HND-Economics-The-World-Economy世界经济学报告

An Evaluation of UK Government Policy on Mentalhealth and behavior in schoolsTable of Contents1 Introduction (1)2 Market failure (2)2.1 Merit goods (2)2.2 Public goods (2)2.3 Impertfect competition (2)2.4 Externalities (2)3 UK Governments policy (1)3.1 Introduction to the policy (2)3.2 instruments used (2)3.3 Justification of the performance of policy (2)4 Conclusion (2)References (5)Appendices (6)Appendix I: (6)Appendix II: (6)1IntroductionThis report aims to explain the‘market failure’and the role of government in relative to merit goods, public goods, imperfect composition and externalities.The policy about mental health and behavior in school will also be introduced.Then it will describe the instruments used to achieve the policy and evaluate the policy.2Market failureMarket fail, that is, they do not provide all of the goods and services needed by the government,nor by society(SQA,2013a p184).2.1Merit goodsThe government provides services that might not be provided by the private sector in sufficient quantities or of a sufficient quantity (SQA,2013a p188).For instance,medical services,education and so on.In China,the government provides the public universities and nine year education,which support children to go to school and get a better education.2.2Public goodsThese are commodities, which would not be provided by the private sector because they would find that many people, even if they benefited from them, would refuse to pay(SQA,2013b p190), for example, grills in the park and Automatic Pet Water Fountain and so on.In many countries, the government provides the Automatic Pet Water Fountain, which is convenient for passerby to drink water whenever they want.2.3Imperfect competitionA company which control their own market , and they have no rival. A monoplist can adjust prices output in the market.for example, on February 5, 1991, pierpont Morgan bought Andrew Carnegie, Rockefeller,several iron ore and all the steel business,became the largest steel company , 65% of steel production by their control.The government could establish perfect competition through the establishment of enterprise competition policy (Peter,2013)2.4ExternalitiesAn externality is an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account (SQA,2013d p188).For example, the negative externalities include car exhaust, smoking, kara OK noisy,which will do harm to the environment and people’health.As far as I am concerned, the government should have odd-and-even license plate rule and provide new energy electric vehicle.The positive externalities include new technology like purify the water and restoration of historical buildings.I think the government should support the enterprise to create more new technology.3UK Governments policy3.1 Introduction to the policy--Mental health and behavior in schoolsThe purpose of this policy is to let all pupils benefit from learning and developing in a well ordered school environment that fosters and rewards good behaviour and sanctions poor and disruptive behaviour. Their behaviour and discipline in schools advice sets out the powers and duties for school staff and approaches they can adopt to manage behaviour in their schools. It also says that schools should consider whether continuing disruptive behaviour might be a result of unmet educational or other needs. Published on16 June 2014，last updated on18 March 2016(Gov,UK,16 June 2014)3.2 Instruments usedInstruments- economic variables that governments can control directly for example, tax, public spending(SQA,2013e p194).The government take actions via government spending and relevant regulation.They found the Child and Adolescent Mental Health Services to deal with it.The specific services offered by CAMHS vary depending on the needs of the local area. The best way to influence those services overall is to get involved with the local health and wellbeing board.The government take actions to help them in referring pupils effectively to specialist CAMHS and otherwise working well with the service for the benefit of their vulnerable pupils. These include:1.The government hire some people documenting evidence of the symptoms or behaviour that are causing concern,encouraging the pupil and their parents/carers to speak to their GP2.The government spent some money working with local specialist CAMHS to make the referral process as quick and efficient as possible(Spence, S.H. 2003)3.1Justification of the performance of the policyI think the policy is successful, the mental health care benefits can make children to have a happier life.Thanks to the policy, children now have the ability to develop psychologically, emotionally, intellectually and spiritually.However,I think the policy also has some disadvantages.It has greatly increased government pressure.For example,Set up the CAMHS organization to support the school and some public organization。

International CollegeCentral South University of Forestry and TechnologyASSIGNMENT COVER SHEETAssessment Task: _____________________________________________________________ Course Name:__________________________________ Outcome: ____________________ Prepared by:______________________________________________________ (English name) ________________________________ (Chinese name) ___________________ (Candidate Number) Class: ____________________ Name of Tutor:___________________________ Due Date: _______________ Date Submitted: ___________________Your report/essay should meet the following requirements. Please confirm this before submitting your assignment.☐Assignment is presented on A4 size paper and is tidily typed and well presented..☐Pages have been firmly stapled.☐ A copy has been retained by me.☐Declaration below is completed.DeclarationAll forms of plagiarism, cheating and unauthorized collusion are regarded seriously by the University and could result in penalties including failure in the unit and possible exclusion from the University. If you are in doubt, please contact the Unit Coordinator.Expect where I have indicated, the work I am submitting in this assignment is my own work._______________________________________ (Signature)Question1：With reference to the case study, summaries the relationship between goals, objectives and policy and advice the management of Scotia Airways of the contribution each will make to effective managerial performance.Answer1：Goal:Organizational goal is to complete the mission and purpose of the carrier organization. It is a future state that an organization strive to achieve, and it is the basis and motivation to carry out the organization's activities. Every social organization has its own intended purpose or result, it represents an organization's direction and future. For the organization, the purpose is the common goal; to the members, the common goal is to organize the stage needs to reach the destination. The organisations are usually determine the direction that it will take over the long term and are not always very specific, but some goals may be unintelligible and hard to understand.There are 4 types of organization: Operational goals, Product goals, Consumer goals, and Secondary goals.Operational goals that means increase efficiency, promote the work efficiency vigorously. Like the Scotia Airways, they have the culture of trust has been emphasized and developed by both the management and workers, and this has served to enhance the effectiveness, efficiency and overall performance of the business. When they have the awareness, team spirit, have the incentive measures, the working efficiency will increase.Product goals signify better service to consumer and higher products qualify, to ensure sustained and stable quality system. The Scotia Airways do well in this side,it offers several value added services, such as, valets to assist the passengers in boarding the plane, gourmet meals and a range of in-flight services and entertainment. And Scotia Airways is the first airline to offer full business class services, but at prices that are equivalent to the economy class of its competitors. A key driver of the success of Scotia Airways is the management focus upon the level and quality of service output.Consumer goals means satisfied the different demand from the different consumers. Scotia Airways is aimed at it, their operate scheduled flights mainly targeting business and leisure travelers and aims to provide exceptional value for money, unparalleled comfort and convenience to its passengers. It illustrated that everyone in the world is not the same, so an organization especially a company should adapt diverse needs.Secondary goals by organisations which are not the most important things that they would like to achieve but are nevertheless important. It is mainly about the social responsibility, making a profit or improving award. The Scotia Airways has been reinforced by positive management approaches and wide ranging reward policies that were agreed and supported by Trade Union representatives. And as far as possible to promote social harmony and integration, to create a better atmosphere.Object:Business objectives are more clear and specific than goals and identity the specific path to be taken in order to achieve goals. In this step, how can we do next, how quickly can we do it and how do we know when we have been successful are the important questions.The objectives should be SMART, include 5 aspects: Specific, Measurable, Attainable, Realistic and be Time-bound. These are the core of objectives’ requirements.To promote the market share increase, the airline has an increasing presence at Scotland’s main airports in Glasgow, Edinburgh and Aberdeen. And currently covers eight destinations across Europe, including Brussels, Paris, Frankfurt, Madrid, Rome, Lisbon, Amsterdam and Copenhagen as well as domestic flights to Manchester, Birmingham, Bristol and four London airports.It is also expanding to major business centers in Eastern Europe and the Middle and Far East. This several plans for improving the market share, expand the business scope is very effective.Pay more attention to suitable consumer groups is significant, too. The airline to operate flights mainly is the special value of providing funds for business and leisure travelers, incomparable comfort and convenience of passengers. To provide different services for different customer groups demand, is important to increase the performance and able to establish good relationship with customers.Policy:The policy is a require ment for the organization’s operating and transaction. It provides a guideline to channel a manager's thinking in a specific direction, it can also provide the path to complete goals and objectives. It provides a framework of rules or guidance within which management and staff can make decisions. Policies contain some different, for example, Inward investment policy, Welfare policy and Reward or Punishment policy.Inward investment policy: The equipments are freshing, all staff receives adequate training, the establishments of the new division and gain more market share are both in it.It has seen that the company expansion over resent year in many aspects and departments. Then they found new distributions in Eastern Europe and the Middle and Far East during this year.Reward or punishment policy: For the completion of the expansion target, organizations should set standards, regulations and purposes to evaluate employees' performance, and then take reactions respectively. The Scotia Airways has been reinforced by positive management approaches and wide ranging reward policies that were agreed and supported by Trade Union representatives.Relationship: The goal is the totality, it can including many objects, goals and objectives provide different kinds of requirements of organization. After make goals and objectives, the organization must have the policies to guides behavior by defining how something should be done. Suitable policies can help the organization to achieve goals and objectives, but inappropriate polices will result in bad effects and cannot complete the goals and objectives. Finally, healthy relationships among goals, objectives and policies are the basis of effective performance. The three affect each other and are both in hand.Q2: Explain the main principles of Open Systems Theory with reference to Scotia Airways.A2: The environments that are both internal and external would influenced the organization. The inter-related parts of a system can interact with the external environment. Changes in the external environment will affect the internal environment changes, the internal factors will also affect the overall changes, resulting in a chain effect.There are 4 aspects in this system. Input contains Staff, Managers, Clients orders, Bank loan and Equipment. Process contains Admin support, Allocation of projects, Communicate with clients, Promotion and Production. Output consists of High quality designs, Skilled staff,Satisfied clients and Service or product. Environment consists of Economy, Social trends, Policies, Legislation, Technology and Culture.When the EU and UK government relax their control over the licensing of airline provision, the input in the airway will increase, and then the output will also increase with the input. That is the external environment policy affect the change of the internal environment.And the government imposes taxes on high emissions of enterprise, then the cost will rise and the profit will reduce. So the company will decrease production, the airways maybe reduce a few airplane and maybe open up just one or two air lines.Q3: Identify the main differences between the formal and informal organization within Scotia Airways.A3: The Scotia Airways both formal and informal organization characte ristic.The aspects at formal organization characteristic are, it has clear goals, objectives, policies and missions; defined structure, clear division and classification; and the organization will be controlled. For example, the airways currently employ executives and managers in marketing, finance, HR and flight operations with operational and administrative staff within each department. Rosa Dallevic is in overall charge, assisted by her long-term colleague, Azim Ishtiaq. She has also employed the same personal assistant, Katrina Wright. That is a holonomic structure in the company.And the aspect at in formal organization characteristic is, it has ambiguous relationships in the airways. For example,the company is very much regarded as a family-style business and has established a range of suppliers and clients that are seen as the extended family. So it has relaxed and harmonious atmosphere, not very serious and tense.Q4: Describe four primary stakeholders of Scotia Airways and explain their interests in, and influence on the organisation.A4: G overnment: Whether the taxation violate related laws, whether the company compliance to related laws and whether solve the problem of local employment, that are the government concern about, is their interests. The influence in this case is the EU and UK governmentrelax their control over the licensing of airline provision. Then the airways business will improve and the profit will increase, so the government could charge a higher tax.Creditors: The creditors are concern about the credit score, liquidity, repayment ability and new contracts. When to borrow the money and when to return is the most important key to creditors. Only the airways credit rating better, can it borrow much money when they need, so the turnover of the fund more convenient.Investors: Have interest earning income from investment; have profitability, market share and business achievement are the significant matter to the investors. The influence are have big expansion plans and hire a team of administration. The investors in Scotia Airways have set an ambitious programme for expansion over the next 5 years, introducing flights to major European tourist destinations and to establish new branch in Eastern Europe and the Middle and Far East. Besides, They set about appointing a management team whose experience and expertise was firmly grounded in the budget aviation market.Employees: They concern about the rates of pay, job security, respect, truthful communication and work condition. The attitude and enthusiastic in working will influence the quantity and efficiency. The Scotia Airways have t o develop a wide range of rewards and punishment system, let the employees enthusiasm greatly improve.Q5:Identify an effective control strategy that the management of Scotia Airways could successfully implement, and justify its suitability.A5: I think the Bureaucratic control is the most effective control strategy to the Scotia Airways.Bureaucratic control means it can dominate the process, is the use of the determined rules, policies, hierarchy of authority, reward systems and other formal mechanisms to influence employee behavior and assess performance. The advantages are it could increase efficiency of the company, and can be controlled with market or price mechanisms, it is so stable. The disadvantage is the Poor flexibility. Bureaucratic control through the Organization Structure,In Scotia Airways, they begin to appointing a management team in the budget aviation market and currently employs 80 staff across all divisions. Its expansion over recent years has seen the company commit significant resources to the marketing and sales department, its finance department. There has been an increase in staffing levels, in budgets and in capital investment. It currently employs executives and managers in marketing, finance, HR and flight operations with operational and administrative staff within each department. Rosa Dallevic is in overall charge, and she has also employed the same personal assistant, Katrin Wright. In this organization structure, is helped promote consistency and continuity, lead to a positive working relationship within and between different departments. Various departments perform their respective duties, everything in good order and well arranged. The Scotia Airways also have some rules and regulations to guarantee employees behaviors in the company.So the Bureaucratic control is the best choice to the Scotia Airways.Bibliography:1. Stephen P. Robbins, (2008),The Principle of Management, 3edt,Beijing, China Renmin University Pres s Co. LTD2. Stephen P. Robbins, (2012), Organizational Behavior, 4edt,Beijing, China Renmin University Pres s Co. LTD3. Douglas Macgregor, (2008), The human side of enterprise,1edt,Beijing, Chinese International Book Trading Corporation. LTD4. James G.March, Herbert A Simon (2013), Organization, 2edt, Beijing,China Machinery press. LTD。

