HND 经济学 报告

1.0 Introduction

In current years, our country has the great achievements of industrial development, and we are now becoming more and more close to a modern industrial country. However, there are many obstacles for us, and we get some from international trade. As a government official, I just, free trade can achieve, as soon as possible to enter the European Union (EU. as a European country, the benefits of doing so is absolute.

2.0 Body

Question 1 Trading internationally

1) Increased world-wide output. Making the enterprises of Bierce become more competitive and full filled with innovation spirit. Since international trading is trading between different countries, companies from other countries will occupy the international market with our companies. In order to facing these challenges, our companies should make changes to adapt the global market, and this will help them establish the innovation spirit and the companies will be more competitive.

2) Goods and services produced at lower cost. Through trading internationally, we can purchase materials and other goods from other countries at a quite lower price, this can reduce our cost of producing products, and our people can buy more kind of goods just in domestic shops.

3) Overall increase in standard of living. This is also a good chance to raise our international standing. International trading can not only bring us wealth, but also bring us the opportunity to be known by people throughout the world. We should make use of international trading to participate in the international activities, so that our national power can be shown and developed.

Question 2 The free trade

Free trade is a system of trade policy that allows traders to act and or transact without interference from government. According to the law of comparative advantage the

policy permits trading partners mutual gains from trade of goods and services.

For example, The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises ten countries of ASEAN. All the four latecomers were required to sign the AFTA agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's tariff reduction obligations. The primary goals of AFTA seek to: Increase ASEAN's competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and Attract more foreign direct investment to ASEAN.

Question 3 Absolute advantage and comparative advantage

Absolute advantage is the ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service. For example, As trade opens up, by Ricardian demon- stration, both countries would experience rise in national incomes. US will specialise in A, China in B. But countries tend to catch up with others in terms of productivity. It may so happen that the productivity of labour in the production of A rises in China by such an amount that the ratio of the productivities in the two countries exactly matches each other (while US still maintain the absolute advantage in both). In this case, no country will have any incentive to trade. The US will have a level of national income which it had in autarky.

Comparative advantage is the name for the ability of one business entity to engage in production at a lower opportunity cost than another entity. Comparative advantage, rather than absolute advantage, is useful in determining what should be produced and what should be acquired though trade. For example, Latvia is one of the new member states that joined the European Union in 2004. Like all other Central and East European countries that were admitted into the EU at that time, Latvia had much

lower level of economic development and productivity than the 15 “old” EU members. But Latvia has had a comparative advantage in any area by the moment of joining the EU. Seven years before Latvia became a full member of the European Union.

Question 4 The protectionism

The protectionism is the government's placing of duties or quotas on imports to protect of domestic industries from global competition.

For example, in March 2010, US Treasury Secretary Tim Geithner delivered a warning to the European Commission that the EC's plans to regulate the hedge fund and private equity industries shows definite signs of protectionism against US groups. The other example, In March 2010, President Obama announced a government effort to promote US goods overseas , hoping to boost competitiveness abroad and create jobs in the US Ralph C. Bryant, senior fellow at the Brookings Institution, said efforts to stimulate exports could prompt other countries to take similarly ambitious actions. Government for the purpose to protection of employment, to protect their market from infringement, and to protecting domestic industries.

Question 5 Barriers to trade

The two barriers to trade are: Tariffs barriers and non-tariff barriers.

Tariffs barriers

These are taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. Sometimes they may be used by a government as a way of raising revenue. The United Kingdom at one stage had a special tax which was levied on imported cars. The purpose was to try and protect the uk automobile industry from foreign competition. But it failed because the uk population … perceived? the imported cars to be still better value than uk sourced vehicles and the proportion of imported to home produced vehicles steadily rose. This particular tariff was obviously not very effective.

Non-tariff barriers

UK non-tariff administrative measures: For opening the domestic market, the British Government takes a positive attitude, but also to take appropriate non-tariff measures. British Government's position in this regard is: taking into account a variety of macroeconomic factors, we must also take into account the interests of various sectors and individuals to ensure that the measures to use and fully reflect the interests of the British state as a whole.

