronger economic ties with other countries. The nation recently has worked out many of its problems with China, and today, the Chinese have become a useful economic ally. And Vietnam is well on its way in establishing a vigorous trading relationship with the United States. Efforts toward this end began over a decade ago, but because of lack of information concerning the many U.S. soldiers still unaccounted...
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...per cent of 34 member countrys is nearly 9.5 times more than that of the poor. It has been increased, compared with 9 times in 2007 and it means that income disparity has been exacerbated proportionately. The report especially highlight that the gap between rich and poor has been growing more quickly than the gap that has widened over the past 12 years. A global gap between rich countries and poor countries is more serious than ever. Erik Reinert, the author of a book titled "How rich countries got rich and why poor countries stay poor?", discusses about this long title itself regarding the issue above. Once again, "How rich countries got rich and why poor countries stay poor?" Reinert is considering about what causes this phenomenon and how can we fix this problem in this book. Orthodox development economists argue that mainstream economics(neo-liberalism) and international free trade can narrow the wage and rich-poor gap between rich countries and poor countries. Reinert criticizes them because there don't exist any exmaples of success in narrowing the gap historically and argues that "harmonious economy" is not a result of internationl free trade and laissez-faire but conscious policies since in contrast to rich countries which are already developed through protectionism, direct subsidies and government intervention so ready for free trade, poor countries are not because of their incompetitive industries. In other words, fair competition which free trade theory says cannot...
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...Economy of International Trade Learning objectives • Describe the policy instruments used by governments to influence international trade flows. • Understand why governments sometimes intervene in international trade. • Articulate the arguments against strategic trade policy. • Describe the developments of the world trading system and the current trade issues. • Explain the implications for managers of developments in the world trading system. This chapter focuses on the political systems and tools of trade policy. The major objective of this chapter is to describe how political realities shape the international trading system. With an introduction to tariffs, subsidies, and the development of the world trading system, the chapter describes the evolution of the World Trade Organization and its impact on the global business environment. While in theory many countries adhere to the free trade ideal outlined in Chapter 5, in practice most have been reluctant to engage in unrestricted free trade. The US continues to restrict trade in technological and militarily sensitive products as well as in textiles, sugar, and other basic products in response to domestic political pressures. OUTLINE OF CHAPTER 6: THE POLITICAL ECONOMY OF INTERNATIONAL TRADE Opening Case: United States Cotton Subsidies and World Trade Introduction Instruments of Trade Policy Tariffs ...
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...Wen Jie, What Are the Costs of Free Trade?. Retrieved on September 07, 2015. From: http://www.ehow.com/about_5367523_costs-trade.html * Trade Link (August 2008) México elimina los obstáculos a la importación de medicamentos. Retrieved on September 07, 2015. From: http://www.economia-snci.gob.mx/sic_php/pages/bruselas/trade_links/esp/agoesp2008.pdf * Investopedia (s.f.) Free Trade. Retrieved on September 07, 2015. From: http://www.investopedia.com/terms/f/free-trade.asp | 1. Mexico has always portrayed itself as one of the most pro-trade countries in the world. For instance, we have a free trade agreement with the United States and Canada, and another one with the European Union. We are active members of the WTO, the OECD, the APEC, the Pacific Alliance, and have also signed multiple bilateral agreements with many nations, most of them deemed “strategic”. Answer the next two questions in your own words: What are the potential costs and benefits of adopting such a free-trade strategy? International trade allows a country to specialize in the manufacture and export of products that it can produce efficiently, and in the meantime, to import products that can be produced more efficiently in other countries. Some benefits of adopting a free-trade strategy are: * Tariff. One of the main objectives is to remove tariff barriers in the trade of goods and services, thus allowing that a person exports their products to another country non-dutiable. * Rules of Origin...
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