HNDEconomics2TheWorldEconomy世界经济学报告.docx

HNDEconomics2TheWorldEconomy世界经济学报告.docx

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HNDEconomics2TheWorldEconomy世界经济学报告

Economics2:

TheWorldEconomy

Content

Introduction----------------------------------------------------------------3

Section1:

InternationalTrade

Threegainsfromtradinginternationally---------------------------------------3

FreeTrade--------------------------------------------------------------------------3

AbsoluteandComparativeAdvantage-----------------------------------------3

Protectionism----------------------------------------------------------------------4

Barrierstotrade-------------------------------------------------------------------4

WTOandEU----------------------------------------------------------------------5

Section2:

InternationalFinance

BalanceofPaymentsandGeneraltrendsinUKTrade----------------------6

Relationshipbetweentheexchangerateandthebalanceofpayments—14

SingleCurrency------------------------------------------------------------------15

EffectsonindividualsandbusinessoftheEuro-----------------------------15

Section3:

LessDevelopedCountries（LDCs）

CharacteristicsofaLDC--------------------------------------------------------16

CurrentissuesthatfaceLDCs--------------------------------------------------16

TheimpactsofmultinationalsonLDCsandNICs--------------------------16

Conclusion-----------------------------------------------------------------16

References------------------------------------------------------------------17

Introduction:

AsamemberofthegovernmentofnationontheperipheryofEurope,itismyobligationtoillustratethebenefitsofjoiningtheEUtothePremier.Inthisreport,Iwillanalyze15elementsinnextthreepartstomakeaclearexplanationofbenefitsofjoiningtheEU.

Section1:

InternationalTrade

Threegainsfromtradinginternationally:

Tobeginwith,theinternationaltradecouldincreaseworldout-put.Thetendencyofglobalizationbringsthefirmsmoreopportunitiestogainthelabor,resources,contractsandnewtechnology.Thesupplyanddemandwillbeimprovedwiththeimprovementofcompany’sproductivity.

Oncethesupplyhasbeenimproved,thegoodsandserviceswereproducedatlowercostandtherearemoreandmorecompetitions,thepriceoftheproductmightfallwhichmeansconsumerscouldgetmorechoicesandcheapergoods.

Inaddition,themostimportantgainingofinternationaltradeisitcangenerateeconomicgrowth.Freetradecouldincreasesales,profitmargins,andmarketsharesandthebothdemandandsupplylevelhasupdated.Meanwhile,theproducerneedsmoreresources,laborandcapitaltoproducemoretosatisfytheglobalmarket.Itdirectresultinimprovingthematerialmarket,financemarket,andmaydeclinetheunemploymentrate.

Freetrade

Freetradeisaconceptthatthereisnobarriertogoodsandservicesexchangedbetweencountries.Sincedifferentcountrieshavedifferentterrain,weather,resourcesandtechnology,theinternationaltradewouldbringthegoodswhicharemorevaluablethanthelocalpeopleproduceitbythemselves.

AgoodexampleforfreetradeisinNov.18,2004,ChinesePresidentandChileanPresidentdeclaredthestartoftheFTAnegotiations.Accordingtotheagreement,thetwocountrieswouldstarttariffreductionofgoodstradefromJuly1,2006.Tariffofproductsaccountingfor97%ofthetotalofthetwocountrieswouldbezerointenyears.ChinaandChilewouldcarryoutfreetradeineducation,science&technology,environmentprotection,labor,socialsecurity,IPR,investmentandpromotion,mineralandindustry.ThisagreementhaspromotedthefreetradebetweenChinaandChilesuccessfully.

Absoluteandcomparativeadvantage

Absoluteadvantagereferstotheabilityofaparticularpersonoracountrytoproduceaparticulargoodwithfewerresourcesthananotherpersonorcountry.Absoluteadvantageissaidtooccurwhenonecountrycanproduceagoodorservicetopre-determinedqualitymorecheaplythananthercountry.Itstandscontrastedwiththeconceptofcomparativeadvantagewhichreferstotheabilitytoproduceaparticulargoodataloweropportunitycost.Opportunitycostisdefinedasthecostofchoosingagoodorservicemeasuredintermsofthenextbestalternativegivenup.Acountryhasacomparativeadvantageinproducingagoodiftheopportunitycostofproducingthatgoodintermofothergoodsislowerinthatcountrythanitisinothercountries.

Example:

KoreaandJapanhavefollowingproductionpossibilitiesfortwocommodities,mobilephonesandcomputers;assumethatalltheresourcesownedbyeachcountryaresame.

Mobilephone

Computer

Japan

2000

20000

Korea

1000

15000

ItisclearthatJapanhasanAbsoluteadvantageoverKoreainbothcommodities.Buttheadvantageithasismuchgreaterformobiles.UsingthesameresourcesasKoreaitcanmaketwiceasmanymobilephones.