Question 6 The role of the WTO

The value of world merchandise trade was 18% higher in the third quarter of 2010 than in the same period of 2009, according to the latest WTO quarterly figures released on 1 December 2010. This marks a slowdown in comparison with the 26% increase registered in the second quarter of 2010. From January to September trade expanded by 23%, continuing the recovery that began in the second quarter of 2009. Despite this positive trend, the value of world trade remains below its peak level from before the present financial crisis.

These short-term “value” figures should not be confused with the annual trade growth figures,the latest projection of 13.5% merchandise trade volume growth for 2010, released on 20 September, remains unchanged for the time being.

WTO short-term merchandise trade values are expressed in “current” US dollars, Seasonal patterns therefore considerably affect the quarter on quarter (Q-o-Q) and month on month (M-o-M) developments in world trade, and this in turn affects comparisons between the trade developments in individual regions and economies. The EU has undertaken numerous good faith attempts towards a negotiated solution to the differences of opinion between the EU and the US, without success to date. February 18, 2010, WTO Dispute Settlement Body (DSB) regular meeting formally decided to recommend six of China WTO Dispute Settlement Panel of experts included in the indicative list.

Question 7 The role of the EU

EU: initiatives for simplifying national and community rules include SLIM(simpler legislation for the internal market) and the European business test panel, which allows for consultation with business during the drafting stage of new legislation.

The major bone of contention is that of EU Member State co-financing of R&D for new Airbus aircraft. This form of support is expressly agreed under the bilateral EU-US Agreement and has been used on three of the nine Airbus aircraft launched. It provides for government funding to Airbus repaid with interest under terms specified in the Bilateral Agreement.

In some cases the terms are more onerous than those commercially available in that the lending governments are receiving royalty payments that will last through the life of a particular aircraft program. In fact, EU governments so far have made handsome returns on their initial “investments”, even though there are instances where Airbus has been able to obtain financing on more favourable terms from private lenders, compared with government offers.

Question 8 The composition of the balance

BOP is the record of all financial transactions between a country and the Global economy which is split into two areas. And BOP is a general account of government which results in the surplus and deficits of import and export. In UK one trade year is 10 months.

The BOP?s structure in UK consists of the current Account, the Capital Account and the Financial Account.

Current account is typical account. And nowadays there?s a fairly large deficit in current account in UK. For instance, there is a deficit of ￡68,589 million in 2005, which mainly caused by trade in goods and services (￡42,847 million).

Capital account tracks capital flows into and out of the UK. The creditor is the capital flows out of UK. While government is the debtor. The balance of capital account is ￡1503 million, which caused by credits---￡4,310 million and debits---￡2,807 million in 2003.

Financial account which deals with flow of direct portfolio investments and reserve assets and the International Investment Position and it shows the Stock of External Financial Assets and Liabilities. The balance of financial account is ￡29,024m, causing by investment in UK ￡716,344m less UK investment abroad ￡687,320m.

Question 9 The general trends in UK

In the previous 30 years, UK was a heavy importer in trade of goods balance. It has held a large-scale of deficit except a short surplus period from 1980 to 1982. Current Account

Trade in Goods

(￡/ million )

Trade in Services

￡/ million )

(

billion as a result of the export of North Sea Oil. On the other hand, the balance of Trade in Services in UK from 1976 to 1997 has appeared a surplus. The main groups of Services in UK are Travel, Construction, Transportation, Royalties, Financial, Insurance, Computer and Information, Licence Fees, Business, Personal, Cultural and Recreation, Government. From 1985 to 1987, the amount of Trade in Service of UK was increased in larger amplitude which produced by the spring up of the computer industry. Many years later, the finance, especially the financial supervision, has made an apparent development. The Chinese Wall has brought huge amount of benefits for UK government. As a result, in 1997, the amount in Trade in Services of UK was growing rapidly.

The second account is the Capital Account. This one is consists of two parts: Capital Transfers and Acquisition/Disposal of non produced Assets/non financial Assets. In 2003, credits in UK?s capital account are ￡2,793 million and debits are ￡1,327 million The balances of the capital account that year are ￡1,466 million pound which is obviously surplus.

The financial account which has been modified now from an old capital account has the same categories as the income account. These are:Direct Investment, Portfolio Investment and Reserve Assets.

