HNDEconomics2TheWorldEconomy世界经济学报告第二篇
HND 世界经济报告
Contents PageSummary (2)1.Introduction (3)2 (4)3 (4)4 (5)5 (5)6 (6)7 (6)8 (7)9 (7)10 (8)11 (8)12 (9)13 (9)14 (10)15 (10)16. Conclusion (11)17. References (12)SummaryThis report is an analysis of the world economy in the aspects of international trade, trade organizations, balance of payments and exchange rate, as well as the single currency and some specific kind countries.With these information we can see clearly that it will bring us many benefits to join in EU.1.IntroductionAs a member of the government of a nation which is on the periphery of Europe, I think the currently consideration of join in European Union is a meaningful project, and in the following i will talk about 14 points of the benefits of joining EU.2Firstly, I will briefly explain the current conditions of our country.The characteristics.Birth rate. In less developed countries, there is often a high birth rate. For example, in 2010 05.18, the United Nations economic commission of Africa published 2010 African economic report ,it said between 2008 and 2009, Africa's population increased by 2.3%, the total number reached 1 billion, of which 70% is not more than 30 years old.Unemployment. Unemployment is usually very high with very little industry because most people work on their own small plots of land. For example, in 2009, the manager of United Nations economic commission of Africa said, even in the year of rapid economic growth, Africa's unemployment rate is still very high, and the economic crisis will make this a more serious problems. Official figures showed that in 2008, sub-saharan Africa's unemployment rate is 7.6%, north Africa is 10.1% while the average level in the world is 6%.Some problems that face us.Indebtedness. This is a major problem for LDCs. It increases year by year, which makes it almost impossible to borrow more. For example, in 1991, Congo economic decline, and debt is as much as $5 billion in 1990, an average of $2500 per person. According to the report: African countries have the highest debt: the debt ratio of República de Moç is equal to 426% of GDP, guinea Bissau is 323.7%, Tanzania is 250.8%. In addition, Egypt, equatorial guinea, Zambia, Congo, Mali,, Madagascar, SAO tome and principe, Sudan, Zaire, more than 20 countries has their debt outstrip nation's GDP, almost completely lost the solvency.Aid programmes. The aid they get from the World Bank or IMF often carry conditions which they feel are difficult to comply with and are too expensive. For example, in 2000, the loans and grants of 20 million dollars they got from IMF been used in some high technical industry, which didn't use in some aspects of poverty. We can see from this case that the money didn't spend in the area that they most been needed3If we join in EU, there will be more multi-nationals come to our country.The multi- nationals can bring in new methods and technology to the NICs and LDSs. For example, the branches of Microsoft operated in China can transfer the new management skills and most importantly, the technical skills to China to help him promote.The multi-nationals can increase employment. A new stores of a famous companywho built in one country can solve the problems of unemployment. For example, a new branche of Wal-Mart which settled in HanDan, China, a small city in China recently, make thousands of people find their jobs in the city where the competition is fierce, which of course is a good thing.4There are many advantages from trading internationally. If we join in EU, we will have more opportunities of free trade.First, it can increased world-wide output. As with the theory of comparative advantage, which means that countries should specialise in trading in goods and services in which they have the biggest advantage, so specialisation as we have seen can lead to increases in output.Second, goods and services produced at lower cost. Because of the comparative advantage, every country will concentrate on the industry which he has the biggest advantage, which, of course, the cost is lower than other nations, as well as the competition, the advantaged country will make his cost even lower to have a place in the economic world.Third, greater range of commodities for consumers, more choice. World trade allows countries to exchange their range of goods with other countries producing a different range. This gives the population of each country a greater choice.5There I illstruate an example to help me better explain the benefits of free trade. There is a free trade agreement(FTA) between Korea and United States which will realise in 2012.01.01. This means that many goods and services could be exchanged freely between the two countries with no barriers to this exchange. I will mainly narrate the agriculture content.In the agriculture part, for the Korea in the food crops, the manufacture potatoes will take season tariffs, very year from December to April tariffs is promptly abolished, but during May to November it will remain the tariffs of the 7 years before, at the 8th year Korea will began to lower tariffs year by year, and at 15th year it wil completely abolished the tariffs on manufacture potatoes.For the meat, like beef which the two parties regarded as very important. In the FTA, they agreed they will abolished the tariffs in 15 years step by step, during that period ASG is available.6The 2 kinds of advantages is the reasons of free trade. It is also the reason why we need to join in EU.Absolute advantage. This exist when one country can produce a good or service much more efficiently than another when they are each using the same level of resource to produce the good or service.Comparative advantage. It is formulated on the basis that, despite having absolute advantage over other countries in production of goods and services it will be beneficial for a country to specialise in the good or service it is best at produc in and trade with other countries which have a comparative advantage in some of the range of goods and services the countries wish to trade in. This occurs because the opportunity costs of switching resources will be higher in the country with absolute advantage than it will be in the countries with comparative advantage.Here is a worked example. With the same resources of 100 units, countries A and B can produces the commoditis as follow.Sugar breadCountry A 10 100Country B 5 80It is clearly that country A has absolute advantage over country B.Now, we will look at the local opportunity cost ratios.For A, the cost of 1 sugar is 10 units of bread: 100/10=10For B, the cost of 1 sugar is 16 units of bread: 80/5=16For A, the cost of 1 bread is 0.1 units of sugar: 10/100=0.1For B, the cost of 1 bread is 0.0625 units of sugar: 5/80=0.0625From the outcome I have calculated above, we can see in terms of opportunity cost, bread is cheaper in country B than in country A. country B has a comparative advantage in bread.7While there are many advantages of free trade, we still can't forget the protectionism to maintain the employment rate, protect our local companies from the fierce competition if we join in EU.The protectionism is a kind of measure that the domestic country has some restrictionon other countries on import of the world trade to protect local industries from competition, and supply some preferential means to local company to help them develop as well as raise revenue from tariffs and quotas. It contains protecting employment, industries, protecting against dumping, protecting against over specialisation, cure persistent balance of payments deficit.For example, in 2011.10.11. The United States senate passed the 2011 of currency exchange rate supervision reform bill, the main content of the bill is of request to the U.S. Government to impose punitive tariffs to major trade partners who is called his exchange rate is undervalued. It was obviously that the U.S. want to impose tariffs to China to force the value of RMB apprecation, in this way the import of U.S. from China will decline, which, in turn, will protect local industry and protect employment. In another case, in 2010 Argentina pass some policies to limit the import which make 540,000 people find their jobs in financial crisis, among this 360, 000 textile worker be employed, followed 64,000 people in wooden furniture and 50,000 people in capital goods, which protect the local employment.8There are many barriers of trade, if we join in EU, most of them can be cancelled. One of the barriers to trade is tariffs. Tariffs are surcharges on the price of imports , a tariff requires the importer of a good to pay a specified fraction of the price to the government. For example, in 2011.01.20. To protect the local production enterprise from the impact of the imported products, one of the most important global textile powers, Turkey, issued an official statement, which plans to impose import tariffs of woven fabric from the impoters.Another is quotas. It is the most important non-tariff trade barrier. It is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported. For examle, in 2011.11.17. The customs union committee of Belorussia, Russia,Kazakhstan set the amount of impot quotas, which contains: Russia's quota- 70000 tons to 250000 tons of frozen chicken bone, 10,000 tons of frozen Turkey. The quota for Belorussia-15,000 tons of poultry and poultry products. Kazakhstan's quota-110,000 tons of poultry and poultry product s.9Now, let me talk about the role of EU.The free movement of goods, people, services and capital is the fundamental role ofEU.It also aims to eliminate customs duties and quotas between members, establish common external tariff for non members, establish free movement of people, services, goods and capital between members, reduce anti-competitive