The current account is one of the two primary components of the balance of payments, the other being the capital account. It is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). From the chart, the current balance is the lowest -15.9 in the first quarter of 2007, when the income is least all of the quarter at -0.7, and trade in goods is not so well at one of the smallest of those. The least present of the current balance as percent of GDP is -4.5% the firstFinancial account shows a net inflow (inward investment) £9.1billiono in the second quarter, compared with the previous quarter; net inflow is £6.5 billion pounds. In the latest quarter net foreign investment, reduce£326.1 billion, this is the highest record, in the first quarter in the netBillion----------------from <Pink Book>Since 1984, UK had always been deficit in every year. From 1987 the deficit was expanding from -8 billion to -11 billion, then the second phase from 1992 to 1997,recovery to -1 billion which is good view for UK in current payment.payment was facing the disaster which is the current account recorded in nearly -52 billion, aboutTable B。

SQA-HND英国高等教育文凭项目专业简章——商务会计（注册会计师方向）
培养学生掌握会计学、经济学的基本原理和现代商务管理的基本知识，熟悉我国及国际会计领域的惯例与规则。

此专业主要培养面向企业，从事日常业务核算与管理工作。

具备熟练的操作计算机、运用多种办公软件应用开发的能力，具有较强的分析和解决问题的基本能力。

具有良好的语言与文字表达、人际沟通、英语听说能力。

胜任会计主管及以下岗位群工作需要，具有与之相适应的知识、技能和能力的高等应用性会计。

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 Free Trade--------------------------------------------------------------------------3 Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4 Barriers to trade-------------------------------------------------------------------4 WTO and EU----------------------------------------------------------------------5 Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14 Single Currency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16 Current issues that face LDCs--------------------------------------------------16 The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanation of benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which are more valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service topre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries. Example: Korea and Japan have following production possibilities for two commodities, mobile phones and computers; assume that all the resources owned bythe advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methodsare—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax may be ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper.Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flows around the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions onfactor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote and smooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’ negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years.The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billion in 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record 13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which has resulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed itsliabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns) the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to thesame amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest rate lower and the commitment to low inflation should allow economies to operate with lower cost. Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rate and commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs) Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies.Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and are expensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economic growth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 FreeTrade--------------------------------------------------------------------------3Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4Barriers to trade-------------------------------------------------------------------4WTO and EU----------------------------------------------------------------------5Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14SingleCurrency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16Current issues that face LDCs--------------------------------------------------16The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17 Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanationof benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which aremore valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service to pre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries.Example: Korea and Japan have following production possibilities for twocommodities, mobile phones and computers; assume that all the resources owned by each country are same.It is clear that Japan has an Absolute advantage over Korea in both commodities. But the advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000 For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, throughmethods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methods are—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax maybe ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper. Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flowsaround the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions on factor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote andsmooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years. The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billionin 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which hasresulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed its liabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns)the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄ is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to the same amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄ is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest ratelower and the commitment to low inflation should allow economies to operate with lower cost.Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rateand commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs)Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies. Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and areexpensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economicgrowth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites /wiki/Protectionism/eurocash.asp/Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

