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International Trade Advantages and Limitations Report (Assessment)

Scientific innovation and invention in technology, communication, and transport networks has facilitated integration among countries; one major element of globalisation is international trade. International trade is trade among countries; it operates on two main paradigms, importation and exportation of factors of production and finished commodities.

International trade prevails because of economic, resource and wealth differences among countries, which results to comparative and absolute advantage; with international trade, countries stand to benefit (Taylor 78). This report discusses the economic concept of free trade; it will use international policies to explain the advantages likely to be derived from free trade.

One advantage and one limitation of International Trade Free trade is attained when countries remove trade and non-trade barriers among themselves and allow free flow of goods and factors of production; government intervention in free trade is minimal.

One advantage that countries stand to benefit from international trade is a large market base for raw materials and finished commodities. International trade brings the world into one market thus, traders, suppliers get a place where they can sell their commodities.

The increased market and large base of suppliers lead to innovativeness in efficient resource management as companies, countries and firms try to be competitive in international market, the result is a country with well-utilized resources. The world three largest economies, the United States, China and Japan have maintained their leadership because of the benefit they get from international trade; they are net exporters.

As countries trade among each other, some stands to lose whereas some gain; one disadvantage that international trade has lead to is dependency among countries, there are some countries that have become net consumers. When a country becomes a net consumer, it means that its local companies cannot produce goods to compete in the international arena they remain sycophants of other countries. Examples of countries that have become net consumers include Zimbabwe and Swaziland.

Absolute and comparative advantages of international trade Both absolute and comparative advantages concepts explain why international trade prevail; they support free trade among countries;

Get your 100% original paper on any topic done in as little as 3 hours Learn More Absolute advantage

Adam smith, an economist in late 18th century and early 19th century, developed this concept of absolute advantage, the concept behind the theory is that countries should produce what they can effectively and cheaply produce and import those commodities that it has limited capacity to produce effectively.

The concept is similar to household resource management; whereby households tend to produce what they can produce more cheaply and opt to buy those that they cannot produce effectively.

The concept broadly states that it is rational that if a country can import goods and services more cheaply than it can produce, then there is no point of producing such commodities. It goes further and states that a country should only produce what it can make efficiently then export to those countries that cannot have the commodities produced effectively. The proceeds gotten from the export is then used to pay for imports.

The net effect of the trading partners is that country A will have products produced form country B at a lower cost and country B will get commodity form country A at lower costs; consumers will benefit reduced prices. If we consider two countries, a country has an absolute advantage if it can produce some products at a low cost than another country.

Comparative advantage

David Ricardo developed the concept of comparative advantage in 1817; the main argument of the concept is that a country has a comparative advantage if its marginal production cost is lower than marginal production of the other country.

If we have two trading countries, country A and country B, country A has a comparative advantage than country B if it has a marginal superiority in production of certain product. Abundance of factors of production differs among countries; rational countries will generally tend to produce those products that utilize the most abundant (cheap) factor of production.

According to this concept, if each country specializes in those products and service that it can produce more efficiently, then production can increase and maximum and efficient resource utilization realized. The concept argues that trade allow each country (trading partner) to specialize in those goods and service that it can have a lower marginal production cost.

We will write a custom Assessment on International Trade Advantages and Limitations specifically for you! Get your first paper with 15% OFF Learn More However, the concept assumes that factors of mobility has are perfectly mobile; this means that a country can exchange a factor of production for another without affecting the level of efficiency of the factor. Secondly, it assumes that input-output ratio is constant. This is not true because of the effects of diminishing return and the effects of specialization (O’Sullivan and Sheffrin 23-67)

How Absolute and Comparative advantage are used Absolute advantage

Let take a hypothetical example of two countries, country A and country B, they have different potentials. Country A can produce 300milligrams of wheat by using 300 units of factors of production, and can produce 500 milligrams of maize using 300 units of factors of production.

Country B can produce the 300 milligrams wheat using 200 units of factors of production, and 200milligrams of maize using 200 units of factors of production, then country B has an absolute advantage in wheat production than country A and country A has absolute advantage in maize than country B. In such a situation assuming that there are no barriers to trade, then country A should import wheat from country B and country B import maize from country A, both countries stand to benefit.

Comparative advantage

Let us consider two countries; county 1 and country 2, trading on only two products; wheat and television sets, using similar factors of production as an example;

Pre-specialization (before free trade)

Wheat Television sets County 2 300 300 County 1 1200 500 Total 1500 800 Let analyze the opportunity costs of the two countries: where county 2 shifts more resources into making of television set, the opportunity cost of one television is one wheat milligram.

