As exemplified in the stimulus, an appreciation of the Australian dollar, however, can have adverse effects on volumes of imports and international competitiveness. For this, there is a possibility of some industries to struggle. It is important to be able to measure the value of the Australian dollar for many reasons, that range from being able to make an informed business decision or, propose government initiatives and stances. A useful way of measuring the value of the AUD is through using the trade weighted index. The trade weighted index is a weighted average of a basket of currencies that reflects the importance of the sum of Australia's exports and imports of goods by country.
Globalisation is fuelled by different companies, people and countries integrating their economies, their trade and to some extent their people and societies. Global social and economic groupings have been created between countries to help enable globalisation and ease the movement of capital between various countries. Each grouping has its own specific aims, but generally they hope to remove trade barriers, so that countries can buy and sell products from other countries more easily. Some such as the EU, go as far as to also have a monetary union in order to eliminate exchange rate problems. Others such as the Arab league take a social approach in order to unite countries for a common cause.
1) With that being said, exporting and importing is great for companies and society to bring goods and services to people, however the way trade is done can be viewed as unfair in regards to the welfare of people and justice for human man kind who is working in third world countries. “Proponents of fair trade argue that exchanges between developed nations and lesser developed countries (LDCs) occur along uneven terms, and should be made more equitable.” ("Free Trade Vs. Fair Trade," 2005, para. 3) “By contrast, free trade proponents believe that under a system of voluntary exchange, the demands of justice are met. Although free traders hope to alleviate poverty and improve conditions around the world, they prefer measures that are less intrusive than fair traders, who regard the unfettered market as injurious to these same goals.” ("Free Trade Vs. Fair Trade," 2005, para. 5) In my opinion, justice is not fully met just because the system is voluntary.
Over the course of history, the debate between free trade and fair trade has become more complicated with the continual immersing of the global economy. Proponents of free trade believe that through a system of voluntary exchange, the demands of justice are met while proponents of fair trade argue that exchanges between developed nations and lesser developed nations occur under uneven terms and should be made more equitable. This paper will go over some of the history of free trade and fair trade as well as covering the status quo of this controversy along with the various terminologies being used in the debate. Before there was free trade, there was a policy called mercantilism which developed in Europe in the 16th century. Since then, early economists such as Adam Smith and David Ricardo opposed the idea and advocated free trade because they believed free trade was the reason why certain civilizations prospered economically (Cooper, 2000).
Free traders argue that in the long run markets will solve - that is, when permitted to come to equilibrium, both rich and poor nations will benefit. In this way, free traders hold that free trade is fair trade. The Case for Fair Trade The Dependency Thesis Proponents of fair trade maintain that trade between and among nations occurs in coercive and uneven ways. Even if nations trade freely, smaller nations become
The more common and economically orientated explanation for country’s differing attitudes towards international trade is that certain countries gain or loose from trade in certain international markets. Most gains and losses of countries in international trade can be explained by looking at the differing factor endowments of countries. The basic principle of factor endowments in relation to international trade is that a country or group within a country that is trading a resource that is locally abundant to them in relation to the international market will gain from international trade as they do not have the burden of scarcity that other countries will have in relation to them. (Frieden, M. and Lake, D. 2000 p.318) This allows them essentially to behave as an economy of scale within that international market and therefore gain like any other economy of scale might. The inverse is true for countries or groups within countries that are trading a resource that is locally scarce to them in relation to the international market.
Effects of Protectionist Trade Policies Venezuela: An Economy Disrupted by Protectionism By Sardi L., David J. University of Houston (Instructor: Swati Basu) Effects of Protectionist Trade Policies Venezuela: An Economy Disrupted by Protectionism Based on the Gains from Trade theory, specialization and free market makes of an individual, organization, or country to be better off than self-sufficiency does. According to this hypothesis, if two entities focus in producing any output in which they have a comparative advantage and then freely trade those outputs between each other, both groups will be more economically efficient than if they produce each product individually. In other words, as it is stated in the Heckscher-Ohlin theory (1967), “International trade equals to economic growth.” Although this model has proven how two different parties can benefit substantially from trade, it is based on a series of assumptions. Two important factors to consider as influential of this theorem are property rights and free market.
Adam Smith can be considered the first name in economics by his views on globalization and his thoughts detailed in his book The Wealth of Nations. Smith made a classic case of free trade by essentially addressing three key points. Smith believed that we as people have the freedom to pursue our own self interests, specialization, which is the division of labor, and the freedom of trade (Solman, 2007). It was these three ideals that essentially state that globalization is the opening of the free marketplace to include the entire world. I believe there is good that comes from globalization but there are also some bad things that can come from it.
Introduction Foreign aid programmes have been criticized for profiting the donor country over the recipient country. While there are positive effects of aid programs, there exists other negativity to aid; this type of aid is always tied to a donor countries interests and stakes in the recipient country. Receiving aid may have some negative side effects on the economic and political development of a country. This work will look deeply into the activities of the UN, IMF and the World Bank in donations and fund raiser for the third world countries and the effectiveness of the funds. Also, mention will be made of the positive as well as negative effects of accompanying policies or terms backing the donations using Nigeria and The United States as a case study with little reference to some other developing countries.
Argument against trade protection Argument against trade protection, in another word calls it as argument for trade restriction which support for the free trade. Free trade occur when government do not attempt to restrict what its citizen can buy from another country or what they can sell to another country. With the free trade, each nation can specialization in production which they have comparative advantage than other country, and trade with other country exchange the production which they cannot produces in home nation or other country have comparative advantages in those production than us. Over the long run, each nation can more efficiency in production which spending lower prices to produce higher levels of output; Get more income, revenue and profit as increase the market place, and increase in the consumption or demand (consumer can buy their like or product at the lower price). A country can be a capital (or labor)-abundant nations and labor (or capital)-scarce nations which consider their comparative advantage in technologies, input productivity, and wages of labor.