----F86E35Economics2:TheWorldEconomy Economics2:TheWorldEconomyF86E35CandidateName:RENLUGradeandClass:2021BA1Introduction (3)1.Freetrade (4)2.Absoluteadvantagesandcomparativeadvantages (4)3.Thebenefitsoffreetrade (5)4.Thepurposeofcarryingouttradeprotectionism (7)5．OneMechanismoftheWorldTradeOrganization (7)6.OnemeasureofEuropeanUnionpromoteseconomicintegration (8)7.Balanceofpayments (9)8.ThegeneraltrendsinUKtradeoverthelast30year (12)9.Thebalanceofpaymentsaffectedbyexchangerates (13)10.Advantagesanddisadvantagesoffixedrateandfloatingrate (14)11.Effectsoffixedrateandfloatingrateonindividualsandcompany (16)12.Thecharacteristicsofthenewlyindustrializedcountriesandthedevelopingcountries (18)13.Theissuesofthenewlyindustrializedcountriesandthedevelopingcountries (19)14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries (19)Conclusion (21)Reference (22)Thisreporthasintroducedtheworldeconomicssimply.Thecontentincludes: Internationaltrade,freetrade,Protectionism,theroleofWTOandunder-developed nation,UKabsoluteandcomparativeadvantage,theprotectionismandtworecent examplesaboutdemonstrateargumentswhichgovernmentmayputforwardforits use,twobarriersoftrade,aEUinitiativeabouttheroleoftheEUinpromotingtrade, thecompositionofthebalanceofpayments,thegeneraltrendsinUKtradeoverthe last30years,thewaywhichthebalanceofpaymentsaffectedbyexchangerates,an analysisoftwocurrentissuesthatfaceLDCs,andtheaidofrecentexamplesabout twoimpactsofmultinationalsonNICsandLDCs.(1).Freetrade isatypeoftradepolicythatallowstraderstoactandtransactwithout interferencefromgovernment.Thus,thepolicypermitstradingpartnersmutualgains fromtrade,withgoodsandservicesproducedaccordingtothetheoryofcomparative advantage.China-ASEANfreetradeareawasformallyestablishedinJanuary1,2021,coveringa populationof1900000000.China-ASEANfreetradearea’sGDPamountedto$6and tradeamountedto$4.5.Itisthelargestfreetradezoneamongdevelopingcountries. AftertheestablishmentofCAFTA,morethan90%productsarecarriedoutforzero tariffsonbothsides.AveragetariffsfromChinesetoASEANdecreasefrom9.8%to 0.1%,AveragetariffsfromASEAN’ssixoldmemberstoChinesedecreasefrom 12.8%to0.6%.Tariffs’hugereductionpromotedtherapidgrowthofbilateraltrade. ChinaandASEANcountries’tradeinvestmentgrows,economicintegrationdeepens, companiesandpeoplearewidelybenefit,realizinggoalsofmutualbenefitandwin-wincooperationandcommondevelopment.ChinaandASEAN’stotalquantityof bilateraltradegrowsrapidly.FromJanuarytoOctoberthisyear,thebilateraltrade volumehasreachedto$295900000000,ayear-on-yeargrowthof25.7%.(2).Absoluteadvantagesandcomparativeadvantages Absoluteadvantages issaidtooccurwhenonecountrycanproduceagoodor servicetopre-determinedqualitywithlessresourcesormorecheaplythananother country. Evenwhenacountryhasanabsoluteadvantageoveranothercountryintermsof commoditiestheywishtotradeitwillstillbetotheirmutualadvantagetotrade providingeachcountryhasthe comparativeadvantages.UKisamajorimporterofmanufacturinggoodssuchclothes,shoes,toys,electronicproducesetc.astheselabororientedconsumergoodswillcostmoreinUKbefore hastheWiththedevelopmentofservice,theadvantageoftradeisservice trade. Thegoodsthatcourtryimportandexportchangeovertimeasthegoodsinwhichthey haveacomparativeadvantagechangeovertime.Before1970s,manufacturing industryisitsabsoluteadvantage.After1970s,serviceindustryismorecompetitive forinternationaltradesuchascomputersoftware,businessserviceand pharmaceuticals.Theseindustryareseentobringthepossibilityoflongtermgrowth, whiletheindustriesbasedonheavycapitalinvestmentorrequiringrelativelycheap laborwillnotbecompetitivewithdevelopingcountries.2.Thebenefitsoffreetrade(1).Goodsandservicesproducedatlowercost.Freetradecanpromotethe cooperationofdifferentcountriesintheworld.Itcandecreasethecostofproducing goods.(2).Greaterrangeofcommoditiesforconsumers,morechoice.Anycountriescannot produceallproducts,theyallhaveproductswhichareunabletoproduce.Tradeallow ustobuyallofthem.Greaterrangeofcommoditiesprovidecustomerswithmore choice.(3).Increasedworld-wideoutput.Eachcountryproducingaccordingtotheir respectiveadvantageshashighefficiency.Underthesameresources,ithashighyield. Therefore,internationaltradeincreasedworld-wideoutput.3.BarrierstoInternationalTrade Tradebarriersaregovernment-inducedrestrictionsoninternationaltrade.Thebarriers cantakemanyforms,includingthefollowingtariffsandnontariffs.NonTarriffBarriers-exchangecontrolsInarealworld,thereisandshouldbeacertaindegreeofgovernmentinterventionon foreignexchange.Importsneedforeigncurrenciestobuygooodsandservicesfrom abroad.Importersmustapplytothecenytalbankforthecurrencytheyneedto purchasegoodsinthatcountry,TheCentralbankcanerxertcontroloverthevariety andvolumeofbothimportsandexportsbycontrollingthequantityofforeign cuurencyitwillissuetoexportersandimporters. NonTarriffBarriers-ImportDepoits Governmentrequiresimporterstolodgeanon-interestbearingdepositinadvance withitsCentralBankbeforetheycanbuygoodsandservicesfromabroad.Besides, thedepositisusuallyinanamountequaltoallorpartofthecostofimportedgoods. Thisistimeconsumingandobviouslyexpensivesinceitreducestheliquidityofthe importingfirms,whichtendtohindertheirimportingactivities.Before1984,the Nigerianadvancedimportdepositrangedfrom50%to200%ofthevalueofalistof importitems.Giveaexampleabouttariffs,35%tariffsonChinesetyresimposedontheUnited Stateson11th Septemberin2021.ItmakeChinesetyresfirmshavetoincreasepriceif salesinAmerica.Forexample,tnontariffsinRussiatoUkraineforembargoeswhichsuspensionof Ukraineimportsofjuiceon29th Julyin2021.ItmakeUkraine’s juicenotallowsale inRussia.4.ThepurposeofraisingbarrierstoInternationalTrade(1)Thepurposeisto protectemployment.FootwearmanufactureersassociationsofItaly,SpainadPortugalarereportedtohave fieldapplicationstotheEUtocurbfootwearimportsfromChina.LocalshoemarkersinElche,thecapitalofSpain’s onceflourishingfootwearindustry,arguethat“m adeinChina〞istakingawaytheirjobsbythatChineseshoeshavebeenboominginSpainjustbecauseofgoodqualityandreasonableprices.(2)Thepurposeistoanti-dumping.InJuly2021,SolarWorldAG,aGermangiant,ledaconsortiumofaround25EUsolarpanelproducerstofileacomplainttotheEUCommissiontoinvestigatewhethertherehasbeendistortionofcompetitionbyChinesecounterpartsduetodumping.SoonGermanyagainstChinalowprice.5．TheRoleofWTOTheWorldTradeOrganization(WTO)isanorganizationthatintendstosupervise andliberalizeinternationaltrade.Theorganizationofficiallycommencedon1January 1995undertheMarrakechAgreement,signedby123nationson15April1994, replacingtheGeneralAgreementonTariffsandTrade(GATT),whichcommencedin 1948.Theorganizationdealswithregulationoftradebetweenparticipatingcountries byprovidingaframeworkfornegotiatingandformalizingtradeagreementsanda disputeresolutionprocessaimedatenforcingparticipants'adherencetoWTO agreements,whicharesignedbyrepresentativesofmembergovernmentsandratified bytheirparliaments.The WTOdisputesettlementmechanism ismeasuresofdealingwithtradedisputes betweenmembers.Itistheeffectivewayforcountriesespeciallythedeveloping countriestoresolvetheeconomicfrictionandsafeguardtheirlegitimaterightsand interests.Itisveryunfavorableforthedevelopingcountriestoresolvetradedisputesespeciallytradedisputeswiththedevelopedcountriesthroughbilateralchannels.The bilateralapproachpursuesstrengthdoctrine.Involvedintradedisputesamong developingcountries,theWTOdisputesettlementmechanismrulingiscomparatively fairandreasonable.Aseitherthecomplainantorrespondent,thelegitimateinterests ofthedevelopingcountrieshavebeeneffectivelyprotected.ItisbecausetheWTO disputeadjudicationhasverystrongfairness,developingcountriesgenerallyhavea highenthusiasmtousetheWTOdisputesettlementmechanism.Somelarger economicscaledevelopingcountriesismoreactiveintheuseofWTOdispute settlementmechanism.Ithelpstoreducetheeconomicfrictionbetweencountries,and promotefriendlyrelationsamongnations.TheUruguayRound wasthe8throundofmultilateraltradenegotiations(MTN) conductedwithintheframeworkoftheGeneralAgreementonTariffsandTrade(GATT),spanningfrom1986to1994andembracing123countriesas "contractingparties".TheRoundledtothecreationoftheWorldTradeOrganization, withGATTremainingasanintegralpartoftheWTOagreements.Thebroadmandate oftheRoundhadbeentoextendGATTtraderulestoareaspreviouslyexemptedas toodifficulttoliberalize(agriculture,textiles)andincreasinglyimportantnewareas previouslynotincluded(tradeinservices,intellectualproperty,investment policytradedistortions)HerearesomeothersareastheWTOhasdealtwithinattemptstoestablishitselfas thepolicingbodypromotingfreetrade.TheBananaDispute.TheWTOruledthatthe EuropeanUniondiscriminatedunfairlyagainsttheUSwithitsbananaimportrules. TheWTOallowedtheUStoslapa$191millionsanctionontheEU.Wasitpaid?We donotknowbutprobablynotso.6.OnemeasureofEuropeanUnionpromoteseconomicintegration The EuropeanUnion(EU)isapolitico-economicunionof28memberstatesthatare locatedprimarilyinEurope.TheEUoperatesthroughasystemofsupranationalinstitutionsandintergovernmentalnegotiateddecisionsbythemember states.Theinstitutionsare:theEuropeanCommission,theCounciloftheEuropean Union,theEuropeanCouncil,theCourtofJusticeoftheEuropeanUnion, theEuropeanCentralBank,theCourtofAuditors,andtheEuropeanParliament.The EuropeanParliamentiselectedeveryfiveyearsbyEUcitizens(1)EUcaneliminatecustomersdutiesandquotasonimportsandexportsofgoodsbetweenmemberstatesandeliminatetariffsbetweenEUmembers.Thoughthe institutions,memberscanestablishcommonpoliciesforagricultureandtransport forfreetrade.(2)Itcanacceleratetheinvestmentfromawiderangeofcontries.WiththerisingstatusoftheeuroanddevelopmentofEuropeancapitalmarket,members’costo capitalwilldecline,whichisconducivetoinvestmentandeconomicgrowth.TheEuropeanCentralBank(ECB)developandimplementaunifiedmonetarypolicy, eachcountry’sinterestrates,pricesandinvestmentreturnswillgraduallynarrow thedifferencesorreachtounanimous,leadingtoanoveralldeclineofpriceandthelevelofinterestrates.7.Balanceofpayments(s:///government/statistics/announcements)The balanceofpayments(BOP)ofacountryistherecordofalleconomic transactionsbetweentheresidentsofacountryandtherestoftheworldinaparticular period(overaquarterofayearormorecommonlyoverayear).Thesetransactions aremadebyindividuals,firmsandgovernmentbodies.Thusthebalanceofpayments includesallexternalvisibleandnon-visibletransactionsofacountryduringagiven period,usuallyayear.Itrepresentsasummationofcountry'scurrentdemandandsupplyoftheclaimsonforeigncurrenciesandofforeignclaimsonitscurrencyThistableillustratescurrentaccount,capitalaccountandfinancialaccountinUK duringthe20yearsfrom1980to2021.Intermsofcurrentaccount,therejustfour yearsthefigureispositivewhenbetween1980and1983.Andthenthefigurealmost negativefrom1984to2021.Andthefigureachievesthelowestnumberabout-55190 millionin2021.ThissituationillustratethattheeconomyofUKdevelopnotvery well.Asforcapitalaccount,thedatashowsthatthisaccountexperienceafluctuatetrend. First,thefigurewas-4millionin1980andthenthefiguredecreaseto-79millionin 1981.Afterthatthefigurewas6millionin1982increaseto159millionin1987. Whatisfunnythingisthefigurefallagainto-39millionin1988.Afterthatthefigure experienceafluctuateandwhatisnotableisthefiguregainalowestnumber-1527 millionin2006.Intermsoffinancialaccount,thefigureseeanpositivetrendfrom2157millionin 1980to122millionin1986.Andthenthefigureexperienceanegativetrendbetween-9690millionin1987and-23296millionin1993.Andfrom-20261millionin1999to-30276millionin2021thisaccountexperiencenegativetrendagain,andgetthe lowestnumberin2021becauseofthefinancialcrisisthefigurewas-39301million.8.ThegeneraltrendsinUKtradeoverthelast30yearOverall,theevolutionoftradeingoodsshowanupwardtrend.Withthequick development,UKneedtokeepupwiththetimes,thecountrymustthroughtradein goodtoincreasecountry’s incomesowiththepassageoftime,therearemoreand moretradeinUK.ThetableshowstheevolutionoftradeingoodsandservicesinUKbetween1980and 2021.Thetradeingoodsaccountstand20billionin1980.Thetradeingoodsaccount hasremainedindeficit.Thedeficitgrewremarkableinthelate1980storeachapeak ofabout24billionin1989.Andthendecreasedbackto20billioninearly1990s andkeepastableat10billionfrom1991to1998.In1998thedeficitjumpedbyover9billion,andithascontinuedtorisesince,reachingacashrecordof92.9billionin2021.Thechartshowsthatthetotalgoodsexportsarelessthanimports,whichleadstodeficit.However,thetotalserviceexportsaremorethantotalserviceimports,whichresultsinsurplus.ItshowsUnitedKingdomisinalargefiscaldeficitinthelast30years.Thehighestsurplusisin1981,howeverthecurrentbalancedeficitfrom1984to1990.From1984to1989,thecurrentbalancedeficitandin1987,thedeficitincreasequickly.The currentbalancedeficitfellsharplyfrom1990to1991.From1992to1997,thecurrentbalanceslightlyfluctuates.Thenfrom2000to2006,thedeficitincreasedsubstantially,althoughfrom2002to2004,thereisaslightdecline.From2007to2021deficithasasteepdecline.Mainreasonmaybeingoodstradebalancedeficits,whilethesurplusontradeinservices,especiallyinthelast30yearsgrowth.Inthepast30yearsBritain'smerchandisetradedecreased,becauseofthehighcostofHR,theUKisfewtodoingthemanufacture,mostgoodsisdependonimported,noexported.Butthefinancialservices,rentingandbusiness,istotallyincreased,sointhepast30years,theUKfinancialhasbeensteadilyincreasing.9.Thebalanceofpaymentsaffectedbyexchangerates(1)Theeffectsofexchangeratesfortradea.Importedgoodswillbedearer,thereforetheTradeinGoodsislikelytomoveintodeficit.Consumersmayturntoconsumemoreimportedgoods;Inflationmaybelowerbecausedomesticfirmsmayreduceprices.Thepriceofi mportedrawmaterials maygodownagainaffectingtheTradeaspect.Consumersmayfinditeasiertobuy importedgoods.b.Domesticgoodsandserviceswillbecheaperbothinforeignanddomesticmarkets.Acountrywhichhasreducedthevalueofitscurrencywouldcertainlybelookingtosellmoreabroad.ThisshouldmeananimprovementinTradeinGoods. CheapercurrencyhelpsboosttheexportSeeanexample:AUKfirmmanufacturesharddiscsforacomputerfirmintheUSA. Sellingprice:100pounds.Exchangerate:1pounds=$1.5CosttotheAmerican:$150.Exchangerate:1pounds=$2CosttotheAmerican:$200 TheAmericanfirmmayconsiderthistobetooexpensiveandlookelsewherefora cheaperalternative.If:Exchangerate:1pounds=$1CosttotheAmerican:$100 TheAmericanfirmmayconsiderthistobecheaper,andbuymore.(2)Theeffectsofexchangeratesforcapitalaccountsa.Manufacturingfirmsmightforexamplebuildupstocksattecheaperpriceandforeigninvestmentmayincreasebecauseprofitssentbackwillbeworthmorein theirdomesticcurrency.b.Itcouldencouragefirmsandindividualstoinvestabroadinthattheforigncurrencyearnedwillbeworthmorewhensentbacktothedomesticmarket. 10.AdvantagesanddisadvantagesoffixedrateandfloatingrateFloatingexchangerate orfluctuatingexchangerateisatypeofexchange-rate regimeinwhichacurrency'svalueisallowedtofluctuateinresponsetomarket mechanismsoftheforeign-exchangemarket.Acurrencythatusesafloatingexchange rateisknownasafloatingcurrency.Afloatingcurrencyiscontrastedwithafixed currency.Advantages.Largereserveswillnotbenecessarytoprotectthecurrencyagainstchangesor speculation.Acountryhasnoobligationtomaintainexchangeratestability,and thereforeitdoesnotneedforeignexchangereserveasmuchasinthefixedexchange rates,whichcansaveforeignexchangefunds.Theexchangeratewillnotbecomeatargetbecausewhicheverwayitmoves,the mechanismshouldstarttooperatequicklytorestoreequilibrium.Theimbalanceofa country'sinternationalbalanceofpaymentscanbeeliminatedbyfreefluctuationof exchangerate.Governmentsdonothavetointroducemeasurestokeepthevalueatafixedrate, whichmightbeharmfultoothersectionsoftheeconomy.Becausethebalanceof paymentsofeachcountrycanadjustbythemselves,whichensuresthestabilityof foreignexchangemarketinacertainextent.Disadvantages.Thefuturesmarketisdesignedtopreventthis.Bybuyingforwardforcommoditiesa priceisagreedwhichdoesnotchangewhenthecommodityisdelivered.Itcausesall countries'instabilityofabilityofinternationalsettlementandcommodityprice.Demandmaybeunstablebecauseexternalpricesofdomesticgoodswillbesubjectto change.Planningproductionmaybedifficult.Theinstabilityofexchangerate increasestheriskofinternationaltradeIfthereisinflationafloatingexchangeratewillnotalwaysdealwithiteffectively becausethedepreciationofthecurrencyintheforeignexchangemarketswillmake importsdearerandassistpossiblecostpushinflation.Fixedexchangerate,sometimescalledapeggedexchangerate,isatype ofexchangerateregimewhereacurrency'svalueisfixedagainsteitherthevalueof anothersinglecurrency,toabasketofothercurrencies,ortoanothermeasureofvalueAdvantages.Theyreduceuncertainty,thismakestradeandinvestmentsbetweenthetwocountries easierandmoreexternalandmorepredictableandisespeciallyusefulforsmall economiesinwhichexternaltradeformsalargepartoftheirGDP.Longtermgrantingofcredits,long-termcontractsandinvestmentoverseasareseen tocarrylessrisk.Itmakesthecapacityoftheinternationalsettlementandthepriceof importandexportgoodsbestable.ThefixedrateplayedacrucialroleinachievingthisgrowthinFDI.Thestabilityof theexchangeratesuppressedthespeculationofforeignexchangemarkettoa certainextent.Disadvantages.Ifdeficitspersistthenreservesofforeigncurrencymaybeusedupquitequickly.It leadstoreductionofexports,thedeficitofinternationalbalanceofpaymentsand moreunstablethecurrency.Countrieswhichhaveapersistentdeficitorsurpluswillhavetotakesomeaction whichmayhavesevereimpactsuponexportsandimportsorboth.Ifinflationoccurstheunderlyingcausewillneedtobetackled.Countriescannotrely ondevaluingthecurrencytogetridoftheproblem.Itweakenedtheautonomyof domesticmonetarypolicy.11.Effectsoffixedrateandfloatingrateonindividualsandcompany FloatingExchangeCompany.Floatingexchangeratesystemputforwardhigherrequirementsforcompany's macro-economicmanagementcapacityanddevelopmentoffinancialmarket.Itincreasescompany’smanagementandoperationcost.Thecompanydirectlyproducesexchangeloss.Individuals.Inthefloatingexchangeratesystem,exchangeratetendtofluctuate significantly,whichisnotconducivetoindividualsinvestmentWithfloating exchangerates,individualsmightspeculateinfinancialmarketsIndividualsare beginningtorealizethechallengeofpriceadvantagerecessionandthenecessityof improvingnonpricecompetitiveness.Theindividualsbegantorealizetheimportanceofmonetarysettlementtiming.Theindividualsbegantorealizetheimportanceofmonetarycurrencyselection.FixedExchangeC ompany.Rigidexchangeratearrangementsmaybeconsideredimplicitexchange rateguarantee,soastoencouragecapitalinflowsintheshorttermandnohedgingof foreigndebt,damagingthecompany’shealthofthefinancialsystem.Fixedrate makesthecompany’sadjustmentofrelativepricebeeasierandsmoother.Itisbeneficialtoalong-termstabledevelopmentofcompany’seconomic.ItisdirectlygeneratetheexchangeratelossesI ndividuals.ItIsconduciveforindividualstomakecostandprofitaccounting,which avoidstheriskofexchangeratefluctuations.Iteasilyleadstocurrencyovervaluationandweakenthecompetitivenessoflocal exports,causingpersonalimbalancesoflong-termcurrent-account.Ithelpsindividualstoeliminatetheriskofexchangerateandreducethetransaction costofinternationaltradeandinvestment.12.Thecharacteristicsofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializedcountries’economicstructureespeciallyindustrialand agriculturalstructurechangessignificantly,andtheproportionofindustryislarger thanagriculture.Intotalexports,theproportionofmanufacturedgoodsincreased, gettingridofthesituationofahalfofthedevelopingcountriesdependingonprimary products.Manyintermediateproductsandmachineryandequipmentrequiredfor productionisstillinthehandsofthedevelopedcountries.Insomeproductionof manufacturedgoods,Brazilisonlydevelopedcountries’assemblyprocessingfactory. Duetotheintroductionofalargenumberofforeigncapital,Brazilhaslargeforeign debts,andtheamountofprincipalandinterestishuge.From2021to2021,the economyofBrazilisnotoptimisticthesituationoftheperiodforthesefouryears,the averageeconomicwasonly1.4%.The developingcountries relyheavilyonagriculturalproduction.Fromthe productionstructureofagriculture,low-incomecountries’shareofagricultureinthe GDPismuchhigherthanthatofdevelopedcountries;fromtheemploymentstructure, theproportionofagriculturallaborinIndiaupto50%~70%;fromtheurbanization level,theproportionofurbanpopulationintotalpopulationoflowandmiddleincome ismuchlowerthanthoseofhighincomecountries.Underdevelopedmarketeconomy isthenatureofIndia’e sconomy.Duetothelongsufferingboundcolonialplunder andfeudalrelationsofproduction,aswellasgovernment’i m s p roperintervention afterindependence,themarketofIndiafailedtooperateandwasdistortedseverely, unabletofunctionasthebasicmeansofresourceallocation.13.Theissuesofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializingcountry: WhileBrazilintroducinglarge-scaleforeigncapitalandborrowingfromthe internationalfinancialcapital,Brazilcannotsolvetheproblemofexcessive dependenceoninternationalcapitalintheeconomyandcannotsolvetheproblemof establishingindependenteconomicsystemintheinternationaldivisionoflabor. Brazil'swealthgapis21timesthatofFrance,inBrazil's1.6billionofthenational population,"marginalizedpeople"withnofixedincomewashighlyupto50%.Brazil isnotonlythecountrywiththemostcapitalinthethirdworld,butalsothecountry rgerandlargerforeigndebtofprincipleandinterest makeseconomicdevelopmentbeonthebrinkofcollapse.LessDevelopedCountry:Chinafacesthedebtcrisisandfundbackflow.Theagriculturalinfrastructure deterioratesandpercapitaoutputofgraindecreasedcontinuously.Because populationgrowthexceededthegrowthofsocialmaterialproduction,thesocietyhas borroductivityofdevelopingcountryisonly1/23ofthatin developedcountries.Politicalinstabilityandfrequentwarsaggravatedtheexisting difficulties,makingresidentsbecomedestituteandhomeless.14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries.Overall,GeneralElectricCorporationplaysa positive rolefortheeconomic developmentofthesecountries.GeneralElectric’sforeigninvestmenthasbroughtthe capitalrequiredforSingapore’e csonomi c development,technologyandadvanced managementidea,drivingthedevelopmentofthenationalindustry,whichhelpsthese countriestorealizerapideconomicgrowthandquickincreaseinnationalpower objectively.GeneralElectricCorporationprovidesalargenumberofemployment opportunities,whichsolvestheseriousunemploymentissue,maintainingthestability ofsociety.However,italsohas negativeeffects onthestatepower.Generallyspeaking,General ElectricCorporationhassomenegativeeffectsontheindependenceofSingapore’s economicandsocialdevelopment.Somekeysectorsanddepartmentsofnational economyhasriskofbeingcontrolledbytheGeneralElectricCorporation,orhave evenbeencontrolled.Someimplementationofnationalindustrialpolicy,anti-unfair competitionpolicy,laborandenvironmentalpolicyareweakenedbecauseofthe existenceofGeneralElectricCorporation.ConclusionFormthisreport,Wehaveknowsomanyusefulknowledgeaboutinternationaltrad andwecanknowmuchabouttheadvantagesoftradeandthefunctionsofdifferent organizationsplaysintrade.AndwealsoknowalotofBalanceofPaymentofUK andthecharacteristicsandproblemsoflessdevelopedcountries.Reference(1)://cy580/content/2021/03/15/show149282.html(2):///xb/file.asp?fileid=20211237007(3)://ppkao/tiku/shiti/20752.html(4)://imibao/thread-12941-1-1.html(5):///chuangyexinde/202112030934994_2.htm(6):///wiki/Free_trade。