If county 1 was to put more resources into manufacture of more television sets, then the opportunity cost of one television is 2.4 wheat milligrams. Therefore county 2 has a lower marginal opportunity cost than county 1 in the production of television sets. On the other hand, for county 1 to produce television it is going to give a higher opportunity cost.

Post-specialization (after adopting free trade)

wheat Television sets county 2 (300-300)= 0 (300 300)= 600 county 1 (1200 200*2.4)= 1680 (500-200)= 300 Total 1680 900 Looking at the above trading after specialization, then we find that if countries specialize in the area that they have a comparative advantage, then world’s production will increase.

From the analysis above, free trade among countries has an advantage over protectionism policies and lack of international trade; both countries to a trade stand to benefit. As nations, trade among themselves the citizens’ benefit. They enjoy a wide variety of goods and services, increased employment opportunities and improvements in health and standards of living.

Not sure if you can write a paper on International Trade Advantages and Limitations by yourself? We can help you for only $16.05 $11/page Learn More In a period of about twenty years, a big number of countries have entered into global economies leading to a reduction in the number of people living in poverty. When borders are opened and there are no trade and non-trade barriers, new developed industries will have access to a large market. When the market is large then chances of their success is higher.

There will be demand of products and services in other countries that results to investment pull. Investment pull is whereby due to an increased market in a certain region, a country manufacturing the products on demand relocates/ opens a branch in the country of demand (Lipsey 16)

Factors affecting foreign exchange rates In international trade, foreign currencies are required to effect a transaction; a country can peg its currency on an internationally known currency like Dollar or pound. After making an exportation, payments in the form of foreign currency forms a credit in foreign exchange and an importation there is a debit in the foreign currency account.

Two exchange rates are used in the financial market; the fixed exchange rate and floating exchange rate. The forces of demand and supply in the international market determine a floating exchange rate.

Exchange rate is determined by the demand of foreign currency at a certain particular time, if the demand is high, then the currency rate of exchange will be higher, when the rate of demand is low then the rate of exchange is low. Balance of trade exists when a country foreign currency from imports equals the expense of exportation.

When a country is a net importer, then it has a negative balance of trade and its exchange rate to foreign currency is higher (its currency is said to have devalued), when a country is a net exporter then it has a low exchange rate; it has a strong currency.

The international monetary fund (IMF) is an international organization that supervises the international financial market by examining the macroeconomic policies of member countries. The objective of IMF is to stabilize foreign exchange rates and enforce liberalized economic policies in countries for loan purposes (Parkin 23).

Works Cited Lipsey, Richard, and Courant. Paul. Economics: Social and Environmental Regulation. New York: HarperCollins Publishers Inc, 1996.Print.

O’Sullivan, Arthur, and Sheffrin, Steven. Economics: Principles in Action. Upper Saddle River: New Jersey, 2003. Print.

Parkin, Michael. Economics. Massachusetts: Pearson Addison-Wesley, 2008.Print.

Taylor, John. Principles of Microeconomics. New York: Cengage Learning, 2006.Print.

A Pair of Silk Stockings Analysis – Literary Devices Explicatory Essay

Nursing Assignment Help The diminutive Mrs. Sommers demonstrates, in A Pair of Silk Stockings, the flexibility of role and identity that women often must possess, and her return to her usual life is likely as a result.

As a married woman, she has already changed roles once. She has subordinated her personal comfort and identity to the needs, as well as monetary and time constraints, of her husband’s socio-economic level. She has given up fashion and self-gratification of any kind for the sake of her children.

It is only under the influence of low blood sugar, and the tactile lure of the silky fabric, that she allows herself to indulge in a domino progression of indulgences. These re-open for her a social and sensual milieu out of which she has been, or felt shut out of, since marriage. She moves back into this previous role with ease.

By the end of her little ‘binge’, she is aware that she will have to return to her married, maternal role, out of which she stepped, if only for a few hours, and accept the consequences of having spent her windfall. However, since the reader has watched her switch from one identity to another with swift facility, if not conscious thought, it is a safe assumption that she will probably switch back into married mode once the impulse and the cash are mere memories.