practices, associate with countries outside union to increase trade, move towards full economic and monetary union, develop common foreign, security and defence policy.In 15 October 2009, in Brussels, Belgium, which is the European Union headquarters, the EU trade commissioner ashton and south Korean foreign trade minister signed the free trade agreement between EU and South Korea. The agreement will eliminate almost all of the tariff and non-tariff barriers to trade between two economies.As we kown the bilateral trade between the 2 countries in 2008 to more than $90 billion, this assignment will promote the free trade and bring benefits to EU membership countrise.10There is also an world organization called World Trade Organization, which paly the same role in some aspects with EUit is the body established in 1995 to regulate world trade. This covers goods, services and intellectual property rights. It seeks to encourage the lowering of trade restrictions and to settle disputes with a common dispute procedure.For example,in the 2003 December 13th to 18th, the sixth ministerial conference of WTO held in Hong Kong, China, the meeting pass the minister declaration, which said "by the end of 2008, the developed countries and part of developing countries will allow non-tariffs and non-quotas standards be available to the most undeveloped countries; The developed members cancel cotton export subsidies in 2006 , cancel all form of export subsidies in agricultural product by the end of 2013.In this case, we can see the WTO is playing his roles to promote the development of free trade, to help the poor countries become more strengthful in the competitive world.11The balance of payments is one of the most important documents of one country, it can help us find our problems. Here I use the figures of UK to help us understand it. The balance of payments a record of all financial transactions between a country and the international economy. The structure of the UK now consists of the current account and the capital account, the financial account.The current account concerns income and expenditure and is dividen into four parts.(1). Trade in goods. This covers the exports and imports of goods.(2). Traded in service. This covers the exports and imports of services.In 2002, the trade in goods/services are -21,023 million pounds(3). Income.it consists 2 parts. Direct investment income and portfolio investment income and other income like earning s on loans and deposits and reserve assets. In 2002, this figure is 20,646 million pounds.(4). Current transfers. This aspects contains payments and receipts where there is no corresponding exchange of a good or service. In 2002, the number of current transfer is -9,247 million pounds.The capital account. It consists of capital transfers and acquisition and disposal of non-produced goods. In 2002, the figure is 1,096 million pounds.The financial account. It is the flow of direct portfolio and other investment and reserve assets. In 2002, the financial account is 7,188 million pounds.12If we join in EU, our exchange rate is tend to be more stable, so our balance of payments can be more steady.The exchange rate is the price of a currency in terms of other currencies.If the value of currency rises imported goods will be dearer, therefore the trade in goods is likely to move into deficit.If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall.For example, a UK firm produces bread for a cake company in the China. The cost is 100 pounds. The rate of the Yuan to the pounds is 10 Yuan to 1 pound. Cost to the Chinese firm is 1000 Yuan. If the rate changes to 11 Yuan to 1 pound, which means the pound is stronger and the cost of the bread to the Chinese firm is now 1100 Yuan. The Chinese firm may consider this to be too expensive and look elsewhere for a cheaper company. If the value of the pound then falls to 9 Yuna to 1 pound, then the cost to the Chinese firm will be 900 Yuan and they are likely to purchase more at this cheaper price.13There is no doubt however that it was the move towards becoming a Service-based economy which changed the emphasis in the UK economy. All the heavy manufacturing and engineering industries largely disappeared, for example: shipbuilding, steel, mining etc.The balance of payments figures show that the deficit in the balance of trade in goodshas widened considerably, and a marked increase in the balance of trade deficit. Even a very marked increase in the income generated in the income section has not been sufficient to overcome this deficit and therefore the current account balance has also usually been in deficit. The reason of the deficit is that the trend for UK consumers to buy more imported goods.But the current figures suggest that the UK economy is heading for an annual growth of 2002 of 3.7%.14If we join in EU, it is likely that we will be a single currency country. So here I will say something about the single currency.There are 2 advantages of the single currency for the UK.Reduce costs. Firms and individuals do not have to pay as they move themselves or goods or services from one EU country to another.Reduce exchange rate uncertainty. The UK pound will be at the same rate for all Euro members.There are also 2 disadvantages of the single currency.Loss of independent monetary policy. Scope for fiscal policy adjustments is restricted by need to stay within 3% of GDP.Inability to devalue independently. Individual governments lose this policy instrument.15There are many benefits of being a single currency country if we join in EU.There are many impacts of single currency to the individual as well as businesses.For person. first, as long as you are in the countries of EU, you don’t need to purchase other currencies and change them back, you also needn’t to calculate the cost of purchases in different denominations against the UK pound. Second, the price of goods in each country will be easily compared.For companies. First, the company can aviod the additional cost when it was to settle accounts because the EU countries all use the same currency. Second, increased foreign investments. Because the market size as it was in a union.16. ConclusionWith the contents I have talked above, we can see that if we join in EU, the benefits is obvious. It will bring more opportunities to our people and company, bring in new technology and ideas to widen our horizon to help us think in order to develop our nation's environment and most importantly, develop our economy to make our people have a better life.17. References1./2./3.China daily4.the world economy5.financing international trade6./7.An Inquiry into the Nature and Causes of the Wealth of Nations8.World economy。
HnD经济学导论outcome1报告
International CollegeCentral South University of Forestry and TechnologyASSIGNMENT COVER SHEETAssessment Task: _____________________________________________________________ Course Name:__________________________________ Outcome: ____________________ Prepared by:______________________________________________________ (English name) ________________________________ (Chinese name) ___________________ (Candidate Number) Class: ____________________ Name of Tutor:___________________________ Due Date: _______________ Date Submitted: ___________________Your report/essay should meet the following requirements. Please confirm this before submitting your assignment.☐Assignment is presented on A4 size paper and is tidily typed and well presented..☐Pages have been firmly stapled.☐ A copy has been retained by me.☐Declaration below is completed.DeclarationAll forms of plagiarism, cheating and unauthorized collusion are regarded seriously by the University and could result in penalties including failure in the unit and possible exclusion from the University. If you are in doubt, please contact the Unit Coordinator.Expect where I have indicated, the work I am submitting in this assignment is my own work._______________________________________ (Signature)Question1：With reference to the case study, summaries the relationship between goals, objectives and policy and advice the management of Scotia Airways of the contribution each will make to effective managerial performance.Answer1：Goal:Organizational goal is to complete the mission and purpose of the carrier organization. It is a future state that an organization strive to achieve, and it is the basis and motivation to carry out the organization's activities. Every social organization has its own intended purpose or result, it represents an organization's direction and future. For the organization, the purpose is the common goal; to the members, the common goal is to organize the stage needs to reach the destination. The organisations are usually determine the direction that it will take over the long term and are not always very specific, but some goals may be unintelligible and hard to understand.There are 4 types of organization: Operational goals, Product goals, Consumer goals, and Secondary goals.Operational goals that means increase efficiency, promote the work efficiency vigorously. Like the Scotia Airways, they have the culture of trust has been emphasized and developed by both the management and workers, and this has served to enhance the effectiveness, efficiency and overall performance of the business. When they have the awareness, team spirit, have the incentive measures, the working efficiency will increase.Product goals signify better service to consumer and higher products qualify, to ensure sustained and stable quality system. The Scotia Airways do well in this side,it offers several value added services, such as, valets to assist the passengers in boarding the plane, gourmet meals and a range of in-flight services and entertainment. And Scotia Airways is the first airline to offer full business class