I. IntroductionThis report introduction some economics about the world economy including free trade, exchange rate, balance of payment, NIC and LDC and so on. In this report i will analyze 14 elements to make a clear explanation about world economy.II. Text1.Explain free trade including the theory of absolute advantage and comparative advantageFree trade had the original intention that goods and services could be exchanged freely between countries with no barriers to this exchange.Trans-Pacific Partnership Agreement, or TPP, as it’s more commonly know. 12 countries like America, Japan, Australian and so on, they reach on agreement about TPP on 5th of October in 2015. Between TPP members, the products and service price will decrease and logistics speed will increase. Add the 12 countries which accounts for 40% of the global economy. The TPP will reduce or decrease tariff on 18000 categories of products.Absolute advantage is said to occur when one country can produce a good or service to a pre-determined quality with less resources than another country.The benefit or advantage of an economy to be able to produce a commodity at a lesser opportunity cost than other entities is referred to as comparative advantage in international trade theory.In 1970s, manufacture industry take up large proportion in UK, its manufacture industry has absolute advantage. However, its industry began transfer to overseas from 1980s. Particularly manufacture industry, UK environment become very bad duoto much manufacture industry, so UK government decide close some domestic factory and invest Financial industry. Financial industry rose sharply base on this opportunity. Financial industry don’t have to cause pollution, and its profitability also very good.2. Identify three gains from international tradeFirst of all, goods and services could exchange freely between countries with no barriers to this exchange. And the goods can decrease cost, and that can increase employment rate and rose the economic in the local area.Second, International trade can improve global productivity because that can use absolute advantage and comparative advantage to make cost deduction and after that the productivity will increase.Third, International trade customer can get more products from other countries, and low product cost can make the goods become more cheaper and international trade make the market become large and increase product will make scale effect.3.Explain barriers to trade including two forms of protectionTrade barriers are government-induced restrictions on international trade. The barriers can take many forms, including the following tariffs and non tariffs.Give a example about tariffs, 35% tariffs on Chinese tyres imposed on the United States on 11th September in 2009. It make Chinese tyres firms have to increase price if sales in America.For example about non tariffs, Russia to Ukraine for embargoes which suspension of Ukraine imports of juice on 29th July in 2014. It make Ukraine’s juice not allow sale in Russia.4.Explain why government may wish to rise barriers to international tradeBecause government want to protect the country’s job opportunity and avoid anti-dumping. For example, Local shoemaker in Elche, the capital of Spain’s once flourishing footwear industry, argue that “Made in China” is taking away their jobs by means of ultra-low pricing.For example about anti-dumping, earlier in May 2012, solar panel manufacturers in the United States led the U.S. Government to impose anti-dumping duties, ranging from 31% to 250% on solar panel imports from China, which were accused of selling panels in the U.S. Market at prices below cost.5. Describe the role of WTO in development of free tradeThe WTO was founded in 1994 on April 15. WTO has 164 member states, headquarters in Geneva, Switzerland. WTO objective is improve life level ensure sufficient job opportunity and solar improve income level and keep the sustainable development road and ensure developing country’s interests.WTO basic on open, equality and mutual benefit, escalate decrease tariffs and non tariffs and eliminate discriminate between the member states in the international trade. That will promote the development of free trade.On 7th December 2013, 18 years have passed since the establishment of the WTO’s first global trade agreement was born. That will promote the development of tree trade.6.0 Explain how EU promote free tradeEuropean Union or EU establish 1st of November in 1993. There are 28 member of country in the EU now like Netherlands, France, Italy and so on. Headquartered in Brussels, Belgium. The purpose of EU is Strengthen the coordinated development of economy and society and establish the economic and monetary union of the final implementation of the unified monetary union, and promote the balanced development of economic and social development of the member states.EU make many rules for member states like removal of the member countries of the border control, member states capital can flow freely. These rules help EU member countries escape the trade barrier.And other rules like free trade between member states, and use a same currency which is euro to make trade, these rules help the member states expand market to economic growth.7.0Explain the composition of the UK's balance of payments and its recent trends in the last 30 yearsThis accompanying picture above shows detail about balance of payment in the UK in 2010.This above table gives information about current account, capital account and financial account in UK from 1980 to 2010. In terms of current account,according to the data, there just four years the figure is positive when between 1980 and 1983. And then the figure almost negative from 1984 to 2010. And the figure gain the lowest number about -55190 million in 2008. This situation illustrate UK’s economic development is not very good.In terms of capital account, according to the data this account experience a fluctuate trend. At first, the figure was -4 million in 1980 and then the figure decrease to -79 million in 1981. After that the figure was 6 million in 1982 increase to 159 million in 1987. What is funny thing is the figure fall again to -39 million in 1988. After that the figure experience a fluctuate and what is no table is the figure gain a lowest number -1527 million in 2006.In terms of financial account, the figure see an positive trend from 2157 million in 1980 to 122 million in 1986. And then the figure experience a negative trend between -9690 million in 1987 and -23296 million in 1993. And from -20261 million in 1999to -30276 million in 2010 this account experience negative trend again, and get the lowest number in 2008 because of the financial crisis the figure was -39301 million.8.0 Explain British trade trends in the last 30 yearsThe table shows the evolution of trade in goods and services in UK between 1980 and 2008. The trade in goods account stand 20 billion in 1980. The trade in goods account has remained in deficit. The deficit grew remarkable in the late 1980s to reach a peak of about 24 billion in 1989. And then decreased back to 20 billion in early 1990s and keep a stable at 10 billion from 1991 to 1998. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billion in 2008.Overall, the evolution of trade in goods experience an upward trend. With the development too fast, UK need to keep up with the times, the country must through trade in good to increase country’s income so with the passage of time, there are more and more trade in UK.The trade in services account stand 8 billion at first and the figure keep until in 1995. From 1995 to 2003 the figure keep around 18 billion. After that, the figure experience an upward trend and peak at 56billion in 2008.Overall the evolution of trade in service see an upward trend. With the development of the times, services like financial service, travel service become more and more popular for people. So the the number of trade in service will be increase.9.0 The relationship between exchange rate and balance of paymentsExchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency. Cheaper currency helps boost the export. If demand keep keep the same, the value of goods will reduce and the current account balance may deteriorate. If the exchange rate increase, the country’s goods might suffer and demand from abroad could decrease.If the demand keep the same volume, the value of exports will rise and the current account balance should be improved. For example, China allowed the yuan to rise 21% against the dollar in the three years to July 2008, but since then it has more or less kept the rate fixed. As a result, the yuan’s trade weighted value has been dragged down by the sickly dollar, while some other currencies have soared. Since March the Brazilian real and the South Korean won have gain 42% and 36% respectively against the yuan, seriously eroding those countries’ competitiveness.When currency appreciation, it benefit for overseas investment and capital outflows. On the contrary, currency devalue, it will influence overseas investment and benefit for foreign capital inflows.10.0 The advantages and disadvantages about floatingexchange rate and single currencyIn terms of advantages about floating exchange rate, first is expected to provide an automatic correcting mechanism, it will help country adjust the function of balance of payments.Second is the exchange rate will not become a target because whichever way it moves, the mechanism should start to operate quickly to restore equilibrium.Third is if a country imports more than it exports then the supply of its currency will exceed demand for it and its price will fall. Exports will become cheaper and imports dearer, restoring equilibrium.In terms of disadvantages about floating exchange rate, it adds uncertainty. Price may fluctuate in very short time scales. Purchasers have to watch two things. The price of the goods and the price of the currency. They may buy the goods at one price but when the deal is concluded find that they have to pay more for the currency than they envisaged.Second is demand may be unstable because external prices of domestic goods will be subject to change. Planning production may be difficult.Third is if there is inflation a floating exchange rate will not always deal with it effectively because the depreciation of the currency in the foreign exchange markets will make imports dearer and assist possible cost push inflationIn terms of advantages about single currency, first is can reduce costs, firms and individuals do not have to pay as they move themselves or goods or services from one EU country to another.Second is it can reduce exchange rate uncertainty, like the UK pound will be at the same rate for all Euro members.Third is increased foreign investment, direct inward investment should be attracted because of the reduction of uncertainty.In terms of disadvantages about single currency, first is loss of independent monetary policy like scope for fiscal policy adjustments is restricted by need to stay within 3% of GDP.Second is misalignment of exchange rates, an exchange and interest rate which benefits most members may not benefit all.Third is regional differences, different place have different custom, there may affect firms which be persuaded to move to more prosperous areas.11.0 Explain the influence of floating exchange rate and fixed exchange rate on economic individualAs for the individual, floating exchange rate change will influence individual, like raise the floating exchange rate that mean is native currency devalue, so it will influence people take more money in the foreign countries like travel or study in foreign countries.Second, floating exchange rate is difficult for long term trade and contracts like people speculation on foreign exchange is difficult for long term trade because people have no idea about tomorrow the exchange will be increase or decrease.Third is fixed exchange rate can avoid inflation, so people can avoid currency devaluation by the fixed exchange rate.As for the business, floating exchange rate will influence business,too. For example, decrease the floating exchange rate will make native currency appreciation, so it will impact business export, business will decrease export and increase import. And it will decrease business profit from foreign area.On the contrary, if rise the floating exchange rate, it will attract foreign investor and promote business export.Fixed exchange rates can reduce the risk of exchange rate fluctuations that business can avoid affect revenue and increase profit.12.0 Explain the two characteristics of NIC or LDCSomalia is one of the LDCs. Somalia has a large proportion of the inhabitants live in the countryside with subsistence agriculture, living in a family with many children and working on a small piece of land with much too little funds to purchase adequate agricultural machinery, fertilisers or pesticides. Somalia has a poor infrastructure is very likely to hinder the revitalisation of economy in Somalia. So their trade capacity is bad, too.In Somalia,unemployment is usually very high with very little industry because most people work on their own small plots of land. And high unemployment rate influence national gross domestic product,so Somalia’s GDP always low.13.0 Analysis NIC and LDC face the main economic problemsZimbabwe is belong to LDC, and Zimbabwe inflation rates are generally much higher, Zimbabwe’s hyperinflation at very beginning of the 21st century. And this country is caught in a various circle of poverty. It stay poor because it is poor, low per capitalincomes make it difficult for Zimbabwe to save and invest, a condition that perpetuates low productivity and low incomes and government gain low tax that influence Zimbabwe build infrastructure like education, medicine, military. Furthermore, rapid popular growth may quickly absorb increases in per capital real income and thereby destroy the possibility of breaking out of the poverty circle.Chinese firms might well be very critical. They have been very successful in moving their resources around the world to where they get the best return. As wage and salaries and other begin to rise in the China, with increasing labor costs, rising inflation and a manufacturer of consumer goods. Rising costs are forcing companies, such as Nike, to take a closer look at new sourcing locations across Asia.14.0 Analysis the economic impact of multinational companies to NIC or LDCAdidas company set some branch companies in the Thailand. In terms of advantages, Adidas company can being high technology, management experience to the Thai, it can let them improve their own quality. And Adidas company can supply many job opportunities that can improve Thailand employment rate and then, government can gain more tax to build some infrastructural like invest education system, medicine and military and so on.In terms of disadvantages, Adidas will use sources which from Thailand and make some pollution in Thailand. The most worst thing is Adidas basic on high technology and reputation will beat some Thailand’s firms that will make these firms have to lose down.III. ConclusionAfter analyzing these 14 elements, you may have a clear acknowledge of theinternational trade, balance of payment, LDCs and so on, It will help you to realize the world economy.IV. Reference(1)/micro-economic-essays/marketfailure/positive-exte rnality/(2)/micro-economic-essays/marketfailure/negative-exte rnality/(3)/terms/i/imperfect_competition.asp(4)/od/termsbeginningwithm/g/monopsony.htm(5)/financial-dictionary/economics/oligopoly-104(6)/oligopoly-examples.html。