It always has positive result except that in Asian?s financial crisis in 1997, deficit appeared in UK. In 2005, the surplus on direct investment was ￡29 billion, while portfolio investment invest abroad showed a surplus of ￡61 billion.

In 2002, the current balance was -9,624, the capital account was 1,096, and the financial account was 7,188, so the Net Errors and Omissions were -1,340.

Question 10 The influence of exchange rate

The exchange rate can have a big effect on the balance of payments although these effects are subject to uncertain lags. It has two aspects in affecting the balance of payment.

First, high exchange rate means that all those areas which are interest bearing will benefit and this will have a positive impact on the balance of payment. Bur the imports will become cheaper which could cause problems in the balance of trade areas.

A low exchange rate will be benefit for exports. Because the money dose not valued as before. And another country can buy more goods than before but use the same money as before. It is not benefit for import.

Here is a case to explain the effect that falls and rises in the value of a country?s currency can cause. A UK firm manufactures hard discs for a computer firm in the USA. The cost is ￡100. The rate of the dollar to the pounds is $1.5 to ￡ 1. So the cost to the American firm is ￡150. The rate change s to ￡=$2 which means the pound is stronger and the cost of the disc to the American firm is now$200. The American firm may consider this to be too expensive and look elsewhere for a cheaper alternative. If the value of the pound then falls to ￡1 to $1 then the cost to the American firm will be

$100 and they are likely to purchase more at this cheaper price.

Question 11 The single currency

Advantages

Transaction costs will be eliminated: For instance, UK firms currently spend about ￡1.5 billion a year buying and selling foreign currencies to do business in the EU. With the EMU this is eliminated, so increasing profitability of EU firms.

Price transparency: EU firms and households often find it difficult to accurately compare the prices of goods, services and resources across the EU because of the distorting effects of exchange rate differences. This discourages trade. According to economic theory, prices should act as a mechanism to allocate resources in an optimal way, so as to improve economic efficiency. There is a far greater chance of this happening across an area where EMU exists.

Disadvantages

The instability of the system: Throughout most of the 1980s the UK refused to join the ERM. It argued that it would be impossible to maintain exchange rate stability within the ERM, especially in the early 1980s when the pound was a petro-currency and when the UK inflation rate was consistently above that of Germany. When the UK joined the ERM in 1990 there had been three years of relative currency stability in Europe and it looked as though the system had become relatively robust.

Loss of Sovereignty: On the political side, it is argued that an independent central bank is undemocratic. Governments must be able to control the actions of the central banks because Governments have been democratically elected by the people, whereas an independent central bank would be controlled by a non elected body. Moreover, there would be a considerable loss of sovereignty. Power would be transferred from London to Brussels.

Question 12 Effects of the single currency

On individuals

Deflationary tendencies: Perhaps the most important economic argument relates to the deflationary tendencies within the system. Another problem that the early 1990s highlighted was that the needs of one part of Europe can have a negative impact on the rest of Europe. Critics of the ERM and EMU argue that this could be repeated frequently if EMU were ever to be achieved. Local economies would suffer economic shocks because of policies, forced on them, designed to meet the problems of other parts of Europe.

Inflation: From the mid-1980s onwards, there were a number of economists and politicians who argued that, for the UK at least, EMU provided the best way forward to achieve low inflation rates throughout the EU. During the first half of the 1980s high inflation countries, such as France and Italy were forced to adopt policies which reduced their inflation rates to something approximating the German inflation rates to something approximating the German inflation rate. If they had not done this, the franc and the lira would have had to be periodically devalued, negating the fixed exchange rate advantages of the system.

On business

Increased Trade and reduced costs to firms: Proponents of the move argue that it brings considerable economic trade through the wiping out of exchange rate fluctuations, but as well as this it helps to lower costs to industry because companies will not have to buy foreign exchange for use within the EU. For them, EU represents the completion of the Single European Market. It is vital if Europe is to compete with the other large trading blocs of the Far East and North America.

Uncertainty caused by Exchange rate fluctuations eliminated: Many firms become wary when investing in other countries because of the uncertainty caused by the fluctuating currencies in the EU. Investment would rise in the EMU area as the currency is universal within the area, therefore the anxiety that was previously apparent is there no more.