services, but at prices that are equivalent to the economy class of its competitors. A key driver of the success of Scotia Airways is the management focus upon the level and quality of service output.Consumer goals means satisfied the different demand from the different consumers. Scotia Airways is aimed at it, their operate scheduled flights mainly targeting business and leisure travelers and aims to provide exceptional value for money, unparalleled comfort and convenience to its passengers. It illustrated that everyone in the world is not the same, so an organization especially a company should adapt diverse needs.Secondary goals by organisations which are not the most important things that they would like to achieve but are nevertheless important. It is mainly about the social responsibility, making a profit or improving award. The Scotia Airways has been reinforced by positive management approaches and wide ranging reward policies that were agreed and supported by Trade Union representatives. And as far as possible to promote social harmony and integration, to create a better atmosphere.Object:Business objectives are more clear and specific than goals and identity the specific path to be taken in order to achieve goals. In this step, how can we do next, how quickly can we do it and how do we know when we have been successful are the important questions.The objectives should be SMART, include 5 aspects: Specific, Measurable, Attainable, Realistic and be Time-bound. These are the core of objectives’ requirements.To promote the market share increase, the airline has an increasing presence at Scotland’s main airports in Glasgow, Edinburgh and Aberdeen. And currently covers eight destinations across Europe, including Brussels, Paris, Frankfurt, Madrid, Rome, Lisbon, Amsterdam and Copenhagen as well as domestic flights to Manchester, Birmingham, Bristol and four London airports.It is also expanding to major business centers in Eastern Europe and the Middle and Far East. This several plans for improving the market share, expand the business scope is very effective.Pay more attention to suitable consumer groups is significant, too. The airline to operate flights mainly is the special value of providing funds for business and leisure travelers, incomparable comfort and convenience of passengers. To provide different services for different customer groups demand, is important to increase the performance and able to establish good relationship with customers.Policy:The policy is a require ment for the organization’s operating and transaction. It provides a guideline to channel a manager's thinking in a specific direction, it can also provide the path to complete goals and objectives. It provides a framework of rules or guidance within which management and staff can make decisions. Policies contain some different, for example, Inward investment policy, Welfare policy and Reward or Punishment policy.Inward investment policy: The equipments are freshing, all staff receives adequate training, the establishments of the new division and gain more market share are both in it.It has seen that the company expansion over resent year in many aspects and departments. Then they found new distributions in Eastern Europe and the Middle and Far East during this year.Reward or punishment policy: For the completion of the expansion target, organizations should set standards, regulations and purposes to evaluate employees' performance, and then take reactions respectively. The Scotia Airways has been reinforced by positive management approaches and wide ranging reward policies that were agreed and supported by Trade Union representatives.Relationship: The goal is the totality, it can including many objects, goals and objectives provide different kinds of requirements of organization. After make goals and objectives, the organization must have the policies to guides behavior by defining how something should be done. Suitable policies can help the organization to achieve goals and objectives, but inappropriate polices will result in bad effects and cannot complete the goals and objectives. Finally, healthy relationships among goals, objectives and policies are the basis of effective performance. The three affect each other and are both in hand.Q2: Explain the main principles of Open Systems Theory with reference to Scotia Airways.A2: The environments that are both internal and external would influenced the organization. The inter-related parts of a system can interact with the external environment. Changes in the external environment will affect the internal environment changes, the internal factors will also affect the overall changes, resulting in a chain effect.There are 4 aspects in this system. Input contains Staff, Managers, Clients orders, Bank loan and Equipment. Process contains Admin support, Allocation of projects, Communicate with clients, Promotion and Production. Output consists of High quality designs, Skilled staff,Satisfied clients and Service or product. Environment consists of Economy, Social trends, Policies, Legislation, Technology and Culture.When the EU and UK government relax their control over the licensing of airline provision, the input in the airway will increase, and then the output will also increase with the input. That is the external environment policy affect the change of the internal environment.And the government imposes taxes on high emissions of enterprise, then the cost will rise and the profit will reduce. So the company will decrease production, the airways maybe reduce a few airplane and maybe open up just one or two air lines.Q3: Identify the main differences between the formal and informal organization within Scotia Airways.A3: The Scotia Airways both formal and informal organization characte ristic.The aspects at formal organization characteristic are, it has clear goals, objectives, policies and missions; defined structure, clear division and classification; and the organization will be controlled. For example, the airways currently employ executives and managers in marketing, finance, HR and flight operations with operational and administrative staff within each department. Rosa Dallevic is in overall charge, assisted by her long-term colleague, Azim Ishtiaq. She has also employed the same personal assistant, Katrina Wright. That is a holonomic structure in the company.And the aspect at in formal organization characteristic is, it has ambiguous relationships in the airways. For example,the company is very much regarded as a family-style business and has established a range of suppliers and clients that are seen as the extended family. So it has relaxed and harmonious atmosphere, not very serious and tense.Q4: Describe four primary stakeholders of Scotia Airways and explain their interests in, and influence on the organisation.A4: G overnment: Whether the taxation violate related laws, whether the company compliance to related laws and whether solve the problem of local employment, that are the government concern about, is their interests. The influence in this case is the EU and UK governmentrelax their control over the licensing of airline provision. Then the airways business will improve and the profit will increase, so the government could charge a higher tax.Creditors: The creditors are concern about the credit score, liquidity, repayment ability and new contracts. When to borrow the money and when to return is the most important key to creditors. Only the airways credit rating better, can it borrow much money when they need, so the turnover of the fund more convenient.Investors: Have interest earning income from investment; have profitability, market share and business achievement are the significant matter to the investors. The influence are have big expansion plans and hire a team of administration. The investors in Scotia Airways have set an ambitious programme for expansion over the next 5 years, introducing flights to major European tourist destinations and to establish new branch in Eastern Europe and the Middle and Far East. Besides, They set about appointing a management team whose experience and expertise was firmly grounded in the budget aviation market.Employees: They concern about the rates of pay, job security, respect, truthful communication and work condition. The attitude and enthusiastic in working will influence the quantity and efficiency. The Scotia Airways have t o develop a wide range of rewards and punishment system, let the employees enthusiasm greatly improve.Q5:Identify an effective control strategy that the management of Scotia Airways could successfully implement, and justify its suitability.A5: I think the Bureaucratic control is the most effective control strategy to the Scotia Airways.Bureaucratic control means it can dominate the process, is the use of the determined rules, policies, hierarchy of authority, reward systems and other formal mechanisms to influence employee behavior and assess performance. The advantages are it could increase efficiency of the company, and can be controlled with market or price mechanisms, it is so stable. The disadvantage is the Poor flexibility. Bureaucratic control through the Organization Structure,In Scotia Airways, they begin to appointing a management team in the budget aviation market and currently employs 80 staff across all divisions. Its expansion over recent years has seen the company commit significant resources to the marketing and sales department, its finance department. There has been an increase in staffing levels, in budgets and in capital investment. It currently employs executives and managers in marketing, finance, HR and flight operations with operational and administrative staff within each department. Rosa Dallevic is in overall charge, and she has also employed the same personal assistant, Katrin Wright. In this organization structure, is helped promote consistency and continuity, lead to a positive working relationship within and between different departments. Various departments perform their respective duties, everything in good order and well arranged. The Scotia Airways also have some rules and regulations to guarantee employees behaviors in the company.So the Bureaucratic control is the best choice to the Scotia Airways.Bibliography:1. Stephen P. Robbins, (2008),The Principle of Management, 3edt,Beijing, China Renmin University Pres s Co. LTD2. Stephen P. Robbins, (2012), Organizational Behavior, 4edt,Beijing, China Renmin University Pres s Co. LTD3. Douglas Macgregor, (2008), The human side of enterprise,1edt,Beijing, Chinese International Book Trading Corporation. LTD4. James G.March, Herbert A Simon (2013), Organization, 2edt, Beijing,China Machinery press. LTD。
