世界经济学outcome1 修订版

Assessment Task for Higher National Unit Unit Code: DE3H 35

Unit Title: Economics 2: The world Economy Assessment Task:

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Major: Global Trade and Business

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Title

Analysis of the Trend of International Trade

Declaration of Own Work

I hereby solemnly declare that this submission is the result of an independent research I have made under the guidance of my tutor. To the best of my knowledge and belief, it does not contain any previously published or unpublished works or research results by other individuals or institotions apart from those that have been referenced in the form of references or notes. All individuals and institutions that have made contributions to my research have been marked in the paper. I myself will bear all the legal responsibility arising from violation of the above declaration.

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1.Introduction

Nowadays, economy is become more and more important in our day life, So the core economic issues that are focused on in this report. This report is to using the knowledge of the world economy to explain some information of trading internationally.

2. Findings

2.1 Why the international trade happened

2.1.1 the benefits from the international trade

There are several benefits with trade internationally as follows.

First, e fficiently using global resources, enriching and facilitating people’s life. Through trading internationally, we can purchase materials and other goods from other countries at a quite lower price, this can reduce our cost of producing products, and our people can buy more kind of goods not just in domestic shops.

Second, making the enterprises of Berce become more competitive and full filled with innovation spirit. Since international trading is trading between different countries, companies from other countries will occupy the international market with our companies. In order to facing these challenges, our companies should make changes to adapt the global market, and this will help them establish the innovation spirit and the companies will be more competitive.

Third, this is also a good chance to raise our international standing. International trading can not only bring us wealth, but also bring us the opportunity to be known by people throughout the world. We should make use of international trading to participate in the international activities, so that our national power can be shown and developed.

2.1.2 Introduction to the free trade

Free trade, now sometimes termed international trade, had the original intention that goods and services could be exchanged freely between countries with no barriers to this exchanges. For a simple example, The United States and Morocco signed a bilateral free trade agreement that entered into force on January 1, 2006. Because of

the agreement and check off-funded marketing efforts in Morocco, the U.S. soybean industry has seen a major increase in its exports to the Mediterranean nation since 2006.

Under the terms of the U.S.-Morocco Free Trade Agreement (FTA), the Moroccan government eliminated all tariffs on imports of U.S. soybeans and soybean oil on January 1, 2006. Prior to the agreement, Morocco assessed a 2.5 percent tariff on soybeans and crude soybean oil and a 25 percent tariff on soybean meal. Morocco reduced its tariff on soybean meal from 25 percent to 12.5 percent on January 1, 2006, and it will be totally eliminated on January 1, 2011. The agreement gives the U.S. soybean sector substantial competitive advantages over South American suppliers, who still face the higher tariff levels on their exports.

2.2 How the international trade happened

2.2.1 The absolute advantage theory

Absolute advantage is said to occur when one country can produce a good or service to a pre-determined quality more cheaply than another country, for example, if UK and Indonesia both can product Car and Coffee, and using same resource, UK use 2 larbor-hour to product Car or use 4 labor-hour to product coffee. And for Indonesia, it use 4 larbor-hour to product Car or use 2 labor-hour to product coffee.

the uk may be able to produce cars more cheaply than say Indonesia. But Indonesia can produce excellent coffee far more efficiently than the UK. Each country is said to have an absolute advantage in producing these single commodities.

2.2.2 The comparative advantage theory

Comparative advantage was first described by David Ricardo, a British economist in 1817. effectively it states that: ‘even when a country has an absolute advantage over another country in terms of commodities they wish to trade it will still be to their mutual advantage to trade providing each country has a comparative c ost advantage’.

For an example, China and Japan both can product car and rice, using the same resource, China can product 200 unit car or 2000 unit rice, and Japan using this resource can product 100 unit car or 1500 unit rice.

