國際貿易簡答essay

CHAPTER1—THEINTERNATIONALECONOMYANDGLOBALIZATION

SHORTANSWER

1. Whatisthemostimportantfactorwhichcontributestocompetitiveness?

ANS:

Keytotheconceptofcompetitivenessisproductivity,oroutputperworkerhour.

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2. Whatarethechallengesoftheinternationaltradingsystem?

ANS:

Amongthechallengesthattheinternationaltradingsystemfacesaredealingwithfairlaborstandardsandconcernsabouttheenvironment.

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ESSAY

1. Doesexposuretocompetitionwiththeworldleaderinaparticularindustryimproveafirm'sproductivity?

ANS:

TheMcKinseyinstitutefoundthathigherproductivityrestedontheabilityofmangerstoinventnewandevermoreefficientwaysofmakingproductsandontheabilityofengineerstodesignproductsthatareeasytomake.TheinstituteresearchersobservedthatintheautoindustryinJapanorthefoodindustryintheUnitedStates,managersandengineersdonotachieveinnovationsbecausetheyaresmarterworkharderorarebettereducatedthantheirpeers.Theydosobecausetheyaresubjectedtointenseglobalcompetition,whereimprovinglaborproductivityisthekeytosuccess.

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2. Whataretheessentialargumentsinfavoroffreetrade?

ANS:

Proponentsofanopentradingsystemcontendthatinternationaltraderesultsinhigherlevelsofconsumptionandinvestment,lowerpricesofcommodities,andawiderrangeofproductchoicesforconsumers.Tradealsoenablesworkerstobecomemoreproductive,andwagesofworkerswhoseskillsaremorescarceinternationallytendtorise.

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CHAPTER2—FOUNDATIONSOFMODERNTRADETHEORY:COMPARATIVEADVANTAGE

SHORTANSWER

1. Isitpossibletoaddupthepreferencesofallconsumersinanentirenation?

ANS:

No.Itisimpossibletomakeinterpersonalcomparisonsofsatisfaction,andthusitisnotpossibletoadduppreferences.

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2. Whogainsmorefromtrade,whennationsareofunequaleconomicsize?

ANS:

Ifonenationissignificantlylargerthantheother,thelargernationattainsfewergainsfromtrade,whilethesmallernationcapturesmostofthegainsfromtrade.

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3. Isitpossibleforcomparativeadvantagetochange,thuschangingthedirectionoftrade?

ANS:

Laggingproductivitygrowthmaycauseacountrytoloseitscomparativeadvantage.Inatwo-product,two-countrymodel,thiswouldchangethedirectionoftrade.

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4. Donationalsecurityconcernsleadtoincompletespecialization?

ANS:

Yes.Nationalsecurityconcernsmayleadacountrytoproducesomeofthecommodityinwhichithascomparativedisadvantage,thusleadingtoincompletespecialization.

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ESSAY

1. Willitbeimpossibletokeeplow-skilledjobsintheU.S.?

ANS:

IftaxcreditsorotherincentivesaremadeavailabletoU.S.companies,itwouldbepossibleforthosecompaniestoinvestintrainingortechnologyforlow-skilledworkers.Thatwouldimprovetheefficiencyoftheworkers.Suchimprovementsinproductivitycanmorethanoutweighthewageadvantagethatisenjoyedbylow-skilledworkersoverseas.NewBalanceAthleticShoeCo.Inc.,headquarteredinBoston,Massachusetts,hasbeensuccessfulinretaininglow-skilledproductionintheUnitedStatesbyincreasingworkerproductivity.

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2. Isitpossibletoestimatethegainsfromtrade?

ANS:

Whenanationtrades,itenjoysalargerincome,owingtoawiderrangeofgoodsavailabletoconsumers.Tradealsohasapositiveinfluenceonproductivitylevels.However,itisextremelydifficulttomeasurethesegains,sinceitrequiresknowledgeofwhatanation'simportswouldcostifitproducedthemitself,insteadofpurchasingthemfromalessexpensivesourceabroad.

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CHAPTER3—SOURCESOFCOMPARATIVEADVANTAGE

SHORTANSWER

1. Doesfactorpriceequalizationoccurintherealworld?

ANS:

Intherealworld,differencesinfactorpricestendtoexist.Differenttechnologies,imperfectmarkets,transportationcosts,andtradebarriersmaypreventfactorpricesfromequalizingamongnations.

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2. Whatisthefocusoftheproductlifecycletheory,andwhereisitapplicable?

ANS:

Theproductlifecycletheoryfocusesontheroleoftechnologicalinnovationasakeydeterminantoftradepatterns.Itappliestomanufacturedgoods.