世界经济第二章
第一次
第二次
第三次
政治 领域
推动了19世纪六 七十年代资产阶 级革命、改革， 资本主义制度在 世界范围内确立。
资本主义国家逐 渐成为垄断组织 利益的代表，资 本主义政治制度 进一步完善。
经济 英国成为“世界工 美德崛起,英丧
世 格局 厂”,资本主义世界 失垄断地位,世
界
市场初步形成
界市场最终形成
格 局 国际
• 信息经济是“智力驱动型”经济 • 信息经济是“可持续发展”的经济 • 信息经济是“无疆界”的全球经济
学习改变命运,知 识创造未来
世界经济第二章
三、第三次科技革命对世界经济格局和 国际关系的影响
• 1、促进了世界经济格局的更迭 • 2、促进了经济全球化的发展 • 3、加剧世界经济发展的不平衡
学习改变命运,知 识创造未来
转变为以重工业 为主导，20世纪 初实现了工业化
国家政权与垄断 本结合紧密，国 垄断资本主义得 普遍发展
第一、二产业比 下降，第三产业 升
经济模式 工厂取代手工 的变化 工场， 生产、 资本分散
以科技为基础，私 人垄断为组织形式，
国家垄断资本主
生产、资本集中
国家经济职能加
世界经济第二章
三次科技革命影响之比较 （二）
世界经济第二章
这一方面表现为第三产业在为企事业部门服务
，为个人提供服务和为社会提供服务等方面， 不断涌现出新的行业；另一方面表现为第一、 二产业内部对服务的需求量不断扩大。
学习改变命运,知 识创造未来
世界经济第二章
融合化趋势
• 融合化，就是产业内部和产业之间通过将不同行业的 技术和经营技能相互融合，形成新的发展动力，推动 产业的进一步发展。
HND_Economics_2_The_World_Economy世界经济学报告
Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 Free Trade--------------------------------------------------------------------------3 Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4 Barriers to trade-------------------------------------------------------------------4 WTO and EU----------------------------------------------------------------------5 Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14 Single Currency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16 Current issues that face LDCs--------------------------------------------------16 The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanation of benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which are more valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service topre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries. Example: Korea and Japan have following production possibilities for two commodities, mobile phones and computers; assume that all the resources owned bythe advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methodsare—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax may be ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper.Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flows around the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions onfactor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote and smooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’ negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years.The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billion in 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record 13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which has resulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed itsliabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns) the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to thesame amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest rate lower and the commitment to low inflation should allow economies to operate with lower cost. Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rate and commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs) Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies.Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and are expensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economic growth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。
HND 世界经济报告
Contents PageSummary (2)1.Introduction (3)2 (4)3 (4)4 (5)5 (5)6 (6)7 (6)8 (7)9 (7)10 (8)11 (8)12 (9)13 (9)14 (10)15 (10)16. Conclusion (11)17. References (12)SummaryThis report is an analysis of the world economy in the aspects of international trade, trade organizations, balance of payments and exchange rate, as well as the single currency and some specific kind countries.With these information we can see clearly that it will bring us many benefits to join in EU.1.IntroductionAs a member of the government of a nation which is on the periphery of Europe, I think the currently consideration of join in European Union is a meaningful project, and in the following i will talk about 14 points of the benefits of joining EU.2Firstly, I will briefly explain the current conditions of our country.The characteristics.Birth rate. In less developed countries, there is often a high birth rate. For example, in 2010 05.18, the United Nations economic commission of Africa published 2010 African economic report ,it said between 2008 and 2009, Africa's population increased by 2.3%, the total number reached 1 billion, of which 70% is not more than 30 years old.Unemployment. Unemployment is usually very high with very little industry because most people work on their own small plots of land. For example, in 2009, the manager of United Nations economic commission of Africa said, even in the year of rapid economic growth, Africa's unemployment rate is still very high, and the economic crisis will make this a more serious problems. Official figures showed that in 2008, sub-saharan Africa's unemployment rate is 7.6%, north Africa is 10.1% while the average level in the world is 6%.Some problems that face us.Indebtedness. This is a major problem for LDCs. It increases year by year, which makes it almost impossible to borrow more. For example, in 1991, Congo economic decline, and debt is as much as $5 billion in 1990, an average of $2500 per person. According to the report: African countries have the highest debt: the debt ratio of República de Moç is equal to 426% of GDP, guinea Bissau is 323.7%, Tanzania is 250.8%. In addition, Egypt, equatorial guinea, Zambia, Congo, Mali,, Madagascar, SAO tome and principe, Sudan, Zaire, more than 20 countries has their debt outstrip nation's GDP, almost completely lost the solvency.Aid programmes. The aid they get from the World Bank or IMF often carry conditions which they feel are difficult to comply with and are too expensive. For example, in 2000, the loans and grants of 20 million dollars they got from IMF been used in some high technical industry, which didn't use in some aspects of poverty. We can see from this case that the money didn't spend in the area that they most been needed3If we join in EU, there will be more multi-nationals come to our country.The multi- nationals can bring in new methods and technology to the NICs and LDSs. For example, the branches of Microsoft operated in China can transfer the new management skills and most importantly, the technical skills to China to help him promote.The multi-nationals can increase employment. A new stores of a famous companywho built in one country can solve the problems of unemployment. For example, a new branche of Wal-Mart which settled in HanDan, China, a small city in China recently, make thousands of people find their jobs in the city where the competition is fierce, which of course is a good thing.4There are many advantages from trading internationally. If we join in EU, we will have more opportunities of free trade.First, it can increased world-wide output. As with the theory of comparative advantage, which means that countries should specialise in trading in goods and services in which they have the biggest advantage, so specialisation as we have seen can lead to increases in output.Second, goods and services produced at lower cost. Because of the comparative advantage, every country will concentrate on the industry which he has the biggest advantage, which, of course, the cost is lower than other nations, as well as the competition, the advantaged country will make his cost even lower to have a place in the economic world.Third, greater range of commodities for consumers, more choice. World trade allows countries to exchange their range of goods with other countries producing a different range. This gives the population of each country a greater choice.5There I illstruate an example to help me better explain the benefits of free trade. There is a free trade agreement(FTA) between Korea and United States which will realise in 2012.01.01. This means that many goods and services could be exchanged freely between the two countries with no barriers to this exchange. I will mainly narrate the agriculture content.In the agriculture part, for the Korea in the food crops, the manufacture potatoes will take season tariffs, very year from December to April tariffs is promptly abolished, but during May to November it will remain the tariffs of the 7 years before, at the 8th year Korea will began to lower tariffs year by year, and at 15th year it wil completely abolished the tariffs on manufacture potatoes.For the meat, like beef which the two parties regarded as very important. In the FTA, they agreed they will abolished the tariffs in 15 years step by step, during that period ASG is available.6The 2 kinds of advantages is the reasons of free trade. It is also the reason why we need to join in EU.Absolute advantage. This exist when one country can produce a good or service much more efficiently than another when they are each using the same level of resource to produce the good or service.Comparative advantage. It is formulated on the basis that, despite having absolute advantage over other