We see that China has an absolute advantage over Japan in both commodities. But the advantage it has is much greater for car. Using same resources, China can product as twice as Japan make. We can now also look at the domestic opportunity cost ratios. For China, the cost of 1 Car is 2000/1000=10, for Japan it is 1500/100=15. But if we look at the rice, we can see that for China the cost of a bale of rice is one-tenth of a car, but for Japan, it is one-fifteenth. So Japan has a comparative advantage in Rice. 2.3 Protectionism against the free trade

2.3.1 The implementation of trade barriers

The most well known barriers to trade are tariffs. Tariffs are usually associated with protectionism, the economic policy of restraining trade between nations. For political reasons, tariffs are usually imposed on imported goods, although they may also be imposed on exported goods.

Sometimes they may be used by a government as a way of raising revenue if they feel they cannot stem the flow of goods inwards.

For example Canada, Mexico and the United States have signed the North America Free Trade Agreement (NAFTA). As its name implies, NAFTA eliminates most tariff duties for signatory countries. Residents of NAFTA countries are entitled to additional privileges in another NAFTA country, since they can: Work for local employers, Bid on government contracts ,Perform professional services such as engineering and surveying and Have their intellectual property rights respected, including patents and copyright.

Embargoes: these are an extreme form of barrier. In effect a country which imposes an embargo is saying ‘ we will not allow you to import any quantity at all’. These tend to be only used when there are very serious disputes between countries or in even more extreme situations such as war e.g. gulf wars, Kosovo etc. An example of a trade embargo would be a decision made by the US to pressure businesses not to trade with Israel, because Israel established a trade embargo with any Arabic country, or alternately, for the US to compel businesses not to trade to the country to which Israel has halted trade. Pressuring businesses to form a secondary trade embargo is not only illegal, but must be reported.

3.3.2 The appearance of protectionism

1)protecting industries: if a new industry is showing promise of growth and to become

a major player, countries may feel a need to nurture this industry while it grows to become large enough and competitive enough to match foreign firms which are already enjoying economies of scale. These new industries are sometimes termed ‘infant’ or ‘sunrise’ industries.For example, during the 1980s Brazil enforced strict controls on the import of foreign computers in an effort to nurture its own "infant" computer industry. This industry never matured; the technological gap between Brazil and the rest of the world actually widened, while the protected industries merely copied low-end foreign computers and sold them at inflated prices. In addition, countries that put up barriers to imports will often face retaliatory barriers to their exports, potentially hurting the same industries that infant industry protection is intended to help.

2) Over specialization: some industries may be protected because they are almost the only one and if they decline drastically this could have a very severe impact on an economy. One very obvious example of both over specialization in customer base was the Korean karaoke business detailed in our Four Lessons series (see our July 2009newsletter). This business provided a karaoke experience, only in Korean, in premisesthat sold neither food nor alcohol. I explained in that article that they had

over specialized their customer base to dieting, sober, Korean karaoke singers. That business failed because it was over specialised.

3.4 some famous trade blocs to improve the international trade

3.4.1 the role of the WTO

The WTO dealt with in attempts to establish itself as the policing body promoting free trade.

Dumping: anti-dumping policy is one of the few forms of restriction as allowed by the wto rules.5

As an example, WTO issued final rulings on a long-term Brazil-U.S. cotton dispute, recently 2005, authorizing Brazil to impose annual sanctions worth some 294.7 million U.S. dollars against illegal U.S. subsidies. By these two ways, WTO successfully settled many trade disputes.

3.4.2 the role of the EU

EU initiatives for simplifying national and community rules include SLIM(simpler legislation for the internal market) and the European business test panel, which allows for consultation with business during the drafting stage of new legislation. Currently, a single currency is in use between the 16 members of the Euro zone since 1999. If considered as a single economy, the EU makes it the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter, and largest importer of goods and services, and the biggest trading partner to several large countries such as India and China.

4. Conclusion

In this report, we analyse some information of world economy. We explain gains from trading internationally, and also using some example to explain absolute and comparative advantage . At last, it also explain the role of the WTO in the development of free trade.

5．References

1https://www.360docs.net/doc/557111397.html,/content/trade-agreement-tariff-treatment-duty-rates-a2206 09

2https://www.360docs.net/doc/557111397.html,.au/Library/viewArticle.aspx?articleId=6495bddc-4acc-df11-9504-0050568173d5

3 https://www.360docs.net/doc/557111397.html,/p/articles/mi_7658/is_200710/ai_n32246112/