Question 13 The characteristics of LDCs

The two characteristics of LDCs:

Political instability in the political development of developing countries, a distinctive feature: The lives of political instability, frequent changes of regime, the Government such as the lantern-style replacement.

Political dictatorship in some developing countries, due to traditional factors or weak social forces and political rights are often highly concentrated in the hands of one or a few people.

For example: Mali. Mali is a backward agricultural country, less than 300 dollars per capita GDP, is one of the world's poorest countries, debt burdens, the people living in poverty.

Mali's agriculture

Food crops: Millet: the basic food of Mali, the average annual yield of about 793,000 tons; Sorghum: Malian people's basic food, the annual output of about 488,500 tons; Corn: Malian people's basic food, the annual output 742,000 tons; Rice: about 524,000 tons. Cash crops: Cotton: an annual output of 58 million tons, the output column first in West Africa, Mali is the largest export product; peanut: 14 tons; sugar cane: 28.5 million tons, good quality, has great development potential. Tobacco: 726 tons / year.

Mali's education

Attention to the protection and development of national culture, to encourage literature. Arts groups have the official National Song and Dance Ensemble Folk Orchestra and the Repertory Theatre and so on. Cultural facilities concentrated in the capital Bamako, mainly the Islamic Cultural Centre, National Museum and National Library. Follow the French education system. By the basic, secondary and vocational technical and higher education of three parts. In 2004, expenditure on education accounted for 15.06% of the national budget. In 2003, the enrollment rate of 70% of children and illiterate persons accounted for 70% of the population. In the same year, schools, students and teachers as follows: Number of schools (schools) in school

(person) teachers (person)；Basic Education 8714 1651000366000; Secondary and vocational: Education 1531090002890; Higher 937,600,824.

Question 14 The current issues

Mali's climate is not good, leading to an important reason for its backwardness. Mali in West Africa, southern edge of the Sahara desert, west of Mauritania, Senegal, North, East and Algeria and Niger is adjacent to the south, Guinea, C?te d'Ivoire and Burkina Faso, for landlocked countries. Northern tropical desert climate, dry and hot in the southern savannah climate. Year is divided into three seasons: 3 to 5 months for the hot season, from 6 October for the rainy season, 11 to 2 months for the cool season. Maximum temperature of the hot season 50 ℃, cool season minimum temperature of 14 ℃.

Slow economic development in Mali, but also led to an important reason for its backwardness. Agricultural-based economy, weak industrial base, published by the United Nations, one of the world's least developed countries. 1988, began implementing the "economic restructuring plan "and" state-owned enterprise reform plan. " In 1992, the year the World Bank and International Monetary Fund structural adjustment programs signed agreement, within the period specified in the agreement certain amount of assistance available horses.

Question 15

The impacts of multinationals

The Coca-Cola Company has long been a worldwide business. As we all know, Coca-cola is a big and successful multinational company in the world. Their products can be bought in everywhere in the world. Therefore, we will analyze its two impacts on newly industrialized countries and LDCs. As we all know, The Company has both effect on newly industrialized countries and LDCS. For example, Over the past five years the company in Africa an investment of more than $6 billion, is mainly used to

the new factory, equipment updating and staff training, At present, the company owns 160 factories in Africa. Africa is a less developed country. Through the case, we may know the impact of multinationals on LDCs. The company affect Africa in some way as follows: firstly, since coca-cola company invested in Africa, it will increase local employment in Africa, because they need labor force from Africa when running the com pany. What?s more, coca-cola will also force Africa capital infusion and capital formation.

But, some multinational company can also cause troubles, as four tires companies in South Africa in order to enlarge their marketing, using a variety of trade protection measures besieged local counterparts? products. And it may cause technological dependence and brain drawn.

3.0 Conclusion

Company should be aware that there are many from international trade to get. However, many countries have large trade barriers to protect their own industries, because they have absolute or relative advantages. Thus, like the World Trade Organization or the European Union organization provides a similar form of free trade, the basic unit of transfer of goods or services. Otherwise, the main criteria for the balance of payments between countries is extremely ensure that transactions and other people's level. This makes the current account, capital account and financial account. The European countries utilize single currency in recent years; growing developed countries place their extra capital into LDC or NIC.

4.0 Reference

Website

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Book

Economics 2: The World Economy DE3H 35