countries in production of goods and services it will be beneficial for a country to specialise in the good or service it is best at produc in and trade with other countries which have a comparative advantage in some of the range of goods and services the countries wish to trade in. This occurs because the opportunity costs of switching resources will be higher in the country with absolute advantage than it will be in the countries with comparative advantage.Here is a worked example. With the same resources of 100 units, countries A and B can produces the commoditis as follow.Sugar breadCountry A 10 100Country B 5 80It is clearly that country A has absolute advantage over country B.Now, we will look at the local opportunity cost ratios.For A, the cost of 1 sugar is 10 units of bread: 100/10=10For B, the cost of 1 sugar is 16 units of bread: 80/5=16For A, the cost of 1 bread is 0.1 units of sugar: 10/100=0.1For B, the cost of 1 bread is 0.0625 units of sugar: 5/80=0.0625From the outcome I have calculated above, we can see in terms of opportunity cost, bread is cheaper in country B than in country A. country B has a comparative advantage in bread.7While there are many advantages of free trade, we still can't forget the protectionism to maintain the employment rate, protect our local companies from the fierce competition if we join in EU.The protectionism is a kind of measure that the domestic country has some restrictionon other countries on import of the world trade to protect local industries from competition, and supply some preferential means to local company to help them develop as well as raise revenue from tariffs and quotas. It contains protecting employment, industries, protecting against dumping, protecting against over specialisation, cure persistent balance of payments deficit.For example, in 2011.10.11. The United States senate passed the 2011 of currency exchange rate supervision reform bill, the main content of the bill is of request to the U.S. Government to impose punitive tariffs to major trade partners who is called his exchange rate is undervalued. It was obviously that the U.S. want to impose tariffs to China to force the value of RMB apprecation, in this way the import of U.S. from China will decline, which, in turn, will protect local industry and protect employment. In another case, in 2010 Argentina pass some policies to limit the import which make 540,000 people find their jobs in financial crisis, among this 360, 000 textile worker be employed, followed 64,000 people in wooden furniture and 50,000 people in capital goods, which protect the local employment.8There are many barriers of trade, if we join in EU, most of them can be cancelled. One of the barriers to trade is tariffs. Tariffs are surcharges on the price of imports , a tariff requires the importer of a good to pay a specified fraction of the price to the government. For example, in 2011.01.20. To protect the local production enterprise from the impact of the imported products, one of the most important global textile powers, Turkey, issued an official statement, which plans to impose import tariffs of woven fabric from the impoters.Another is quotas. It is the most important non-tariff trade barrier. It is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported. For examle, in 2011.11.17. The customs union committee of Belorussia, Russia,Kazakhstan set the amount of impot quotas, which contains: Russia's quota- 70000 tons to 250000 tons of frozen chicken bone, 10,000 tons of frozen Turkey. The quota for Belorussia-15,000 tons of poultry and poultry products. Kazakhstan's quota-110,000 tons of poultry and poultry product s.9Now, let me talk about the role of EU.The free movement of goods, people, services and capital is the fundamental role ofEU.It also aims to eliminate customs duties and quotas between members, establish common external tariff for non members, establish free movement of people, services, goods and capital between members, reduce anti-competitive practices, associate with countries outside union to increase trade, move towards full economic and monetary union, develop common foreign, security and defence policy.In 15 October 2009, in Brussels, Belgium, which is the European Union headquarters, the EU trade commissioner ashton and south Korean foreign trade minister signed the free trade agreement between EU and South Korea. The agreement will eliminate almost all of the tariff and non-tariff barriers to trade between two economies.As we kown the bilateral trade between the 2 countries in 2008 to more than $90 billion, this assignment will promote the free trade and bring benefits to EU membership countrise.10There is also an world organization called World Trade Organization, which paly the same role in some aspects with EUit is the body established in 1995 to regulate world trade. This covers goods, services and intellectual property rights. It seeks to encourage the lowering of trade restrictions and to settle disputes with a common dispute procedure.For example,in the 2003 December 13th to 18th, the sixth ministerial conference of WTO held in Hong Kong, China, the meeting pass the minister declaration, which said "by the end of 2008, the developed countries and part of developing countries will allow non-tariffs and non-quotas standards be available to the most undeveloped countries; The developed members cancel cotton export subsidies in 2006 , cancel all form of export subsidies in agricultural product by the end of 2013.In this case, we can see the WTO is playing his roles to promote the development of free trade, to help the poor countries become more strengthful in the competitive world.11The balance of payments is one of the most important documents of one country, it can help us find our problems. Here I use the figures of UK to help us understand it. The balance of payments a record of all financial transactions between a country and the international economy. The structure of the UK now consists of the current account and the capital account, the financial account.The current account concerns income and expenditure and is dividen into four parts.(1). Trade in goods. This covers the exports and imports of goods.(2). Traded in service. This covers the exports and imports of services.In 2002, the trade in goods/services are -21,023 million pounds(3). Income.it consists 2 parts. Direct investment income and portfolio investment income and other income like earning s on loans and deposits and reserve assets. In 2002, this figure is 20,646 million pounds.(4). Current transfers. This aspects contains payments and receipts where there is no corresponding exchange of a good or service. In 2002, the number of current transfer is -9,247 million pounds.The capital account. It consists of capital transfers and acquisition and disposal of non-produced goods. In 2002, the figure is 1,096 million pounds.The financial account. It is the flow of direct portfolio and other investment and reserve assets. In 2002, the financial account is 7,188 million pounds.12If we join in EU, our exchange rate is tend to be more stable, so our balance of payments can be more steady.The exchange rate is the price of a currency in terms of other currencies.If the value of currency rises imported goods will be dearer, therefore the trade in goods is likely to move into deficit.If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall.For example, a UK firm produces bread for a cake company in the China. The cost is 100 pounds. The rate of the Yuan to the pounds is 10 Yuan to 1 pound. Cost to the Chinese firm is 1000 Yuan. If the rate changes to 11 Yuan to 1 pound, which means the pound is stronger and the cost of the bread to the Chinese firm is now 1100 Yuan. The Chinese firm may consider this to be too expensive and look elsewhere for a cheaper company. If the value of the pound then falls to 9 Yuna to 1 pound, then the cost to the Chinese firm will be 900 Yuan and they are likely to purchase more at this cheaper price.13There is no doubt however that it was the move towards becoming a Service-based economy which changed the emphasis in the UK economy. All the heavy manufacturing and engineering industries largely disappeared, for example: shipbuilding, steel, mining etc.The balance of payments figures show that the deficit in the balance of trade in goodshas widened considerably, and a marked increase in the balance of trade deficit. Even a very marked increase in the income generated in the income section has not been sufficient to overcome this deficit and therefore the current account balance has also usually been in deficit. The reason of the deficit is that the trend for UK consumers to buy more imported goods.But the current figures suggest that the UK economy is heading for an annual growth of 2002 of 3.7%.14If we join in EU, it is likely that we will be a single currency country. So here I will say something about the single currency.There are 2 advantages of the single currency for the UK.Reduce costs. Firms and individuals do not have to pay as they move themselves or goods or services from one EU country to another.Reduce exchange rate uncertainty. The UK pound will be at the same rate for all Euro members.There are also 2 disadvantages of the single currency.Loss of independent monetary policy. Scope for fiscal policy adjustments is restricted by need to stay within 3% of GDP.Inability to devalue independently. Individual governments lose this policy instrument.15There are many benefits of being a single currency country if we join in EU.There are many impacts of single currency to the individual as well as businesses.For person. first, as long as you are in the countries of EU, you don’t need to purchase other currencies and change them back, you also needn’t to calculate the cost of purchases in different denominations against the UK pound. Second, the price of goods in each country will be easily compared.For companies. First, the company can aviod the additional cost when it was to settle accounts because the EU countries all use the same currency. Second, increased foreign investments. Because the market size as it was in a union.16. ConclusionWith the contents I have talked above, we can see that if we join in EU, the benefits is obvious. It will bring more opportunities to our people and company, bring in new technology and ideas to widen our horizon to help us think in order to develop our nation's environment and most importantly, develop our economy to make our people have a better life.17. References1./2./3.China daily4.the world economy5.financing international trade6./7.An Inquiry into the Nature and Causes of the Wealth of Nations8.World economy。