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3Section 1: International TradeThree gains from tradinginternationally---------------------------------------3FreeTrade--------------------------------------------------------------------------3Absolute and ComparativeAdvantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4Barriers totrade-------------------------------------------------------------------4WTO andEU----------------------------------------------------------------------5Section 2: International FinanceBalance of Payments and General trends in UKTrade----------------------6Relationship between the exchange rate and the balance of payments—14SingleCurrency------------------------------------------------------------------15Effects on individuals and business of theEuro-----------------------------15Section 3: Less Developed Countries (LDCs)Characteristics of aLDC--------------------------------------------------------16 Current issues that faceLDCs--------------------------------------------------16The impacts of multinationals on LDCs andNICs--------------------------16Conclusion-----------------------------------------------------------------16References------------------------------------------------------------------17Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanation of benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which are more valuable than the local people produce it by themselves.A good example for free trade is in , 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service to pre-determined quality more cheaply than anther country. It stands contrasted with the concept of which refers to the ability to produce a particular good at a lower . Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity costof producing that good in term of other goods is lower in that country than it is in other countries.Example: Korea and Japan have following production possibilities for two commodities, mobile phones and computers; assume that all the resources ownedBut the advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, . 20000/2000 For Korea it is 15, . 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methods are—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them.This tax may be ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper.Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flows around the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions on factor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputesand problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote and smooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’ negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years.The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of billion pounds in 1989, equivalent to per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at billion pounds in 2006. This was the highest recorded in cash terms but only equated to per cent of GDP. In the past two years, there has been a reduction in the current account deficit – in 2008 it currently stands at billion, equivalent to per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since thenhowever, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of billion in 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach billion in 1990. In 1991, the deficit reduced to billion, reflecting billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met. Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing currentaccount deficit, which has resulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed its liabilities, by up to a record billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record billion pounds in 2006. In 2008, the UK returned to a net asset position of billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns) the exchange market in UK would be the demand of dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄ is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to the same amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄ is increasing, the American business man might not choose UK goods, because of the high price.Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then itmay produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest rate lower and the commitment to low inflation should allow economies to operate with lower cost.Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently. Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rate and commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs) Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies.Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and are expensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economic growth by attracting more free capital, using single currency and enlarge the market.References:Web research:Related Web sitesBook resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 Free Trade--------------------------------------------------------------------------3 Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4 Barriers to trade-------------------------------------------------------------------4 WTO and EU----------------------------------------------------------------------5 Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14 Single Currency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16 Current issues that face LDCs--------------------------------------------------16 The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanation of benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which are more valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service topre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries. Example: Korea and Japan have following production possibilities for two commodities, mobile phones and computers; assume that all the resources owned bythe advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methodsare—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax may be ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper.Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flows around the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions onfactor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote and smooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’ negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years.The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billion in 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record 13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which has resulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed itsliabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns) the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to thesame amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest rate lower and the commitment to low inflation should allow economies to operate with lower cost. Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rate and commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs) Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies.Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and are expensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economic growth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites /wiki/Protectionism/eurocash.asp/Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

世界经济学世界经济是世界各国的经济相互联系和相互依存而构成的世界范围的经济整体。

跨国公司指由两个或两个以上国家的经济实体所组成，并从事生产、销售和其他经营活动的国际性大型企业。

规范经济学是指那些依据一定的价值判断，提出某些分析和处理经济问题的标准，并以此建立起的经济理论。

实证经济学：是指描述、解释、预测经济行为的经济理论部分，是经济学的一种重要运用方式。

生产国际化是指生产过程本身越出一国范围，在国际范围形成各国生产相互依赖、相互补充的格局。

服务外包是指企业将原来在内部从事的服务活动转移给外部企业去执行的一种业务安排对外贸易依存度是指一国进出口总额与其国内生产总值或国民生产总值之比，又叫对外贸易系数经济全球化是指世界经济活动超越国界，通过对外贸易、资本流动、技术转移、提供服务、相互依存、相互联系而形成的全球范围的有机经济整体。

国际分工是指世界上各国之间的劳动分工。

它是社会分工发展到一定阶段，国民经济内部分工超越国家界限的结果。

无形贸易是指非实物形态的劳务和技术的进出口。

转口贸易又称中转贸易（intermediary trade）或再输出贸易（Re-Export Trade），是指国际贸易中进出口货物的买卖，不是在生产国与消费国之间直接进行，而是通过第三国（中转国）转手进行的贸易。

横向购并战略。

横向购并是指并购那些同类的生产企业。

规模经济理论是指在一特定时期内，企业产品绝对量增加时，其单位成本下降，即扩大经营规模可以降低平均成本，从而提高利润水平。

产业内贸易，即一个国家在一定时期内（一般为1年）既出口又进口同一种产品绝对优势理论，指在两国都能生产两种同样产品的条件下，一国生产其中一种效率较高或成本较低，卖价较便宜的产品，从而形成各国间的商品交换或贸易，今儿形成专业化分工。

参加贸易和分工的国家可以从中得到利益。

转口贸易又称中转贸易（intermediary trade）或再输出贸易（Re-Export Trade），是指国际贸易中进出口货物的买卖，不是在生产国与消费国之间直接进行，而是通过第三国（中转国）转手进行的贸易。

Report of Economics 2: The World EconomyName:Student Number:Unit Name:Economics 2: The World EconomyClass:GT&B-1Word Count:2454Date:July 6 2015ContentIntroduction (3)1 Free trade (3)4 P rotectionism’ and Barriers to trade (4)5 The role of the WTO in the development of free trade. (5)6 The role of one of EU (5)7 The composition of the UK balance of payments. (6)8 The general trends in UK trade (6)9 How is the balance of payments affected by exchange rates? (6)10 Three advantages and three disadvantages of exchange rates (7)11 Three effects on individuals and three effects on businesses f (8)12 Two characteristics of LDCs (8)13 One issue facing NICs, and one issue facing LDCs (9)14 The impact of transnational firms on NICs or LDCs. (9)Conclusion (10)Reference.................................................................................................. 错误！未定义书签。