ForJapanthe‘cost’of1Mobilephoneis10balesofComputers,i.e.20000/2000

ForKoreaitis15,i.e.15000/1000

ButifwelookatthecaseofcomputerswewillfindthathereforJapanthecostofabaleofcomputersisone-tenthofaMobilephonewhileforKoreaitisonefifteenth.IntermsoftheoutputofMobilephoneforegone（opportunitycost）,computerischeaperinKoreathanJapan.KoreahasaComparativeadvantageincomputerwhileJapanhascomparativeadvantageinmobilephone.

Protectionism

Protectionismistheeconomicpolicyofrestrainingtradebetweennations,throughmethodssuchashightariffsonimportedgoods,restrictivequotas,avarietyofrestrictivegovernmentregulationsdesignedtodiscourageimportsandanti-dumpinglawsinanattempttoprotectdomesticindustriesinaparticularnationfromforeigntake-overorcompetition.

Herearetwoexamplesofprotectionism:

1:

Britainimportsbananasfromitsex-coloniesinSouthAmericawhileUSAownshugebananaplantationsinSouthAmerica.In1999BritainrefusedtoimportbananasfromSouthAmerica,sotheUSgovernmentslappedtariffsonsomeBritish-madegoods.Themostseriousonewasapunitivetariffof100%onScottishwoolproductsinordertolimittheimportfromBritain.

2:

AnotherexampleofprotectionismisinJanuary,2009,AmericangovernmentsettledapolicythatonlytheAmericansteelcanbeusedinAmerica.TheAmericangovernmenttendedtousethispolicytoreducethelossinfinancialcrisisandithelpsthesteelworkerstokeeptheirjobs.Inthisexample,protectionismprotectsthedomesticlower-skilledlaboranddomesticindustries.

Barrierstotrade

Toprotectacountry’sownindustries,thecountrywhichinadversesideneedtofindsomewaystobebarrierstolimittheimportproducts,usually,thetwomethodsare—tariffandnontariffs.

Tariffistaxesorcustomsdutiesplacedonforeignproductstoartificiallyraisetheirpricesandthishopefully,suppressesdomesticdemandforthem.Thistaxmaybeadvalue,thatis,apercentageofthepriceofthegoodsorspecific,thatis,ataxperunitofweightorphysicalquantity.

Forexample,inJanuary12,2009theRussiangovernmentraisedtheexpropriationtariff（upto30percent）forthecarsimportinthenextninemonths.Theimportcar’spricewillbeincreasedtobeWP（priceforthewholeworld）addsthetariff,sincethepriceisincreasing,thesalesoftheimportcarsmustfalldown.ThecustomersmightchoosetheRussiancarinsteadofimportcarssinceitischeaper.

Non-tariffbarrierstraditionallyhavebeenactionssuchQuotas,embargoes,exchangecontrolandimportdeposits.Probablythebestknownoftheseisthequota.Thisisaphysicallimitationonthequantityofimport.Quotaisaphysicallimitationonthequantityofimportswhichhadbeenacknowledgedbylocallaws.Usuallytheimportersneedtoapplytopayforalicensetosellgoods.

Forinstance,Russiausesanothermethodtolimitforeigncarimportsince2008—tolimitthequantityofimport;onlyafewcompanieswhichhavetheimportlicensecouldimportcarsandhaveasellingupperlimit.Russiausesthesemethodstorestricttheimportquantity,andduringthegovernmentlimitedforeigngoodsimport,itcanpromotethedomesticindustries.

WTOandEU

In1948,theGeneralAgreementonTariffsandTrade（GATT）wasestablishedbythedevelopedcountries.In1Jan1995,theGATTwassupplantedbyanewinstitution,theWorldTradeOrganization（WTO）andaimstoimprovetradeandinvestmentflowsaroundtheworld.Itisaninternationalbodyseekingtopromotefreetradebyopeningmarketsthroughtheeliminationofimporttariffs.Theorganizationadministerstradeagreements,monitorsinternationaltradepolicyandactsasaforumfortradenegotiations.ThefourmaingoalsofWTOare:

freeingglobaltradethroughuniversallyloweredtariffs,imposingthesamerulesonallmembersinordertohomogenizethetradeprocess,spurringcompetitionthroughloweredsubsidies,andensuringthesametradeconcessionsforallmembernations.TheWTOalsoprovidestechnicalassistanceandtrainingfordevelopingcountries.WTOaimsforequalrepresentationamongmembersbygrantingeachmembercountry"most-favorednation"status;whenamembercountrybestowsatradeprivilegeonanothernation,theprivilegemustbeextendedtoallothermembercountries.Anothertenetis"nationaltreatment,"whichbehoovescountriestotreatforeignimportsequallywiththoseproduceddomestically.

ThebestexampleforjoiningtheWTOisthejoinofChinain2007,afterthat,Chinaachieveslotsofbenefitsfromthedecreaseoftariff,limitationsandthesimplificationoftradingprocedures.

EUstandsforEuropeanUnionandisaneconomicunion,whichaimstoabolishtariffsandquotasamongmembers,commontariffandquotasystem,restrictionsonfactormovementsandharmonizat