HNDEconomicsTheWorldEconomy世界经济学报告
Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 FreeTrade--------------------------------------------------------------------------3Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4Barriers to trade-------------------------------------------------------------------4WTO and EU----------------------------------------------------------------------5Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14SingleCurrency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16Current issues that face LDCs--------------------------------------------------16The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17 Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanationof benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which aremore valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service to pre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries.Example: Korea and Japan have following production possibilities for twocommodities, mobile phones and computers; assume that all the resources owned by each country are same.It is clear that Japan has an Absolute advantage over Korea in both commodities. But the advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000 For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, throughmethods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methods are—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax maybe ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper. Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flowsaround the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions on factor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote andsmooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years. The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billionin 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which hasresulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed its liabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns)the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄ is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to the same amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄ is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest ratelower and the commitment to low inflation should allow economies to operate with lower cost.Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rateand commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs)Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies. Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and areexpensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economicgrowth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites /wiki/Protectionism/eurocash.asp/Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。
hnd经济学2世界经济学
----F86E35Economics2:TheWorldEconomy Economics2:TheWorldEconomyF86E35CandidateName:RENLUGradeandClass:2021BA1Introduction (3)1.Freetrade (4)2.Absoluteadvantagesandcomparativeadvantages (4)3.Thebenefitsoffreetrade (5)4.Thepurposeofcarryingouttradeprotectionism (7)5．OneMechanismoftheWorldTradeOrganization (7)6.OnemeasureofEuropeanUnionpromoteseconomicintegration (8)7.Balanceofpayments (9)8.ThegeneraltrendsinUKtradeoverthelast30year (12)9.Thebalanceofpaymentsaffectedbyexchangerates (13)10.Advantagesanddisadvantagesoffixedrateandfloatingrate (14)11.Effectsoffixedrateandfloatingrateonindividualsandcompany (16)12.Thecharacteristicsofthenewlyindustrializedcountriesandthedevelopingcountries (18)13.Theissuesofthenewlyindustrializedcountriesandthedevelopingcountries (19)14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries (19)Conclusion (21)Reference (22)Thisreporthasintroducedtheworldeconomicssimply.Thecontentincludes: Internationaltrade,freetrade,Protectionism,theroleofWTOandunder-developed nation,UKabsoluteandcomparativeadvantage,theprotectionismandtworecent examplesaboutdemonstrateargumentswhichgovernmentmayputforwardforits use,twobarriersoftrade,aEUinitiativeabouttheroleoftheEUinpromotingtrade, thecompositionofthebalanceofpayments,thegeneraltrendsinUKtradeoverthe last30years,thewaywhichthebalanceofpaymentsaffectedbyexchangerates,an analysisoftwocurrentissuesthatfaceLDCs,andtheaidofrecentexamplesabout twoimpactsofmultinationalsonNICsandLDCs.(1).Freetrade isatypeoftradepolicythatallowstraderstoactandtransactwithout interferencefromgovernment.Thus,thepolicypermitstradingpartnersmutualgains fromtrade,withgoodsandservicesproducedaccordingtothetheoryofcomparative advantage.China-ASEANfreetradeareawasformallyestablishedinJanuary1,2021,coveringa populationof1900000000.China-ASEANfreetradearea’sGDPamountedto$6and tradeamountedto$4.5.Itisthelargestfreetradezoneamongdevelopingcountries. AftertheestablishmentofCAFTA,morethan90%productsarecarriedoutforzero tariffsonbothsides.AveragetariffsfromChinesetoASEANdecreasefrom9.8%to 0.1%,AveragetariffsfromASEAN’ssixoldmemberstoChinesedecreasefrom 12.8%to0.6%.Tariffs’hugereductionpromotedtherapidgrowthofbilateraltrade. ChinaandASEANcountries’tradeinvestmentgrows,economicintegrationdeepens, companiesandpeoplearewidelybenefit,realizinggoalsofmutualbenefitandwin-wincooperationandcommondevelopment.ChinaandASEAN’stotalquantityof bilateraltradegrowsrapidly.FromJanuarytoOctoberthisyear,thebilateraltrade volumehasreachedto$295900000000,ayear-on-yeargrowthof25.7%.(2).Absoluteadvantagesandcomparativeadvantages Absoluteadvantages issaidtooccurwhenonecountrycanproduceagoodor servicetopre-determinedqualitywithlessresourcesormorecheaplythananother country. Evenwhenacountryhasanabsoluteadvantageoveranothercountryintermsof commoditiestheywishtotradeitwillstillbetotheirmutualadvantagetotrade providingeachcountryhasthe comparativeadvantages.UKisamajorimporterofmanufacturinggoodssuchclothes,shoes,toys,electronicproducesetc.astheselabororientedconsumergoodswillcostmoreinUKbefore hastheWiththedevelopmentofservice,theadvantageoftradeisservice trade. Thegoodsthatcourtryimportandexportchangeovertimeasthegoodsinwhichthey haveacomparativeadvantagechangeovertime.Before1970s,manufacturing industryisitsabsoluteadvantage.After1970s,serviceindustryismorecompetitive forinternationaltradesuchascomputersoftware,businessserviceand pharmaceuticals.Theseindustryareseentobringthepossibilityoflongtermgrowth, whiletheindustriesbasedonheavycapitalinvestmentorrequiringrelativelycheap laborwillnotbecompetitivewithdevelopingcountries.2.Thebenefitsoffreetrade(1).Goodsandservicesproducedatlowercost.Freetradecanpromotethe cooperationofdifferentcountriesintheworld.Itcandecreasethecostofproducing goods.(2).Greaterrangeofcommoditiesforconsumers,morechoice.Anycountriescannot produceallproducts,theyallhaveproductswhichareunabletoproduce.Tradeallow ustobuyallofthem.Greaterrangeofcommoditiesprovidecustomerswithmore choice.(3).Increasedworld-wideoutput.Eachcountryproducingaccordingtotheir respectiveadvantageshashighefficiency.Underthesameresources,ithashighyield. Therefore,internationaltradeincreasedworld-wideoutput.3.BarrierstoInternationalTrade Tradebarriersaregovernment-inducedrestrictionsoninternationaltrade.Thebarriers cantakemanyforms,includingthefollowingtariffsandnontariffs.NonTarriffBarriers-exchangecontrolsInarealworld,thereisandshouldbeacertaindegreeofgovernmentinterventionon foreignexchange.Importsneedforeigncurrenciestobuygooodsandservicesfrom abroad.Importersmustapplytothecenytalbankforthecurrencytheyneedto purchasegoodsinthatcountry,TheCentralbankcanerxertcontroloverthevariety andvolumeofbothimportsandexportsbycontrollingthequantityofforeign cuurencyitwillissuetoexportersandimporters. NonTarriffBarriers-ImportDepoits Governmentrequiresimporterstolodgeanon-interestbearingdepositinadvance withitsCentralBankbeforetheycanbuygoodsandservicesfromabroad.Besides, thedepositisusuallyinanamountequaltoallorpartofthecostofimportedgoods. Thisistimeconsumingandobviouslyexpensivesinceitreducestheliquidityofthe importingfirms,whichtendtohindertheirimportingactivities.Before1984,the Nigerianadvancedimportdepositrangedfrom50%to200%ofthevalueofalistof importitems.Giveaexampleabouttariffs,35%tariffsonChinesetyresimposedontheUnited Stateson11th Septemberin2021.ItmakeChinesetyresfirmshavetoincreasepriceif salesinAmerica.Forexample,tnontariffsinRussiatoUkraineforembargoeswhichsuspensionof Ukraineimportsofjuiceon29th Julyin2021.ItmakeUkraine’s juicenotallowsale inRussia.4.ThepurposeofraisingbarrierstoInternationalTrade(1)Thepurposeisto protectemployment.FootwearmanufactureersassociationsofItaly,SpainadPortugalarereportedtohave fieldapplicationstotheEUtocurbfootwearimportsfromChina.LocalshoemarkersinElche,thecapitalofSpain’s onceflourishingfootwearindustry,arguethat“m adeinChina〞istakingawaytheirjobsbythatChineseshoeshavebeenboominginSpainjustbecauseofgoodqualityandreasonableprices.(2)Thepurposeistoanti-dumping.InJuly2021,SolarWorldAG,aGermangiant,ledaconsortiumofaround25EUsolarpanelproducerstofileacomplainttotheEUCommissiontoinvestigatewhethertherehasbeendistortionofcompetitionbyChinesecounterpartsduetodumping.SoonGermanyagainstChinalowprice.5．