International trade and globalization – Assignment Example
International Trade and Internationalization Assignment al Affiliation: International Trade and InternationalizationAssignment
South Korea has an absolute advantage in manufacture of digital cameras since they can produce a Digital camera at a lesser time as compared to the time used by China to produce the same camera.
South Korea has an absolute advantage in manufacture of wheat since they can produce one bushel of wheat in lesser time as compared to the time used by China to produce one barrel of wheat.
Task 1 (c)
China’s opportunity cost of manufacturing 1 digital camera is 5/100=0.05 hours
South Koreas opportunity cost of manufacturing one digital camera is 3/90= 0.0333 hours
Chinas opportunity cost of making one pound of wheat is 100/5=20 hours
South Koreas opportunity cost of making one pound of wheat is 90/3=30 hours
Task 1 (f)
South Korea should produce digital cameras because they produce digital cameras using less time.
South Korea should produce wheat because they produce one barrel of wheat using less time.
Tariffs are taxes imposed on imported services and goods (Vaidya, 2006). They benefit local manufacturers since the prices of similar local goods/services will be cheaper and hence will sell more. Importers lose when tariffs are imposed since they gain little profit.
Quotas are trade restriction imposed by a government restricting the number of good and services which can be imported or exported at a particular time (Vaidya, 2006). They help regulate the volume of international trade. They benefit domestic trade by regulation foreign competition. When quotas are imposed, the losers are international competitors who trade with that country.
Fewer Jobs: Imports lead to the reduction in job opportunities .most imports are cheaper in price than similar products that are manufactured in a particular country. Therefore, the local manufacturers experience stiff competition and opt to reduce operational costs by laying off some workers and hence jobs are lost. In extreme conditions, local manufacturers are forced to close down if their products cannot compete with the imports. In such situations, very many jobs are lost.
Lower wages: imports increase the level of competition for locally produced goods. For local companies to compete with the imported products, the manufacturers have to reduce their operational costs. One strategy used is the reduction of wages paid to employees. Reducing wages helps reduce the cost of producing goods which in turn leads to a reduction of costs of products.
Poor working condition: Local manufacturers minimize costs of production in order to set prices that can match the low prices of similar imported goods. In order to minimize costs, the manufacturer forgoes maintaining good working conditions for the employees. Over time, the workers end up working in poor conditions.
According to Ricardo, the developer of the comparative advantage theory, a country should produce the goods that they have a comparative cost advantage on (Vaidya, 2006). In this case, California has an absolute advantage since their land is more productive and available in large quantities. New England has a comparative advantage since it is better in producing tobacco as compared to California. They have better methods of producing tobacco using their limited resources. New England should either forgo production of tobacco or come up with better farming methods in order to compete with California. California should allocate more resources to the production of Tobacco since they have an absolute advantage.
Protectionism is a policy imposed by the government to restrict or restrain international trade. It protects local manufacturers from international competition. Protectionism is disadvantageous since it destroys trade relationships with other countries. Foreign countries can also impose certain policies that will affect the exports of the country. The local manufacturers may fail to produce quality products in the absence of competition.
(2*2)+ (3*3) + (4*4) =29
Vaidya, A. K. (2006). Globalization: Encyclopedia of trade, labor and politics. Santa Barbara, Calif: ABC-CLIO.