Unit Title: Economics 2: The World EconomyCandidate Name:Student ID:Tutor: Lu WeiTitle of the Project: Report for Economics 2: The World EconomyWord Count: 2746Date of Submission: 8 January 2010Table of ContentsIntroduction4Procedure4Analysis on Element 1 4 Analysis on Element 2 5 Analysis on Element 3 5 Analysis on Element 4 7 Analysis on Element 5 7 Analysis on Element 6 8 Analysis on Element 7 9 Analysis on Element 8 9 Analysis on Element 9 11 Analysis on Element 10 12Analysis on Element 1113Analysis on Element 1213Analysis on Element 1314Analysis on Element 1415Analysis on Element 1516Summary17Reference17IntroductionThis report is about it that is providing an analysis of the current external environment order to develop a marking plan for the launch of a product in the furore. The report is going to explain the concept of the world economics with real examples. For examples, free trade, absolute and comparative and protectionism and exchange rate and so on.ProcedureRead this book<Economics 2: The World Economy>, search those website and the newspaper.Analysis on Element 1Every country, every company wants to make more gains. So trading international gives them a good development. The gains of trading international include that:Firstly, overall increase in standard of living. By trading international, significantly improve the economy of each country, People's wage increase. Secondly, increase world-wide output. The output cans country with other countries strongly. It can make every country’s good to any other country. Thirdly, good and services produced at lower cost. Company find the best places to processing, to reduce labour costs. The more developed in international trade, the faster the country's economic development1.Analysis on Element 2Free trade is a system of trade policy that allows traders to act and transact without interference from government. According to the law of comparative advantage the policy permits trading partners mutual gains from trade of goods and services2.The United Kingdom (UK) has to import wheat and discovers it can purchase what it needs from Canada. But Canada does not want to import anything from the United Kingdom. The UK will have to find the money to pay for Canada’s wheat. Then the UK discovers that Nigeria has reserves of oil which it cannot develop because it does not have the equipment to do so. The UK offers to sell the oil resource and export it to earn money. The UK does not want the oil but Nigeria is able to sell the oil to the West Indies. The West Indies is able to pay for this oil because Canada is one of the largest producers of aluminum for whichbauxite is the essential ore and the West Indies has very large reserves of bauxite3.Analysis on Element 3Absolute advantage is said to occur when one country can produce a good or service to a pre-determined quality more cheaply than another country. However even when one country has mange absolute advantage it is still likely to trade with other countries because, thanks to Opportunity Cost these other countries will have what is known as companies advantage4. For example, the UK may be able to produce cars more cheaply than say Indonesia. But Indonesia can produce excellent coffee far more efficiently than the UK. Each country is said to have an absolute advantage in producing these single commodities. If Indonesia wants cars and the UK wants coffee it is obviously to their mutual advantage to trade5. Comparative Advantage is formulated on the basis that, despite having absolute advantage over other countries in production of goods and services it will be beneficial for UK to specialize in the good or service it is best at producing and trade with other countries which have a comparative advantage in some of the range of goods and services the countries wish to trade in. This occurs because the opportunity costs of switching resources will be higher in the country with absolutely advantage than it will be in the countries with comparative advantage6.The UK is an excellent example of how countries can change in their specialization. Long noted for its expertise in manufacturing it has now become much more competitive in what are known as the ‘Knowledge industries’. These are computer software, business services and pharmaceuticals. These industries are seen to bring the possibility of long term growth, while the industries based on heavy capital investment or requiring relatively cheap labor will not be competitive with developing countries7.Analysis on Element 4Protectionism refers to the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition.Foreign discrimination of US products is reinforced by the US tax system, which imposes no appreciable tax burden on foreign goods and services sold in the US but imposes a heavy tax burden on US producers of goods and services regardless of whether they are sold within the US or exported to other countries8.India's Ministry of Finance announced that originated in China will be synchronous digital transmission equipment to impose provisional anti-dumping duty, the maximum import prices for products of 236% in the last week, in order to protect interest of home industries9.Analysis on Element 5There are Tariffs and Non-Tariffs Barriers to international trade. Tariffs means the Government uses taxes or customs duties to place on foreign goods to raise their prices. Non-Tariffs Barriers refers to the Government only physical to limit the quantity of imports, which mean if you pay the Government a fee they will license you to import this quantity ofyour goods for this year10.For example, 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 competition11.According to Argentine media reported that ‘due to the international financial crisis has created a substantial decline in Argentina's exports and capital exodus, the Argentine Government to strengthen the restrictions on the import of products, some of product requirements to achieve equivalent of imports and exports on December 22’ It also to protect its industries12.Analysis on Element 6The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other13.The Government of China requires the World Trade Organization to set up a group of experts to investigate the United States to take China's tire exports to the USA special safeguard measures on December 22.WTO to play an investigator and judge role in the middle of the dispute14.Analysis on Element 7European Union (EU) is similar to Common Markets but also require member states to adopt common economic policies on areas such as agriculture, transport and taxation. It established in 1958. The institution of EU could include Commission which implements and administers Union’s polices and has considerable executive powers, Council of Ministers which take policy decisions, Court of Justice which settles any disputes about interpretation of treaties and European Parliament which has power to veto the EU budget, EU's "Official Gazette" published in the European Commission 2009/603/EC resolution to develop batteries and battery manufacturer's registration requirements on August 8, 2009 , in order to give a common standard of the member countries, it conveniences to the member countries to do the business15.Analysis on Element 8Balance of Payments may record of all financial transactions between a country and the international economy. It includes Current Account, Capital Account, Financial Account and International Investment Position. Current Account includes Trade in Goods, Trade in Services, Income and Current Transfers. Trade in Goods covers the exports and imports of goods. Trade in services result of exporting services against the import of services. Income includes portfolio investment income and direct investment income. The trade in goods balance is the difference between the values of Goods exported and the value of goods imported. Hence, in 2007a ￡220.9 billion credit to the Current Account resulted from goodsexports and a ￡310.6 billion debit from imports giving an overalldeficit of ￡89.8 billion. The trade in services is recorded in the same way, with credits to the Current Account reflecting services exports and debits services imports. In 2007 the UK ran an overall surplus of ￡44.8 billion on the balance of trade in services. An oft en cited measure is the trade balance which is the overall balance in the trade in goods and services. In 2007 this would have been negative to the tune of ￡45.0 billion, as the deficit in goods trades outweighs the surplus in services trade. The trade balance though is not to be confused with the overall Current Account which consists of two further, but less well-known income flows reflect international payments associated with the ownership of the factors of production (land, labor and capital).Two types of income transactions are distinguished; compensation of employees which is paid to non-resident workers involved in theTable: UK Current Account in 2007 £ billionsCredit Debit Balance Goods trade 220.9 310.6 –89.8 Services trade150.6105.844.8Net income flows 291.3 270.5 20.8 Current transfers Current Account(total)14.027.6–13.5Source: ONS Balance of Payments 16.Analysis on Element 9UK has traditionally had a large deficit in trade of goods balance in the last 30 years. For example, export and import of goods, e.g. oil, chemical and finished manufactured goods. But the trade of services had a surplus in the last 30 years. For example, export and import of services, e.g. Transport, Insurance, Travel, Financial and Business Services. There is a table about Trade in Goods and a table about Trade in Service below: Trade in GoodsFrom the table, we can see that imports of goods are more than exports and the difference are growing. £million\ year 19921997200020012002Exports 107863 171923 187936 190500 186170 Imports 120931 184265 218262 223560 221532 Balance-13050-12342-30326-33510-35182£million\ year 19921997200020012002Exports 362285969977199 7768383467Imports 30746 47171 65361 66383 69308Balance 5482 12528 11838 11300 14519Trade in ServicesFrom the table, we can see that exports of services are more than imports, and the difference are growing. So we can get the conclusion from the two tables that UK has transferred from a manufacturing country to a service-based economy17.Analysis on Element 10Each country's currency in international trade, in export and import aspects has different. Every country’s coin is different. The rat e of exchange becomes economic lever, and may also influence trade to pay difference in amount18.For example, if pound appreciate in relation to dollar, it is good for import of UK, it is bad for export of UK, led to increased imports and decreased exports. The balance of trade of UK will be deficit. The pounds depreciate in relation to dollar. Export is cheaper and import is expensive19.Analysis on Element 11The advantages of the single currency for the UK, one is about keeping interest rates lower. The above also reduces the scope for price discrimination and will help create pressure to keep prices low. Another is increased foreign investment. Direct inward investment should be attracted because of the reduction of uncertainty20.The disadvantages of the single currency for the UK include inability to devalue independently—individual governments lose this policy instrument and misalignment of exchange rates—an exchange and interest rate which benefits most members may not benefit all21.Analysis on Element 12The single currency effects on individuals: It will lower the interest rates, it will let people do not deposit the money their earned to bank. And they may use the money to consume or invest. It will cuts costs of transactions, if a British go to member countries, he may not exchange the currency. It convenient to him goes member countries. The single currency effects on businesses: expansion opportunities within the European Union, the competition will be increased22.Analysis on Element 13There are many characteristics of Less Development Countries. It includes subsistence agriculture-land is very ineffectively used and is very low in productivity, climate-lots of drought and floods, very high birth rates but very heavy infant mortality, high death rates, very simple education and often non-existent, poor health care, lack of capital, effectively none communication, inadequate water and power supply and narrow and poor qualityproducts23.For example, Angola's economy has undergone a period of transformation in recent years, moving from the disarray caused by a quarter century of civil war to being the fastest growing economy in Africa and one of the fastest in the world. In 2004, China's Exam bank approved a $2 billion line of credit to Angola. The loan is being used to rebuild Angola's infrastructure, and has also limited the influence of the international monetary fund in the country. Super tropical storm "Sid" swept the southern coast of Bangladesh on the 15th night. Mali, there are about 11000 people died of the AIDS, and there are about 1.7% majors get the AIDS24.Analysis on Element 14They may meet a underdevelopment trap—the vicious circle of poverty which an increase in productivity require the rate of capital accumulation to increase but investment can only increase if saving rates increase which can only increase if income increases. Income cannot increase unless productivity increases. They also do not have tax base, high inflation and indebtedness-major problem. Xinhua Geneva, October 12, WHO Vaccine Research head quarter of Niger on the 12th, said that the organization may be starting in November to about 100 low and middle income countries to send Influenza a H1N1 influenza vaccine. They are faced with the population vulnerable to infection, the lack of response to the dual problem of resources. They have no money, an increase in productivity require the rate of capital accumulation to increase but investment can only increase if saving rates increase which can only increase if income increases. Income cannot increase unless productivity increases. They have not enough capital and high technique to produce A H1N1 influenza vaccine25.Analysis on Element 15Multinational firms mean companies which produce products in more than one country. "Economic Information Daily" reporter seed market survey found that only in Shouguang City, they are filled with more than 30 species of giant multinational research and development, promotion of base in a street on both sides, recently. They are completely occupied the Chinese market. It is said that it had appeared the price per gram to 100 Yuan, because the market has been monopolized by foreign companies, farmers can only be forced to accept. But it brings us new technology, and adds the output of crops. It will give more profit to farmer and improve the standard of living26.Water Resources and Hydropower Construction Group Corporation is also in cooperation projects in China and the Government of Angola, one of the main implementation of the respective commitment to cooperation projects in China and Angola as well as the World Bank and the UN FAO in security assistance projects implemented in the building construction. In Angola's 18 provinces, the water and electricity in 16 provinces were started construction of water conservancy, agriculture, health, schools and transport more than 30 projects, totaling more than 900 million U.S. dollars. Training in the use of local labor to maximize provides local jobs. The uses of local staff were trained more than 8,200 people at present. But it eliminates domestic competition and become monopoly. Monopoly wouldlead to consumer having less choice, paying higher prices, etc. Control the economics of the national country27.SummaryWith some knowledge and examples, it explain how to place the trade, the role of trade in trade patterns, exchange rate system, patters in trade, how trade takes place, the newly industrialized countries and less developed countries. Companies should be adopting different measures to carry out the problem it would be the most emotional. To develop a marketing plan for new products to market, managers have been considering various economic factors.Reference1Economics 2: The World Economy page332/wiki/Free_trade3Economics 2: The World Economy page194Economics 2: The World Economy page285Economics 2: The World Economy page216Economics 2: The World Economy page287Economics 2: The World Economy page248/wiki/Protectionism9/wiki/Protectionism10Economics 2: The World Economy page3511From the teacher talked about in class12Use the China Daily.13Resource ware taken from SQA class material14/english/index.php?do=class&id=1115Economics 2: The World Economy page5916Resource ware taken from SQA class material17/wiki/Wiki_UK_Balance_of_trade18Economics 2: The World Economy page8919From the teacher talked about in class20Economics 2: The World Economy page11221Economics 2: The World Economy page11322Resource ware taken from SQA class material23Resource ware taken from SQA class material24/wiki/Angola25Resource ware taken from SQA class material26/wiki/Multinational27Resource ware taken from SQA class materialIf at the given exchange rate there is an excess supply of the currency, government will have to buy the currency to keep the value constant. If there is no official financing then the supply of currency will always equal the demand and the balance of payments is 0, A surplus in the current account means a deficit on the capital account and vice versa.。

全球经济英语作文The global economy is facing unprecedented challenges. With the ongoing pandemic, many businesses have been forced to close, leading to widespread unemployment and financial hardship for millions of people. The economic impact of the pandemic has been felt worldwide, with supply chains disrupted and consumer demand plummeting.Despite these challenges, there are also opportunities for innovation and growth. Many companies have adapted to the new normal by embracing digital transformation and remote work. This shift has led to the rise of new industries and the creation of new job opportunities in areas such as e-commerce, online education, and telemedicine.In addition to the pandemic, the global economy is also grappling with issues such as climate change and geopolitical tensions. The urgency of addressing climate change has led to increased investment in renewable energyand sustainable technologies. At the same time,geopolitical tensions have disrupted global trade and investment, leading to uncertainty and volatility in financial markets.Amidst these challenges, there is a growing recognition of the need for greater international cooperation and solidarity. Countries are coming together to address common challenges such as vaccine distribution, debt relief for developing countries, and building more resilient and inclusive economies.In conclusion, the global economy is facing a period of profound transformation and uncertainty. While the challenges are significant, there are also opportunitiesfor innovation and collaboration. By working together, we can build a more sustainable and inclusive global economy for the future.。