TheRoleofWTOTheWorldTradeOrganization(WTO)isanorganizationthatintendstosupervise andliberalizeinternationaltrade.Theorganizationofficiallycommencedon1January 1995undertheMarrakechAgreement,signedby123nationson15April1994, replacingtheGeneralAgreementonTariffsandTrade(GATT),whichcommencedin 1948.Theorganizationdealswithregulationoftradebetweenparticipatingcountries byprovidingaframeworkfornegotiatingandformalizingtradeagreementsanda disputeresolutionprocessaimedatenforcingparticipants'adherencetoWTO agreements,whicharesignedbyrepresentativesofmembergovernmentsandratified bytheirparliaments.The WTOdisputesettlementmechanism ismeasuresofdealingwithtradedisputes betweenmembers.Itistheeffectivewayforcountriesespeciallythedeveloping countriestoresolvetheeconomicfrictionandsafeguardtheirlegitimaterightsand interests.Itisveryunfavorableforthedevelopingcountriestoresolvetradedisputesespeciallytradedisputeswiththedevelopedcountriesthroughbilateralchannels.The bilateralapproachpursuesstrengthdoctrine.Involvedintradedisputesamong developingcountries,theWTOdisputesettlementmechanismrulingiscomparatively fairandreasonable.Aseitherthecomplainantorrespondent,thelegitimateinterests ofthedevelopingcountrieshavebeeneffectivelyprotected.ItisbecausetheWTO disputeadjudicationhasverystrongfairness,developingcountriesgenerallyhavea highenthusiasmtousetheWTOdisputesettlementmechanism.Somelarger economicscaledevelopingcountriesismoreactiveintheuseofWTOdispute settlementmechanism.Ithelpstoreducetheeconomicfrictionbetweencountries,and promotefriendlyrelationsamongnations.TheUruguayRound wasthe8throundofmultilateraltradenegotiations(MTN) conductedwithintheframeworkoftheGeneralAgreementonTariffsandTrade(GATT),spanningfrom1986to1994andembracing123countriesas "contractingparties".TheRoundledtothecreationoftheWorldTradeOrganization, withGATTremainingasanintegralpartoftheWTOagreements.Thebroadmandate oftheRoundhadbeentoextendGATTtraderulestoareaspreviouslyexemptedas toodifficulttoliberalize(agriculture,textiles)andincreasinglyimportantnewareas previouslynotincluded(tradeinservices,intellectualproperty,investment policytradedistortions)HerearesomeothersareastheWTOhasdealtwithinattemptstoestablishitselfas thepolicingbodypromotingfreetrade.TheBananaDispute.TheWTOruledthatthe EuropeanUniondiscriminatedunfairlyagainsttheUSwithitsbananaimportrules. TheWTOallowedtheUStoslapa$191millionsanctionontheEU.Wasitpaid?We donotknowbutprobablynotso.6.OnemeasureofEuropeanUnionpromoteseconomicintegration The EuropeanUnion(EU)isapolitico-economicunionof28memberstatesthatare locatedprimarilyinEurope.TheEUoperatesthroughasystemofsupranationalinstitutionsandintergovernmentalnegotiateddecisionsbythemember states.Theinstitutionsare:theEuropeanCommission,theCounciloftheEuropean Union,theEuropeanCouncil,theCourtofJusticeoftheEuropeanUnion, theEuropeanCentralBank,theCourtofAuditors,andtheEuropeanParliament.The EuropeanParliamentiselectedeveryfiveyearsbyEUcitizens(1)EUcaneliminatecustomersdutiesandquotasonimportsandexportsofgoodsbetweenmemberstatesandeliminatetariffsbetweenEUmembers.Thoughthe institutions,memberscanestablishcommonpoliciesforagricultureandtransport forfreetrade.(2)Itcanacceleratetheinvestmentfromawiderangeofcontries.WiththerisingstatusoftheeuroanddevelopmentofEuropeancapitalmarket,members’costo capitalwilldecline,whichisconducivetoinvestmentandeconomicgrowth.TheEuropeanCentralBank(ECB)developandimplementaunifiedmonetarypolicy, eachcountry’sinterestrates,pricesandinvestmentreturnswillgraduallynarrow thedifferencesorreachtounanimous,leadingtoanoveralldeclineofpriceandthelevelofinterestrates.7.Balanceofpayments(s:///government/statistics/announcements)The balanceofpayments(BOP)ofacountryistherecordofalleconomic transactionsbetweentheresidentsofacountryandtherestoftheworldinaparticular period(overaquarterofayearormorecommonlyoverayear).Thesetransactions aremadebyindividuals,firmsandgovernmentbodies.Thusthebalanceofpayments includesallexternalvisibleandnon-visibletransactionsofacountryduringagiven period,usuallyayear.Itrepresentsasummationofcountry'scurrentdemandandsupplyoftheclaimsonforeigncurrenciesandofforeignclaimsonitscurrencyThistableillustratescurrentaccount,capitalaccountandfinancialaccountinUK duringthe20yearsfrom1980to2021.Intermsofcurrentaccount,therejustfour yearsthefigureispositivewhenbetween1980and1983.Andthenthefigurealmost negativefrom1984to2021.Andthefigureachievesthelowestnumberabout-55190 millionin2021.ThissituationillustratethattheeconomyofUKdevelopnotvery well.Asforcapitalaccount,thedatashowsthatthisaccountexperienceafluctuatetrend. First,thefigurewas-4millionin1980andthenthefiguredecreaseto-79millionin 1981.Afterthatthefigurewas6millionin1982increaseto159millionin1987. Whatisfunnythingisthefigurefallagainto-39millionin1988.Afterthatthefigure experienceafluctuateandwhatisnotableisthefiguregainalowestnumber-1527 millionin2006.Intermsoffinancialaccount,thefigureseeanpositivetrendfrom2157millionin 1980to122millionin1986.Andthenthefigureexperienceanegativetrendbetween-9690millionin1987and-23296millionin1993.Andfrom-20261millionin1999to-30276millionin2021thisaccountexperiencenegativetrendagain,andgetthe lowestnumberin2021becauseofthefinancialcrisisthefigurewas-39301million.8.ThegeneraltrendsinUKtradeoverthelast30yearOverall,theevolutionoftradeingoodsshowanupwardtrend.Withthequick development,UKneedtokeepupwiththetimes,thecountrymustthroughtradein goodtoincreasecountry’s incomesowiththepassageoftime,therearemoreand moretradeinUK.ThetableshowstheevolutionoftradeingoodsandservicesinUKbetween1980and 2021.Thetradeingoodsaccountstand20billionin1980.Thetradeingoodsaccount hasremainedindeficit.Thedeficitgrewremarkableinthelate1980storeachapeak ofabout24billionin1989.Andthendecreasedbackto20billioninearly1990s andkeepastableat10billionfrom1991to1998.In1998thedeficitjumpedbyover9billion,andithascontinuedtorisesince,reachingacashrecordof92.9billionin2021.Thechartshowsthatthetotalgoodsexportsarelessthanimports,whichleadstodeficit.However,thetotalserviceexportsaremorethantotalserviceimports,whichresultsinsurplus.ItshowsUnitedKingdomisinalargefiscaldeficitinthelast30years.Thehighestsurplusisin1981,howeverthecurrentbalancedeficitfrom1984to1990.From1984to1989,thecurrentbalancedeficitandin1987,thedeficitincreasequickly.The currentbalancedeficitfellsharplyfrom1990to1991.From1992to1997,thecurrentbalanceslightlyfluctuates.Thenfrom2000to2006,thedeficitincreasedsubstantially,althoughfrom2002to2004,thereisaslightdecline.From2007to2021deficithasasteepdecline.Mainreasonmaybeingoodstradebalancedeficits,whilethesurplusontradeinservices,especiallyinthelast30yearsgrowth.Inthepast30yearsBritain'smerchandisetradedecreased,becauseofthehighcostofHR,theUKisfewtodoingthemanufacture,mostgoodsisdependonimported,noexported.Butthefinancialservices,rentingandbusiness,istotallyincreased,sointhepast30years,theUKfinancialhasbeensteadilyincreasing.9.Thebalanceofpaymentsaffectedbyexchangerates(1)Theeffectsofexchangeratesfortradea.Importedgoodswillbedearer,thereforetheTradeinGoodsislikelytomoveintodeficit.Consumersmayturntoconsumemoreimportedgoods;Inflationmaybelowerbecausedomesticfirmsmayreduceprices.Thepriceofi mportedrawmaterials maygodownagainaffectingtheTradeaspect.Consumersmayfinditeasiertobuy importedgoods.b.Domesticgoodsandserviceswillbecheaperbothinforeignanddomesticmarkets.Acountrywhichhasreducedthevalueofitscurrencywouldcertainlybelookingtosellmoreabroad.ThisshouldmeananimprovementinTradeinGoods. CheapercurrencyhelpsboosttheexportSeeanexample:AUKfirmmanufacturesharddiscsforacomputerfirmintheUSA. Sellingprice:100pounds.Exchangerate:1pounds=$1.5CosttotheAmerican:$150.Exchangerate:1pounds=$2CosttotheAmerican:$200 TheAmericanfirmmayconsiderthistobetooexpensiveandlookelsewherefora cheaperalternative.If:Exchangerate:1pounds=$1CosttotheAmerican:$100 TheAmericanfirmmayconsiderthistobecheaper,andbuymore.(2)Theeffectsofexchangeratesforcapitalaccountsa.Manufacturingfirmsmightforexamplebuildupstocksattecheaperpriceandforeigninvestmentmayincreasebecauseprofitssentbackwillbeworthmorein theirdomesticcurrency.b.Itcouldencouragefirmsandindividualstoinvestabroadinthattheforigncurrencyearnedwillbeworthmorewhensentbacktothedomesticmarket. 10.AdvantagesanddisadvantagesoffixedrateandfloatingrateFloatingexchangerate orfluctuatingexchangerateisatypeofexchange-rate regimeinwhichacurrency'svalueisallowedtofluctuateinresponsetomarket mechanismsoftheforeign-exchangemarket.Acurrencythatusesafloatingexchange rateisknownasafloatingcurrency.Afloatingcurrencyiscontrastedwithafixed currency.Advantages.Largereserveswillnotbenecessarytoprotectthecurrencyagainstchangesor speculation.Acountryhasnoobligationtomaintainexchangeratestability,and thereforeitdoesnotneedforeignexchangereserveasmuchasinthefixedexchange rates,whichcansaveforeignexchangefunds.Theexchangeratewillnotbecomeatargetbecausewhicheverwayitmoves,the mechanismshouldstarttooperatequicklytorestoreequilibrium.Theimbalanceofa country'sinternationalbalanceofpaymentscanbeeliminatedbyfreefluctuationof exchangerate.Governmentsdonothavetointroducemeasurestokeepthevalueatafixedrate, whichmightbeharmfultoothersectionsoftheeconomy.Becausethebalanceof paymentsofeachcountrycanadjustbythemselves,whichensuresthestabilityof foreignexchangemarketinacertainextent.Disadvantages.Thefuturesmarketisdesignedtopreventthis.Bybuyingforwardforcommoditiesa priceisagreedwhichdoesnotchangewhenthecommodityisdelivered.Itcausesall countries'instabilityofabilityofinternationalsettlementandcommodityprice.Demandmaybeunstablebecauseexternalpricesofdomesticgoodswillbesubjectto change.Planningproductionmaybedifficult.Theinstabilityofexchangerate increasestheriskofinternationaltradeIfthereisinflationafloatingexchangeratewillnotalwaysdealwithiteffectively