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Economics2: The World Economy
F86E 35
Candidate Name: REN LU
Grade and Class: 2013 BA1
Introduction (3)
1. Free trade (4)
2. Absolute advantages and comparative advantages (4)
3. The benefits of free trade (5)
4. The purpose of carrying out trade protectionism (7)
5．One Mechanism of the World Trade Organization (8)
6. One measure of European Union promotes economic integration (9)
7. Balance of payments (10)
8. The general trends in UK trade over the last 30 year (13)
9. The balance of payments affected by exchange rates (14)
10. Advantages and disadvantages of fixed rate and floating rate (16)
11. Effects of fixed rate and floating rate on individuals and company (18)
12. The characteristics of the newly industrialized countries and the developing countries (19)
13. The issues of the newly industrialized countries and the developing countries (20)
14. The influences Multi-National Corporations bring to newly industrialized countries. (21)
Conclusion (23)
Reference (24)
Introduction
This report has introduced the world economics simply. The content includes: International trade, free trade, Protectionism, the role of WTO and under-developed nation, UK absolute and comparative advantage, the protectionism and two recent examples about demonstrate arguments which government may put forward for its use, two barriers of trade, a EU initiative about the role of the EU in promoting trade, the composition of the balance of payments, the general trends in UK trade over the last 30 years, the way which the balance of payments affected by exchange rates, an analysis of two current issues that face LDCs, and the aid of recent examples about two impacts of multinationals on NICs and LDCs.
I. Free trade
(1). Free trade is a type of trade policy that allows traders to act and transact without interference from government. Thus, the policy permits trading partners mutual gains from trade, with goods and services produced according to the theory of comparative advantage.
China-ASEAN free trade area was formally established in January 1, 2010, covering a population of 1900000000. China-ASEAN free trade area’s GDP amounted to $6 and trade amounted to $4.5. It is the largest free trade zone among developing countries. After the establishment of CAFTA, more than 90% products are carried out for zero tariffs on both sides. Average tariffs from Chinese to ASEAN decrease from 9.8% to 0.1%, Average tariffs from ASEAN’s six old members to Chinese decrease from 12.8% to 0.6%. Tariffs’ huge reduction promoted the rapid growth of bilateral trade. China and ASEAN countries’ trade investment grows, economic integration deepens, companies and people are widely benefit, realizing goals of mutual benefit and win-win cooperation and common development. China and ASEAN’s total quantity of bilateral trade grows rapidly. From January to October this year, the bilateral trade volume has reached to $295900000000, a year-on-year growth of 25.7%.
(2). Absolute advantages and comparative advantages
Absolute advantages is said to occur when one country can produce a good or service to pre-determined quality with less resources or more cheaply than another country.
Even when a country has an absolute advantage over another country in terms of commodities they wish to trade it will still be to their mutual advantage to trade