She takes the most important step in re-entering the hardships of her married life; she starts for home. Thus far, in her marriage, she has been accepting of her role, and played it with good grace. She shows every sign of gracefully abdicating the temporary life of a fashionable, unencumbered lady.

Mrs. Sommers has been familiar with little luxuries, but has given them up for married life.

The reader knows that the protagonist has not always been the penny-pinching drudge that she is now because, “The neighbors sometimes talked of certain ‘better days’ that little Mrs. Sommers had known before she had ever thought of being Mrs. Sommers.” (Ross) She has been living within the income of her husband and it has consumed all her energies and attention. This she has done with good grace, as evidenced by her spending two days pondering the allocation of her 15 dollars on her kids.

Get your 100% original paper on any topic done in as little as 3 hours Learn More However, the past that her neighbors recall must have included products (e.g., gloves, shoes, stockings, magazines) and services (e.g., theatre) and social entrée (elite restaurants), which are no longer part of what 21st century readers would term her lifestyle. This is clear from the almost automatic, graceful, and reflexive way she acquires them when she has the chance.

For example, she does not have to think twice about the need to spend a bit extra to ensure that her new boots are well fitting. Furthermore, the clerk can discern that her experience in buying shoes does not match the shabbiness of her old footwear. Like many women in many times and places, she switches roles with facility.

In fact, it takes a rather potent combination of factors to distract her from her selfless intentions. She expects to spend her money on items to fill out her children’s wardrobes, but once started spending on herself; however, she moves fluidly to reacquaint herself with genteel pleasures.

Disoriented by an empty stomach, and the availability of both the cash and the products she has long since given up, she succumbs to the lure of minor luxuries that have become almost alien to her. While queuing to purchase discounted sewing fabric for her daughters, the sensuous feel of silk stockings leads to one personal pampering after another.

Why silk stockings should be such a powerful stimulus is explained by the way the author describes their feel and appearance: “Her foot and ankle looked very pretty” (Ross). At that time, it was not necessary for a married lady to look or feel glamorous. That potent reminder, however, was enough to set her, without conscious thought, to pursuing other items to reinforce that feeling of comfort and ease and beauty.

As her little binge continues, the reader is led to worry whether she will be able to stop, whether this taste of the freedom from the incessant mending and scrimping for her brood will lead her to kick the traces or ruin her husband financially. The possibility exists that she will abandon her family permanently and return to single life as best she can in the era of this story.

There is also the possibility that she will not be able to rein in her unaccustomed spending, and will empty the family’s coffers for her own enjoyment. However, she has been aware of the risks from the start. In the opening paragraphs, Ross writes, “A vision of the future like some dim, gaunt monster sometimes appalled her, but luckily to-morrow never comes” (Ross).

We will write a custom Essay on A Pair of Silk Stockings Analysis – Literary Devices specifically for you! Get your first paper with 15% OFF Learn More Fortunately, this little windfall was unforeseen, and therefore, her kids will be no worse off than if the money had never existed. She has done nothing, under the spell of her spree, for which she can be pilloried, with the possible exception of sharing a hankie with a woman who is clearly some sort of courtesan.

In fact, she has perhaps, in the most optimistic interpretation, given herself a tiny vacation that will comfort her during her chores for weeks or months to come. She has exhibited an instinctive capacity to adapt to changed circumstances, first in becoming a devoted housewife, and then in taking a turn as a fashionable lady who lunches.

Her behavior offers every hope that she will revert gracefully to her life without permanent damage to her marriage, in spite of her apparent and understandable desire to prolong that delicious freedom. She may wish, as she rides the cable car home that the ride would continue indefinitely, but the fact is that she is on the car, and it is heading that way.

The protagonist is a woman who has sacrificed a privileged background to scrimp and serve her husband and children, presumably lovingly. She has abandoned one role already to adopt the guise of a married church-mouse. It is only the combined pressure of hunger and discounted silky hose that seduces her. These stimuli, although she does not articulate this to herself, impel her to use her tiny windfall for her own enjoyment.

She recaptures the ease of a woman of means with alacrity The risk that she will not be able to accommodate herself again to the scrimping and labor her married life demands is substantial. Although she evinces a desire for the experience to continue indefinitely, her behavior belies this. She did, indeed, head straight to that cable car to return home.

This suggests that, in the way of women in all eras, she will throw off the role of fashionable lady once again, and resume her duties, refreshed) and better shod). In the 21st century, such a day of self-indulgence would be termed a mental health holiday, and might well be prescribed by her therapist.