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ESSAY

1. Explainhowimmigrationandtrademayworsenwageinequality,andhowcollegeeducationmaymitigateagainstthat.

ANS:

Tradetendstoincreasethedemandforskilledworkersrelativetounskilledworkers,thusworseningwageinequality.Immigrationofunskilledworkersdecreasesthesupplyofskilledworkersrelativetounskilledworkers,thusworseningwageinequality.Alternatively,collegeeducationincreasesthesupplyofskilledworkersrelativetounskilledworkers,thusreducingwageinequality.

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2. HowdoesStaffanLinderexplainworldtradepatterns?

ANS:

Linderofferstwoexplanationsofworldtradepatterns.Tradeinprimaryproductsconformswelltothefactor-endowmenttheory.However,tradeinmanufacturedgoodsisbestexplainedbyoverlappingdemandstructuresamongnations.Formanufacturedgoods,thebasisfortradeisstrongerwhenthestructureofdemandintwonationsismoresimilar,duetosimilarper-capitaincomes.

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CHAPTER4—TARIFFS

SHORTANSWER

1. Canimportdutieshaveunintendedsideeffects?

ANS:

Yes.Dutiesmaydiscourageacompanyfromimportinggoodsinamountslargeenoughtotakeadvantageofquantitydiscountpricing.Also,up-frontpaymentofthesedutiesmayimposefinancialhardshipsonimporters.

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2. Whathappenstoeffectiveprotectionwhenthevalueaddedbythedomesticproducerdeclines?

ANS:

Thedegreeofeffectiveprotectionincreases.

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ESSAY

1. Isitpossibleforalownominaltariffratetounderstatetheeffectiverateofprotection?Whatistariffescalation?

ANS:

Yes.Insomecountries,theeffectiverateofprotectionismorethantwicethenominalrate.Theeffectiverateofprotectiontakesintoaccounttheeffectsoftariffsleviedonrawmaterialsandintermediategoods.Tariffstructuresofindustrializednationshavegenerallybeencharacterizedbyratesthatgivegreaterprotectiontointermediateandfinishedproductsthantoprimarycommodities.Thisisreferredtoastariffescalation.

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2. Howcantariffsbejustified?

ANS:

Tariffsarejustifiedonthegroundsthattheyprotectdomesticemploymentandwages,helpcreatealevelplayingfiledforinternationaltrade,equatethecostofimportedproductswiththecostofdomesticallyproducedgoods,andallowdomesticindustriestobeinsulatedtemporarilyfromforeigncompetitionuntiltheycangrowanddeveloporprotectindustriesnecessaryfornationalsecurity.

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CHAPTER5—NONTARIFFTRADEBARRIERS

SHORTANSWER

1. Isatariff-ratequotaatwo-tiertariff?Why?

ANS:

Yes.Itallowsaspecifiednumberofgoodstobeimportedatonetariffrate,whereasanyimportsabovethislevelfaceahighertariffrate.

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2. WhatisanOMA?

ANS:

AnOMAinvolveslimitationsonexportsalesadministeredbyoneormoreexportingnations.

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ESSAY

1. Describesomeofthedifferencesbetweentariffsandquotas?

ANS:

Tariffsandquotasdifferintheirrevenueeffectsandrestrictiveimpactsonthevolumeoftrade.Whilequotasareeasiertoadministerandmanage,theydonotprovidethegovernmentwithrevenue.

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2. Whataretheintentandimpactofdomesticcontentrequirements?

ANS:

Domesticcontentrequirementstrytolimitthepracticeofjoboutsourcingandalsoencouragethedevelopmentofdomesticindustry.Theystipulatetheminimumpercentageofaproduct'svaluethatmustbeproducedinthehomecountryforthatproducttobesoldthere.Domesticcontentprotectiontendstoimposewelfarelossesonthedomesticeconomyintheformofhigherproductioncostsandhigher-pricedgoods.

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CHAPTER6—TRADEREGULATIONSANDINDUSTRIALPOLICIES

SHORTANSWER

1. Whatistheessentialideabehindstrategictradepolicy?

ANS:

Theessentialnotionunderlyingstrategictradepolicyisimperfectcompetition.

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2. Whatisthebasisfortradeadjustmentassistance?

ANS:

Therationaleoftradeadjustmentassistanceisthatifsocietyingeneralenjoyswelfaregainsfromtheincreasedefficiencystemmingfromtradeliberalization,somesortofcompensationshouldbeprovidedforthosewhoaretemporarilyinjuredbyimportcompetition.

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ESSAY

1. HasindustrialpolicycontributedsignificantlytoJapan'seconomicgrowth?

ANS:

TheextenttowhichindustrialpolicyhascontributedtoJapan'seconomicgrowthisunclear.Japanhasbenefitedfromahighdomesticsavingsrate,aneducatedandhighlymotivatedlaborforce,goodlabormanagementrelations,ashiftoflaborfromlow-productivitysectorstohigh-productivitymanufacturing,entrepreneurswillingtoassumerisks,andthelike.ThesefactorshaveenhancedJapan'stransformationfromalow-technologynationtoahigh-technologynation.Itisdebatablehowrapidlythistransformationwouldhaveoccurredintheabsenceofanindustrialpolicy.AlthoughJapanhasthemostvisibleindustrialpolicyoftheindustrialnations,theimportanceofthatpolicytoJapanshouldnotbeexaggerated.