Contents PageSummary (2)1.Introduction (3)2 (4)3 (4)4 (5)5 (5)6 (6)7 (6)8 (7)9 (7)10 (8)11 (8)12 (9)13 (9)14 (10)15 (10)16. Conclusion (11)17. References (12)SummaryThis report is an analysis of the world economy in the aspects of international trade, trade organizations, balance of payments and exchange rate, as well as the single currency and some specific kind countries.With these information we can see clearly that it will bring us many benefits to join in EU.1.IntroductionAs a member of the government of a nation which is on the periphery of Europe, I think the currently consideration of join in European Union is a meaningful project, and in the following i will talk about 14 points of the benefits of joining EU.2Firstly, I will briefly explain the current conditions of our country.The characteristics.Birth rate. In less developed countries, there is often a high birth rate. For example, in 2010 05.18, the United Nations economic commission of Africa published 2010 African economic report ,it said between 2008 and 2009, Africa's population increased by 2.3%, the total number reached 1 billion, of which 70% is not more than 30 years old.Unemployment. Unemployment is usually very high with very little industry because most people work on their own small plots of land. For example, in 2009, the manager of United Nations economic commission of Africa said, even in the year of rapid economic growth, Africa's unemployment rate is still very high, and the economic crisis will make this a more serious problems. Official figures showed that in 2008, sub-saharan Africa's unemployment rate is 7.6%, north Africa is 10.1% while the average level in the world is 6%.Some problems that face us.Indebtedness. This is a major problem for LDCs. It increases year by year, which makes it almost impossible to borrow more. For example, in 1991, Congo economic decline, and debt is as much as $5 billion in 1990, an average of $2500 per person. According to the report: African countries have the highest debt: the debt ratio of República de Mo&ccedil is equal to 426% of GDP, guinea Bissau is 323.7%, Tanzania is 250.8%. In addition, Egypt, equatorial guinea, Zambia, Congo, Mali,, Madagascar, SAO tome and principe, Sudan, Zaire, more than 20 countries has their debt outstrip nation's GDP, almost completely lost the solvency.Aid programmes. The aid they get from the World Bank or IMF often carry conditions which they feel are difficult to comply with and are too expensive. For example, in 2000, the loans and grants of 20 million dollars they got from IMF been used in some high technical industry, which didn't use in some aspects of poverty. We can see from this case that the money didn't spend in the area that they most been needed3If we join in EU, there will be more multi-nationals come to our country.The multi- nationals can bring in new methods and technology to the NICs and LDSs. For example, the branches of Microsoft operated in China can transfer the new management skills and most importantly, the technical skills to China to help him promote.The multi-nationals can increase employment. A new stores of a famous companywho built in one country can solve the problems of unemployment. For example, a new branche of Wal-Mart which settled in HanDan, China, a small city in China recently, make thousands of people find their jobs in the city where the competition is fierce, which of course is a good thing.4There are many advantages from trading internationally. If we join in EU, we will have more opportunities of free trade.First, it can increased world-wide output. As with the theory of comparative advantage, which means that countries should specialise in trading in goods and services in which they have the biggest advantage, so specialisation as we have seen can lead to increases in output.Second, goods and services produced at lower cost. Because of the comparative advantage, every country will concentrate on the industry which he has the biggest advantage, which, of course, the cost is lower than other nations, as well as the competition, the advantaged country will make his cost even lower to have a place in the economic world.Third, greater range of commodities for consumers, more choice. World trade allows countries to exchange their range of goods with other countries producing a different range. This gives the population of each country a greater choice.5There I illstruate an example to help me better explain the benefits of free trade. There is a free trade agreement(FTA) between Korea and United States which will realise in 2012.01.01. This means that many goods and services could be exchanged freely between the two countries with no barriers to this exchange. I will mainly narrate the agriculture content.In the agriculture part, for the Korea in the food crops, the manufacture potatoes will take season tariffs, very year from December to April tariffs is promptly abolished, but during May to November it will remain the tariffs of the 7 years before, at the 8th year Korea will began to lower tariffs year by year, and at 15th year it wil completely abolished the tariffs on manufacture potatoes.For the meat, like beef which the two parties regarded as very important. In the FTA, they agreed they will abolished the tariffs in 15 years step by step, during that period ASG is available.6The 2 kinds of advantages is the reasons of free trade. It is also the reason why we need to join in EU.Absolute advantage. This exist when one country can produce a good or service much more efficiently than another when they are each using the same level of resource to produce the good or service.Comparative advantage. It is formulated on the basis that, despite having absolute advantage over other countries in production of goods and services it will be beneficial for a country to specialise in the good or service it is best at produc in and trade with other countries which have a comparative advantage in some of the range of goods and services the countries wish to trade in. This occurs because the opportunity costs of switching resources will be higher in the country with absolute advantage than it will be in the countries with comparative advantage.Here is a worked example. With the same resources of 100 units, countries A and B can produces the commoditis as follow.Sugar breadCountry A 10 100Country B 5 80It is clearly that country A has absolute advantage over country B.Now, we will look at the local opportunity cost ratios.For A, the cost of 1 sugar is 10 units of bread: 100/10=10For B, the cost of 1 sugar is 16 units of bread: 80/5=16For A, the cost of 1 bread is 0.1 units of sugar: 10/100=0.1For B, the cost of 1 bread is 0.0625 units of sugar: 5/80=0.0625From the outcome I have calculated above, we can see in terms of opportunity cost, bread is cheaper in country B than in country A. country B has a comparative advantage in bread.7While there are many advantages of free trade, we still can't forget the protectionism to maintain the employment rate, protect our local companies from the fierce competition if we join in EU.The protectionism is a kind of measure that the domestic country has some restrictionon other countries on import of the world trade to protect local industries from competition, and supply some preferential means to local company to help them develop as well as raise revenue from tariffs and quotas. It contains protecting employment, industries, protecting against dumping, protecting against over specialisation, cure persistent balance of payments deficit.For example, in 2011.10.11. The United States senate passed the 2011 of currency exchange rate supervision reform bill, the main content of the bill is of request to the U.S. Government to impose punitive tariffs to major trade partners who is called his exchange rate is undervalued. It was obviously that the U.S. want to impose tariffs to China to force the value of RMB apprecation, in this way the import of U.S. from China will decline, which, in turn, will protect local industry and protect employment. In another case, in 2010 Argentina pass some policies to limit the import which make 540,000 people find their jobs in financial crisis, among this 360, 000 textile worker be employed, followed 64,000 people in wooden furniture and 50,000 people in capital goods, which protect the local employment.8There are many barriers of trade, if we join in EU, most of them can be cancelled. One of the barriers to trade is tariffs. Tariffs are surcharges on the price of imports , a tariff requires the importer of a good to pay a specified fraction of the price to the government. For example, in 2011.01.20. To protect the local production enterprise from the impact of the imported products, one of the most important global textile powers, Turkey, issued an official statement, which plans to impose import tariffs of woven fabric from the impoters.Another is quotas. It is the most important non-tariff trade barrier. It is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported. For examle, in 2011.11.17. The customs union committee of Belorussia, Russia,Kazakhstan set the amount of impot quotas, which contains: Russia's quota- 70000 tons to 250000 tons of frozen chicken bone, 10,000 tons of frozen Turkey. The quota for Belorussia-15,000 tons of poultry and poultry products. Kazakhstan's quota-110,000 tons of poultry and poultry product s.9Now, let me talk about the role of EU.The free movement of goods, people, services and capital is the fundamental role ofEU.It also aims to eliminate customs duties and quotas between members, establish common external tariff for non members, establish free movement of people, services, goods and capital between members, reduce anti-competitive practices, associate with countries outside union to increase trade, move towards full economic and monetary union, develop common foreign, security and defence policy.In 15 October 2009, in Brussels, Belgium, which is the European Union headquarters, the EU trade commissioner ashton and south Korean foreign trade minister signed the free trade agreement between EU and South Korea. The agreement will eliminate almost all of the tariff and non-tariff barriers to trade between two economies.As we kown the bilateral trade between the 2 countries in 2008 to more than $90 billion, this assignment will promote the free trade and bring benefits to EU membership countrise.10There is also an world organization called World Trade Organization, which paly the same role in some aspects with EUit is the body established in 1995 to regulate world trade. This covers goods, services and intellectual property rights. It seeks to encourage the lowering of trade restrictions and to settle disputes with a common dispute procedure.For example,in the 2003 December 13th to 18th, the sixth ministerial conference of WTO held in Hong Kong, China, the meeting pass the minister declaration, which said "by the end of 2008, the developed countries and part of developing countries will allow non-tariffs and non-quotas standards be available to the most undeveloped countries; The developed members cancel cotton export subsidies in 2006 , cancel all form of export subsidies in agricultural product by the end of 2013.In this case, we can see the WTO is playing his roles to promote the development of free trade, to help the poor countries become more strengthful in the competitive world.11The balance of payments is one of the most important documents of one country, it can help us find our problems. Here I use the figures of UK to help us understand it. The balance of payments a record of all financial transactions between a country and the international economy. The structure of the UK now consists of the current account and the capital account, the financial account.The current account concerns income and expenditure and is dividen into four parts.(1). Trade in goods. This covers the exports and imports of goods.(2). Traded in service. This covers the exports and imports of services.In 2002, the trade in goods/services are -21,023 million pounds(3). Income.it consists 2 parts. Direct investment income and portfolio investment income and other income like earning s on loans and deposits and reserve assets. In 2002, this figure is 20,646 million pounds.(4). Current transfers. This aspects contains payments and receipts where there is no corresponding exchange of a good or service. In 2002, the number of current transfer is -9,247 million pounds.The capital account. It consists of capital transfers and acquisition and disposal of non-produced goods. In 2002, the figure is 1,096 million pounds.The financial account. It is the flow of direct portfolio and other investment and reserve assets. In 2002, the financial account is 7,188 million pounds.12If we join in EU, our exchange rate is tend to be more stable, so our balance of payments can be more steady.The exchange rate is the price of a currency in terms of other currencies.If the value of currency rises imported goods will be dearer, therefore the trade in goods is likely to move into deficit.If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall.For example, a UK firm produces bread for a cake company in the China. The cost is 100 pounds. The rate of the Yuan to the pounds is 10 Yuan to 1 pound. Cost to the Chinese firm is 1000 Yuan. If the rate changes to 11 Yuan to 1 pound, which means the pound is stronger and the cost of the bread to the Chinese firm is now 1100 Yuan. The Chinese firm may consider this to be too expensive and look elsewhere for a cheaper company. If the value of the pound then falls to 9 Yuna to 1 pound, then the cost to the Chinese firm will be 900 Yuan and they are likely to purchase more at this cheaper price.13There is no doubt however that it was the move towards becoming a Service-based economy which changed the emphasis in the UK economy. All the heavy manufacturing and engineering industries largely disappeared, for example: shipbuilding, steel, mining etc.The balance of payments figures show that the deficit in the balance of trade in goodshas widened considerably, and a marked increase in the balance of trade deficit. Even a very marked increase in the income generated in the income section has not been sufficient to overcome this deficit and therefore the current account balance has also usually been in deficit. The reason of the deficit is that the trend for UK consumers to buy more imported goods.But the current figures suggest that the UK economy is heading for an annual growth of 2002 of 3.7%.14If we join in EU, it is likely that we will be a single currency country. So here I will say something about the single currency.There are 2 advantages of the single currency for the UK.Reduce costs. Firms and individuals do not have to pay as they move themselves or goods or services from one EU country to another.Reduce exchange rate uncertainty. The UK pound will be at the same rate for all Euro members.There are also 2 disadvantages of the single currency.Loss of independent monetary policy. Scope for fiscal policy adjustments is restricted by need to stay within 3% of GDP.Inability to devalue independently. Individual governments lose this policy instrument.15There are many benefits of being a single currency country if we join in EU.There are many impacts of single currency to the individual as well as businesses.For person. first, as long as you are in the countries of EU, you don’t need to purchase other currencies and change them back, you also needn’t to calculate the cost of purchases in different denominations against the UK pound. Second, the price of goods in each country will be easily compared.For companies. First, the company can aviod the additional cost when it was to settle accounts because the EU countries all use the same currency. Second, increased foreign investments. Because the market size as it was in a union.16. ConclusionWith the contents I have talked above, we can see that if we join in EU, the benefits is obvious. It will bring more opportunities to our people and company, bring in new technology and ideas to widen our horizon to help us think in order to develop our nation's environment and most importantly, develop our economy to make our people have a better life.17. References1./2./3.China daily4.the world economy5.financing international trade6./7.An Inquiry into the Nature and Causes of the Wealth of Nations8.World economy。