becausethedepreciationofthecurrencyintheforeignexchangemarketswillmake importsdearerandassistpossiblecostpushinflation.Fixedexchangerate,sometimescalledapeggedexchangerate,isatype ofexchangerateregimewhereacurrency'svalueisfixedagainsteitherthevalueof anothersinglecurrency,toabasketofothercurrencies,ortoanothermeasureofvalueAdvantages.Theyreduceuncertainty,thismakestradeandinvestmentsbetweenthetwocountries easierandmoreexternalandmorepredictableandisespeciallyusefulforsmall economiesinwhichexternaltradeformsalargepartoftheirGDP.Longtermgrantingofcredits,long-termcontractsandinvestmentoverseasareseen tocarrylessrisk.Itmakesthecapacityoftheinternationalsettlementandthepriceof importandexportgoodsbestable.ThefixedrateplayedacrucialroleinachievingthisgrowthinFDI.Thestabilityof theexchangeratesuppressedthespeculationofforeignexchangemarkettoa certainextent.Disadvantages.Ifdeficitspersistthenreservesofforeigncurrencymaybeusedupquitequickly.It leadstoreductionofexports,thedeficitofinternationalbalanceofpaymentsand moreunstablethecurrency.Countrieswhichhaveapersistentdeficitorsurpluswillhavetotakesomeaction whichmayhavesevereimpactsuponexportsandimportsorboth.Ifinflationoccurstheunderlyingcausewillneedtobetackled.Countriescannotrely ondevaluingthecurrencytogetridoftheproblem.Itweakenedtheautonomyof domesticmonetarypolicy.11.Effectsoffixedrateandfloatingrateonindividualsandcompany FloatingExchangeCompany.Floatingexchangeratesystemputforwardhigherrequirementsforcompany's macro-economicmanagementcapacityanddevelopmentoffinancialmarket.Itincreasescompany’smanagementandoperationcost.Thecompanydirectlyproducesexchangeloss.Individuals.Inthefloatingexchangeratesystem,exchangeratetendtofluctuate significantly,whichisnotconducivetoindividualsinvestmentWithfloating exchangerates,individualsmightspeculateinfinancialmarketsIndividualsare beginningtorealizethechallengeofpriceadvantagerecessionandthenecessityof improvingnonpricecompetitiveness.Theindividualsbegantorealizetheimportanceofmonetarysettlementtiming.Theindividualsbegantorealizetheimportanceofmonetarycurrencyselection.FixedExchangeC ompany.Rigidexchangeratearrangementsmaybeconsideredimplicitexchange rateguarantee,soastoencouragecapitalinflowsintheshorttermandnohedgingof foreigndebt,damagingthecompany’shealthofthefinancialsystem.Fixedrate makesthecompany’sadjustmentofrelativepricebeeasierandsmoother.Itisbeneficialtoalong-termstabledevelopmentofcompany’seconomic.ItisdirectlygeneratetheexchangeratelossesI ndividuals.ItIsconduciveforindividualstomakecostandprofitaccounting,which avoidstheriskofexchangeratefluctuations.Iteasilyleadstocurrencyovervaluationandweakenthecompetitivenessoflocal exports,causingpersonalimbalancesoflong-termcurrent-account.Ithelpsindividualstoeliminatetheriskofexchangerateandreducethetransaction costofinternationaltradeandinvestment.12.Thecharacteristicsofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializedcountries’economicstructureespeciallyindustrialand agriculturalstructurechangessignificantly,andtheproportionofindustryislarger thanagriculture.Intotalexports,theproportionofmanufacturedgoodsincreased, gettingridofthesituationofahalfofthedevelopingcountriesdependingonprimary products.Manyintermediateproductsandmachineryandequipmentrequiredfor productionisstillinthehandsofthedevelopedcountries.Insomeproductionof manufacturedgoods,Brazilisonlydevelopedcountries’assemblyprocessingfactory. Duetotheintroductionofalargenumberofforeigncapital,Brazilhaslargeforeign debts,andtheamountofprincipalandinterestishuge.From2021to2021,the economyofBrazilisnotoptimisticthesituationoftheperiodforthesefouryears,the averageeconomicwasonly1.4%.The developingcountries relyheavilyonagriculturalproduction.Fromthe productionstructureofagriculture,low-incomecountries’shareofagricultureinthe GDPismuchhigherthanthatofdevelopedcountries;fromtheemploymentstructure, theproportionofagriculturallaborinIndiaupto50%~70%;fromtheurbanization level,theproportionofurbanpopulationintotalpopulationoflowandmiddleincome ismuchlowerthanthoseofhighincomecountries.Underdevelopedmarketeconomy isthenatureofIndia’e sconomy.Duetothelongsufferingboundcolonialplunder andfeudalrelationsofproduction,aswellasgovernment’i m s p roperintervention afterindependence,themarketofIndiafailedtooperateandwasdistortedseverely, unabletofunctionasthebasicmeansofresourceallocation.13.Theissuesofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializingcountry: WhileBrazilintroducinglarge-scaleforeigncapitalandborrowingfromthe internationalfinancialcapital,Brazilcannotsolvetheproblemofexcessive dependenceoninternationalcapitalintheeconomyandcannotsolvetheproblemof establishingindependenteconomicsystemintheinternationaldivisionoflabor. Brazil'swealthgapis21timesthatofFrance,inBrazil's1.6billionofthenational population,"marginalizedpeople"withnofixedincomewashighlyupto50%.Brazil isnotonlythecountrywiththemostcapitalinthethirdworld,butalsothecountry rgerandlargerforeigndebtofprincipleandinterest makeseconomicdevelopmentbeonthebrinkofcollapse.LessDevelopedCountry:Chinafacesthedebtcrisisandfundbackflow.Theagriculturalinfrastructure deterioratesandpercapitaoutputofgraindecreasedcontinuously.Because populationgrowthexceededthegrowthofsocialmaterialproduction,thesocietyhas borroductivityofdevelopingcountryisonly1/23ofthatin developedcountries.Politicalinstabilityandfrequentwarsaggravatedtheexisting difficulties,makingresidentsbecomedestituteandhomeless.14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries.Overall,GeneralElectricCorporationplaysa positive rolefortheeconomic developmentofthesecountries.GeneralElectric’sforeigninvestmenthasbroughtthe capitalrequiredforSingapore’e csonomi c development,technologyandadvanced managementidea,drivingthedevelopmentofthenationalindustry,whichhelpsthese countriestorealizerapideconomicgrowthandquickincreaseinnationalpower objectively.GeneralElectricCorporationprovidesalargenumberofemployment opportunities,whichsolvestheseriousunemploymentissue,maintainingthestability ofsociety.However,italsohas negativeeffects onthestatepower.Generallyspeaking,General ElectricCorporationhassomenegativeeffectsontheindependenceofSingapore’s economicandsocialdevelopment.Somekeysectorsanddepartmentsofnational economyhasriskofbeingcontrolledbytheGeneralElectricCorporation,orhave evenbeencontrolled.Someimplementationofnationalindustrialpolicy,anti-unfair competitionpolicy,laborandenvironmentalpolicyareweakenedbecauseofthe existenceofGeneralElectricCorporation.ConclusionFormthisreport,Wehaveknowsomanyusefulknowledgeaboutinternationaltrad andwecanknowmuchabouttheadvantagesoftradeandthefunctionsofdifferent organizationsplaysintrade.AndwealsoknowalotofBalanceofPaymentofUK andthecharacteristicsandproblemsoflessdevelopedcountries.Reference(1)://cy580/content/2021/03/15/show149282.html(2):///xb/file.asp?fileid=20211237007(3)://ppkao/tiku/shiti/20752.html(4)://imibao/thread-12941-1-1.html(5):///chuangyexinde/202112030934994_2.htm(6):///wiki/Free_trade。
庄宗明《世界经济学》(第2版)课后习题详解
庄宗明《世界经济学》（第2版）课后习题详解目录第一篇世界经济运行第一章导论一、概念题二、思考题第二章科技革命与世界经济结构一、概念题二、思考题第三章国际贸易与世界市场一、概念题二、思考题第四章生产国际化与生产要素的国际流动一、概念题二、思考题第五章金融自由化与国际货币体系一、概念题二、思考题第二篇世界经济发展趋势第六章当代世界经济格局一、概念题二、思考题第七章区域经济合作一、概念题二、思考题第八章经济全球化一、概念题二、思考题第三篇世界经济的可持续发展第九章世界经济发展中的全球性问题一、概念题二、思考题第十章国际经济协调一、概念题二、思考题第十一章世界经济的可持续发展一、概念题二、思考题本书是庄宗明《世界经济学》（第2版）教材的学习辅导书，对庄宗明《世界经济学》（第2版）教材每章的课后习题进行了详细的分析和解答，并对个别知识点进行了扩展。
课后习题答案久经修改，质量上乘，特别适合应试作答和临考冲刺。
另外，部分高校研究生入学考试部分复试真题就来自于该书课后习题，因此建议考生多加重视。
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1世界经济答：世界经济就是指各国国民经济相互联系而构成的有机整体，它是指世界范围内各国国民经济通过国际贸易与世界市场、生产国际化与生产要素的国际流动、金融自由化与国际货币体系等经济纽带相互联系而构成的有机整体，是超越民族、国界的一种经济体系。
对于世界经济的理解有以下几点：①世界经济是一个经济的范畴，是经济概念体系中的一种，是人类生产、分配、交换、消费活动的一种方式；②世界经济是一个历史的范畴，它是人类社会发展到一定历史阶段的产物，并随着人类社会的发展而发展变化，最终将随着国家的消亡而消亡；③世界经济还是一个地理的范畴。
人类的经济活动总是要在一定的地域范围内发生。
作为目前已知的活动领域最为广阔的一种经济形式，世界经济还没有能够囊括世界上发生的一切经济活动，从地域范围上说，越来越多的国家和地区（小于国家的地理单位）被纳入世界经济体系仍将是判断世界经济深化发展的标准。
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investment £291.9 billion pounds. And in the UK reduce £317.0 net investment in the second quarter, called the highest record, it is in the previous quarter after the £298.3 investment. (View on table D)
----------------from <Pink Book>
Since 1984, UK had always been deficit in every year. From 1987 the deficit was expanding from -8 billion to -11 billion, then the second phase from 1992 to 1997, the situation of payment is recovery to -1 billion which is good view for UK in current payment. Focus on the 2007, the payment was facing the disaster which is the current account recorded in nearly -52 billion, about the biggest deficit during this period increasing almost 5 times with 1987.
1986 1991 1996 2001 2006 Export
of goods
72997 103939 167196 189 093 243 635 Export
of service
26709 34723 61851 87 773 132 749 import
of goods
82614 114162 180918 230 305 319 947 import
of service
18527 28411 27539 70 573 99 641 Balance –3 614 –10 615 –962 –18 657 –52 568 ----------------from <Pink Book>
From the chart, we can see the import of goods and export of goods are all significant increasing in every year identified. However, the deficit is inevitable in goods of trade. Looking at the Current Account we notice that Income has decreased rapidly, and negatively grow a small of £85 million in 1986 to negatively £665 million in 2007, the difference is almost 590 million. However, between those years, the fluctuation of income is instable, especially in 1997, 1999, 2000, 2001, 2002, 2003 and 2004 through years the income has a positive growth to 150 million and 250 million. The Trade in Goods and Service has significant increased from negative 1435 million in 1986 to positive 590 million, which has grow about 2000 million in 2007. The result is a deficit, 52568 million in 2007, existing which is growing from negative 3614 million in 1986 nearly less 2
£ Billion
£Million。