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2. Explainhowadvocatesofstrategictradepolicydifferfromtheclassicalfreetradersintheirtreatmentofexternalities?

ANS:

Advocatesofstrategictradepolicyrecognizethattheclassicalargumentforfreetradeconsideredexternalitiesatlength.Thedifference,theymaintain,isthattheclassicaltheorywasbasedonperfectcompetitionandthuscouldnotappreciatethemostlikelysourceoftheexternality,whereasmoderntheoriesbasedonimperfectcompetitioncan.Theexternalityinquestionistheabilityofcompaniestocapturethefruitsofexpensiveinnovation.Classicaltheorybasedonperfectcompetitionneglectedthisfactorbecauselargefixedcostsareinvolvedininnovationandresearchanddevelopment,andsuchcostsensurethatthenumberofcompetitorsinanindustrywillbesmall.

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CHAPTER7—TRADEPOLICIESFORTHEDEVELOPINGNATIONS

SHORTANSWER

1. Whataresomemajortradeproblemsfacedbydevelopingnations?

ANS:

Tradeproblemsincludelackofdiversificationofeconomies,unstableexportmarkets,decliningtermsoftradeovertime,andlackofaccesstomarketsofadvancedcountries.

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2. Areeconomicdownturnshelpfultocartels?

ANS:

Notheyaregenerallyproblematicforcartels.Asmarketsalesdwindleinaweakeningeconomy,profitsfall.Cartelmembersmayconcludethattheycanescapeseriousdecreasesinprofitsbyreducingprices,inexpectationofgainingsalesattheexpenseofothercartelmembers.

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ESSAY

1. Whataresomeofthegrowthstrategiesthathavebeenemployedbythedevelopingnations?Howsuccessfularethesestrategies?

ANS:

Besidesattemptingtostabilizecommodityprices,developingnationshavepromotedinternalindustrializationthroughpoliciesofimportsubstitutionandexportpromotion.Countriesemphasizingexportpromotionhavetendedtorealizehigherratesofeconomicgrowththancountriesemphasizingimport-substitutionpolicies.

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2. Describetheflying-geesepatternofeconomicgrowth?Whatcountrieshavepursuedthisstrategy?

ANS:

ItiswidelyrecognizedthatEastAsianeconomieshavefollowedtheflying-geesepatternofgrowth.Thispatternofgrowthoccurswhencountriesgraduallymoveupintechnologicaldevelopmentbyfollowinginthepatternofcountriesaheadoftheminthedevelopmentprocess.Forexample,MalaysiaandTaiwantakeoverleadershipinapparelandtextilesfromJapanasJapanmovesintohigher-technologysectorsofautomotiveandelectronicproducts.

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CHAPTER8—REGIONALTRADINGAGREEMENTS

SHORTANSWER

1. Whatismeantbyeconomicintegration?

ANS:

Thetermreferstotheprocessofeliminatingrestrictionsoninternationaltrade,payments,andfactorinputmobility.

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2. Whatfactorsinfluencetheextentoftradecreationandtradediversion?

ANS:

Tradecreationanddiversionareinfluencedbythedegreeofcompetitivenessthatmember-nationeconomieshavepriortoformationofthecustomsunion,thenumberandsizeofitsmembers,andthesizeofitsexternaltariffagainstnon-members.

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ESSAY

1. Explainthetheoryofoptimumcurrencyareas.

ANS:

MuchoftheanalysisofthebenefitsandcostsofEurope'scommoncurrencyisbasedonthetheoryofanoptimumcurrencyarea.Accordingtothistheory,thegainstobehadfromsharingacurrencyacrosscountries'boundariesincludemoreuniformprices;lowertransactioncosts,greatercertaintyforinvestors,andenhancedcompetition.Thesegainsmustbecomparedagainstthelossofanindependentmonetarypolicyandtheoptionofchangingtheexchangerate.

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2. Concerningtransitioneconomies,whatdotheadvocatesofshocktherapypropose?

ANS:

Advocatesofshocktherapymaintainthateconomiesintransitionshouldproceedimmediatelyonallfronts.Thatis,theyshouldprivatize,abandonpricecontrols,liberalizetrade,anddevelopmarketinstitutions,andsoonasquicklyaspossible.Althoughtheinitialeconomicpainmaybesevere,itwillsubsideasthetransitiontothemarketeconomyleadstorisinglivingstandards.

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CHAPTER9—INTERNATIONALFACTORMOVEMENTSANDMULTINATIONALENTERPRISES

SHORTANSWER

1. Whatarethetypicalwaysinwhichmultinationalenterpriseshavediversifiedtheiroperations?

ANS:

Multinationalenterpriseshav