The World EconomyName: shaohanStudent ID:Tutor: Xiaojiao OuyangTitle of the Project: Report for Economics 2: The World Economy Word Count:2873Date of Submission: 29/12/2011◇Title: Global Economy◇Abstract:This report mainly represents the development about free trade and economical globalization. It discussed about the basic theories about free trade; economic integration regional and global; balance of payment; single currency; LDCs; MNCs. ◇Keywords:Free tradeEconomic integrationTrading blocsGreen barrierⅠIntroductionAlong with 2008 economic crisis,Global unification of financial markets, which preceded formal global economic unification, raised an issue of the global regulation of the markets. At the same time, this seems impossible without global supranational bodies being in place.This is a dilemma posed in discussions in the main international panels of the world (G8; G20; UN General Assembly): economic integration is both pushed by world economic development and stopped at the political level, including cultural differences between states (e.g., Iran and Israel).However the trend of development is inevitable and back to the original of initial purpose to trade, we will find answer.Ⅱ Free Trade vs. Global Economical DevelopmentA s the scarcity and geographical diversity of resources, trading meets the demand of exchanging necessities and commodities. Nowadays, trading is described as ―global‖, it seems we can enjoy the goods and service trading freely allover the world that can be delivered.·But is it true ?·What make us not?·How long should it take to finally make it?As to find out the answer, the questions had been discussed from three parts:◆Free Trade &International TradeFree trade is essentially a liberal approach to international business. Economic policy-makers implement a trade structure in which goods and products are imported and exported without government intervention..[1]F ree trade is based on the principal of eliminating barriers for exchange and North American Free Trade Agreement create a trade free area.Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008. [2]B ut that is a idealized situation when we discussed about completely trading freely it means there is no barrier and restriction of import or export, it is rarely can be found.I n the real world, as the level of industrialization and technology development divers, when one country can produce a good and service much more efficiently than other countries as using the same resources, this country is said to have an Absolute Advantage.Individual country can benefit a lot from international trades:·Specialization pushes up output and decrease the cost of goods.·Consumers get more choice and cheaper goods and service and living standard increase.·Promotes competition. Domestic company will face the challenges from multi- national companies, it also a chance for them to obtain benefits abroad.G lobal trading markets interact with each other, exchanging products grown or made with a Comparative Advantage. Free trade encourages countries to specialize their economies in order to trade certain goods for maximum benefits with other countries. And comparative advantage is the basis of International trade.This happens as the opportunity costs of exchanging resources will be higher in the country with absolute advantage than it will be in the country with comparative advantage.Example:Suppose there two countries, A and B, that both produce food and clothes. Each country has a unit of resources and both countries use their resources to foodproduction, output will be:·Country A:1000 t·Country B:4000 tIf all the resources use to clothes production, output will be:·Country A:1000 t·Country B:2000 tTo show different opportunity costs, consider the countries produce and sells only domestics’:It is clearly that Country B has an absolute advantage in both commodities, for using same resources Country A it can make twice as many clothes and advantage at food is 4.The domestic opportunity cost ratios.For Country A, the cost of 1 food is 1 clothes.For Country B, the cost of 1 food is 0.5 of clothes, the cost of 1 clothes is 2 food.It show the opportunity cost of clothes is cheaper in Country A than Country B. Country A has a comparative advantage in clothes. So A will produce clothes and B will produce food. And only partially specializing that Country B to fulfill the reduction of clothes.And the total output of clothes is remaining the same but total food producing is increase.◆Free trade &Regional economic integrationF ree trade agreements allow for goods to be imported and exported without taxes and tariffs, making products more affordable for buyers and sellers. Other barriers to international trade such as quotas on imports or subsidies for producers are also eliminated.T here are some reasons why trade is not fully free:·Countries raise barriers as they may fear being swamped by the larger and more powerful neighbor.·Countries want to protect industries as ―Sunrise‖, ―Sun set‖ and―Strategic‖. ·Raise revenue by means of imposing taxes on imports.·Protecting employment in domestic industries and try to move expenditure from foreign to domestic product.·Balance of payment deficit.All above reasons will cause restrictions or barriers to the international trade, that applied to free trade is called as protectionism.* EU subsides on agriculture.EU agricultural policy is constantly evolving. 50 years ago, the emphasis was on providing enough food for a Europe emerging from a decade of war-induced shortages. Subsidizing production on a large scale and buying up surpluses in the interests of food security are now largely a thing of the past. EU policy aims to enable producers of all forms of food - from crops and livestock to fruit and vegetables or wine - to survive by themselves in EU and world markets.But*China's agricultural exports are being stifled by "green barriers" -- import restrictions on the grounds of environmental and food safety issues -- but Chinese farmers are now fighting back with "green" produce.China's tea exports to the European Union dropped by 37 percent last year on an annual basis, which was principally attributed to intensified import criteria -- examination categories soared from six to 62 after November last year. According to figures from United Nations organizations, 7.4 billion U.S. dollars of exports from China covering agriculture and other industries were stifled by the growing green barrier annually.In an effort to deal with the difficulties, China has taken up the challenge to improve its own agricultural structure. "China has pinpointed green food as a vanguard to break the barrier and boost agricultural exports. The development can also greatly improve the agricultural environment," said Liang Zhichao, of the China Green Food Development Center (CGFD). In northeast Heilongjiang Province, China's largest green food exporter, 40 percent of farmers' income growth was realized by developing green food. [4]Due to stimulate trade between and obtain other benefits of economic cooperation, countries that joined together reached kinds of intergovernmental agreement, Trade Bloc. Majority members are part of a regional intergovernmental organizationDepending on the level of Economic Integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.[5]Some supporters of worldwide free trade are generally opposed to trading blocs, which, they argue, encourage regional as opposed to global free trade. But it remains observed whether regional economic integration is blocking the process of globalization or alternative.T rade blocs can be stand-alone agreements between several states (such as the North American Free Trade Agreement (NAFTA) or part of a regional organization (such as the European Union).EU&Trade Free:The fundamental principles of the EU is the free movement of people, goods, services, and capital, enacts legislation in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development.The found of EU is significant for European economic integration and the members benefit not only from domestic but also global.The European Union's Internal Market (sometimes known as the Single Market, formerly the Common Market) seeks to guarantee the free movement of goods, capital, services, and people within the EU's 27 member states (single market).∙The Internal Market allows not only for the free movement of goods amongst member states, also the free movement of the factors of production. It is intended to be conducive to increased competition, increased specialisation, larger economies of scale, allows goods and factors of production to move to the area where they are most valued, thus improving the efficiency of the allocation of resources.The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the euro zone. It is also intended as a political symbol of integration and stimulus for more. Since its launch the euro has become the second reserve currency in the world with a quarter of foreign exchanges reserves being in euro. The euro, and the monetary policies of those who have adopted it in agreement with the EU, is under the control of the European Central Bank (ECB).∙ The Union acts as single player in Foreign Trade and supports the principles of free and fair international trade. As it negotiates with one voice, it can exercise real influence. Together, the European Union's 27 members account for 19% of world imports and exports. Since its technical norms are widely used throughout the world, it often sets the terms of the debate.[7]◆Free Trade & Economic Globalization“Only a free global market and a free global trading system can cope with the global challenges of our time,” said Mr. Renato Ruggiero, WTO Director-General, today (24 April) in Singapore at the World Trade Congress, sponsored by Singapore's Trade and Development Board and the International Herald Tribune. [8]The World Trade Organization (WTO) is established to regulate world trade and covers goods, services and intellectual property rights. It aims to lowering trade restrictions and to settle disputes with a certain procedure.Increase income.The WTO’s own estimates for the impact of the 1994 Uruguay Round trade deal were between $109 billion and $510 billion added to world income (depending on the assumptions of the calculations and allowing for margins of error).More recent research has produced similar figures. Economists estimate that cutting trade barriers in agriculture, manufacturing and services by one third would boost the world economy by $613 billion — equivalent to adding an economy the size of Canada to the world economy. In Europe, the EU Commission calculates that over 1989–93 EU incomes increased by 1.1–1.5% more than they would have done without the Single Market. [9]The WTO contributes to protection and preservation of the environment through its objective of trade openness, through its rules and enforcement mechanism, through work in different WTO bodies, and through ongoing efforts under the Doha Development Agenda. The Doha Agenda includes specific negotiations on trade and environment and some tasks assigned to the regular Trade and Environment Committee. [11]◆The UK Balance of PaymentThe UK Balance of Payments is a account of all the economic transactio ns between the UK and the world. These transactions includes: exports and imports of goods& service; income& financial inflows; transfers.And includes four sections: The Current Account; The Capital Account; The Financial Account; The International Investment Position.Here is a summary of balance of payments in 2009:◆Current AccountCurrent account concerns on income and expenditure and includes four categories: Trade in Goods; Trade in Service; Income; Current Transfer.In 2006 the UK current account deficit suffers a peak at ￡44.9 billion in 2006 and for last four years there has been a reduction in deficit. In 2009, it stands at ￡15.5 billion equivalent to -1.1% of GDP.∙ Since 1966, every year that been recorded for trade in service has been a surplus but there was a decrease between 2008 and 2009 from ￡55.4 billion to ￡49.9 billion. ∙ Since 2000, the balance of income has been in surplus for all years. From 2007, the surplus suffers a deduction as a reduction in net earnings deficit on other investment.∙ Between 1990 and 2000, the deficit for current transfer doubled from￡4.8 billion to ￡9.8 billion. As the currency investment abroad is larger than investment domestic.◆Exchange Rate& Balance of Payment[13] From the chart, UK is using direct quotation as 1 GBP can buy 1.6432 USD. GBP is at a high exchange rate. Japan using indirect quotation as 1 USD can buy 96.57 JPY.JPY is at a low exchange rate.∙ A High Exchange Rate, the GBP is at a high value, means that all areas that are interest bearing will benefit and the Balance of Payment will have a positive impact. Import will become cheaper. Consumers could be import goods easier. Foreign investment will increase as profits sent back worth more than domestic currency However it will cause problem in the Balance of Goods& Service areas as domestic firms may reduce price. The strength of the UK pound makes their product expensive to potential foreign buyers whom will consider buying same commodity elsewhere.∙A low exchange rate, the JPY is at a low value, mean Japan’s goods and service will be cheaper both in foreign and domestic markets which will result an in crease in demand and the domestic firms can benefits more. It means an improvement in Trade in Goods.And it will encourage Japanese companies invest abroad in that the foreign currencye.g. GBP earned will be worth more when sent back Japan.◆Singer CurrencyAs the EMU, EURO can be paid in any countries which are a member of it, but UK pound is not one of them. Here some pros and cons:∙The single currency reduces the cost, Euro countries’individual or forms did not have to do transaction and reduce exchange rate uncertainty.Increase foreign investment free movement of capital and goods among internal market.∙If UK joins in the EMU, it will lose independent from both monetary policy and policy instrument. And changes from GBP to Euro may be costly as equipment and staff train.And single currency will have effects on both individuals and enterprises:∙Euro areas citizens will benefit a lot from single currency, as reduce the cost of transaction. It will be more convenient since there is no exchange rate uncertainty and price can be easier to compare between countries.∙For enterprise that wants to invest in Euro areas, the risk is decrease since there is no exchange rate flotation. Both competition and chances is increase as the free movement of capital and goods.◆MNCAs the development of free trade and the trend of economic globalization, some adventurers broaden their eyesight to foreign market or even global market and Multi-National Firms becoming popular. MNFs are those enterprises that operate not only in one country but also seek out opportunity spread abroad such as Ford, IBM and KFC.It brought both benefits and problems to the host countries. As the case of KFC to China, in the year 2000 the direct contribution made by KFC shows that:∙KFC invested directly 2740 million for the upper stream and low stream sectors and a large quantity of initial demands had been created.∙KFC offered 420 million RMB tax for Chinese government and turned in 325 million RMB taxes for Chinese government indirectly. Plus the direct taxes altogether KFC created 745 million RMB tax revenues for Chinese government.∙ KFC provided job opportunities for 5201 formal workers and 24060 casual laborers. ∙ In 2000, the initial paid-in capital made by KFC brought 520 million RMB capital formations to China which as 50 times more than that in 1992.ⅢConclusionEconomic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state. This is meant in turn to lead to lower prices for distributors and consumers (as no customs duties are paid within the integrated area) and the goal is to increase trade.The trade stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist. [16]。