hnd经济学2世界经济学

Economics2: The World EconomyF86E 35Candidate Name: REN LUGrade and Class: 2013 BA1Introduction (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)IntroductionThis 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 advantagesAbsolute 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 tradeproviding each country has the comparative advantages.UK is a major importer of manufacturing goods such clothes, shoes, toys, electronic produces etc. as these labor oriented consumer goods will cost more in UK before 1980s. UK has the With the development of service, the advantage of trade is service trade.The goods that courtry import and export change over time as the goods in which they have a comparative advantage change over time. Before 1970s, manufacturing industry is its absolute advantage. After 1970s, service industry is more competitive for international trade such as computer software, business service and pharmaceuticals. These industry 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 countries.2. The benefits of free trade(1). Goods and services produced at lower cost. Free trade can promote the cooperation of different countries in the world. It can decrease the cost of producing goods.(2). Greater range of commodities for consumers, more choice. Any countries cannot produce all products, they all have products which are unable to produce. Trade allow us to buy all of them. Greater range of commodities provide customers with more choice.(3). Increased world-wide output. Each country producing according to theirrespective advantages has high efficiency. Under the same resources, it has high yield. Therefore, international trade increased world-wide output.3.Barriers to International TradeTrade barriers are government-induced restrictions on international trade. The barriers can take many forms, including the following tariffs and non tariffs.Non Tarriff Barriers-exchange controlsIn a real world, there is and should be a certain degree of government intervention on foreign exchange. Imports need foreign currencies to buy gooods and services from abroad.Importers must apply to the cenytal bank for the currency they need to purchase goods in that country, The Central bank can erxert control over the variety and volume of both imports and exports by controlling the quantity of foreign cuurency it will issue to exporters and importers.Non Tarriff Barriers-Import DepoitsGovernment requires importers to lodge a non-interest bearing deposit in advance with its Central Bank before they can buy goods and services from abroad. Besides, the deposit is usually in an amount equal to all or part of the cost of imported goods. This is time consuming and obviously expensive since it reduces the liquidity of the importing firms, which tend to hinder their importing activities. Before 1984, the Nigerian advanced import deposit ranged from 50% to 200% of the value of a list of import items.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, t non tariffs in 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. The purpose of raising barriers to International Trade(1) The purpose is to protect employment.Footwear manufactureers associations of Italy, Spain ad Portugal are reported to have field applications to the EU to curb footwear imports from China. Local shoemarkers in Elche, the capital of Spain’s once flourishing footwear industry, argue that “made in China”is taking away their jobs by that Chinese shoes have been booming in Spain just because of good quality and reasonable prices.(2) The purpose is to anti-dumping. In July 2012, SolarWorld AG, a Germangiant, led a consortium of around 25 EU solar panel producers to file a complaint to the EU Commission to investigate whether there has been distortion of competition by Chinese counterparts due to dumping. Soon Germany against China low price.5．The Role of WTOThe World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on 1 January 1995 under the Marrakech Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade(GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries by providing a framework for negotiating and formalizing trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments.The WTO dispute settlement mechanism is measures of dealing with trade disputes between members.It is the effective way for countries especially the developing countries to resolve the economic friction and safeguard their legitimate rights and interests.It is very unfavorable for the developing countries to resolve trade disputes especially trade disputes with the developed countries through bilateral channels. The bilateral approach pursues strength doctrine. Involved in trade disputes among developing countries, the WTO dispute settlement mechanism ruling is comparatively fair and reasonable. As either the complainant or respondent, the legitimate interests of the developing countries have been effectively protected. It is because the WTO dispute adjudication has very strong fairness, developing countries generally have a high enthusiasm to use the WTO dispute settlement mechanism. Some larger economic scale developing countries is more active in the use of WTO dispute settlement mechanism.It helps to reduce the economic friction between countries, and promote friendly relations among nations.The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs andTrade(GATT), spanning from 1986 to 1994 and embracing 123 countries as "contracting parties". The Round led to the creation of the World Trade Organization, withGATT remaining as an integral part of the WTO agreements. The broad mandate of the Round had been to extend GATT trade rules to areas previously exempted as too difficult to liberalize (agriculture, textiles) and increasingly important new areas previously not included (trade in services, intellectual property,investment policy trade distortions)Here are some others areas the WTO has dealt with in attempts to establish itself as the policing body promoting free trade. The Banana Dispute. The WTO ruled that the European Union discriminated unfairly against the US with its banana import rules. The WTO allowed the US to slap a $191 million sanction on the EU. Was it paid? We do not know but probably not so.6. One measure of European Union promotes economic integrationThe European Union (EU) is a politico-economic union of 28 member states that are located primarily in Europe. The EU operates through a system of supranational institutions and intergovernmental negotiated decisions by the member states. The institutions are: the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, the European Central Bank, the Court of Auditors, and the European Parliament. The European Parliament is elected every five years by EU citizens(1)EU can eliminate customers duties and quotas on imports and exports of goodsbetween member states and eliminate tariffs between EU members. Though the institutions, members can establish common policies for agriculture and transport for free trade.(2)It can accelerate the investment from a wide range of contries. With the risingstatus of the euro and d evelopment of European capital market, members’ cost of capital will decline, which is conducive to investment and economic growth. The European Central Bank (ECB) develop and implement a unified monetary policy, each country’s interest rates, prices and i nvestment returns will gradually narrow the differences or reach to unanimous, leading to an overall decline of price and the level of interest rates.7. Balance of payments()The balance of payments (BOP) of a country is the record of all economic transactions between the residents of a country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year). These transactions are made by individuals, firms and government bodies. Thus the balance of payments includes all external visible and non-visible transactions of a country during a given period, usually a year. It represents a summation of country's current demand and supply of the claims on foreign currencies and of foreign claims on its currencyThis table illustrates current account, capital account and financial account in UK during the 20 years from 1980 to 2010. In terms of current account, 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 achieves the lowest number about -55190 million in 2008. This situation illustrate that the economy of UK develop not very well.As for capital account, the data shows that this account experience a fluctuate trend. 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 1999 to -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. The general trends in UK trade over the last 30 yearOverall, the evolution of trade in goods show an upward trend. With the quick development , 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 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 accounthas 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.The chart shows that the total goods exports are less than imports, which leads to deficit.However, the total service exports are more than total service imports, which results in surplus.It shows United Kingdom is in a large fiscal deficit in the last 30 years. The highest surplus is in 1981, however the current balance deficit from 1984 to 1990. From 1984 to 1989, the current balance deficit and in 1987, the deficit increase quickly. The current balance deficit fell sharply from 1990 to 1991. From 1992 to 1997, the current balance slightly fluctuates. Then from 2000 to 2006, the deficit increased substantially, although from 2002 to 2004, there is a slight decline. From 2007 to 2008 deficit has a steep decline. Main reason may be in goods trade balance deficits, while the surplus on trade in services, especially in the last 30 years growth.In the past 30 years Britain's merchandise trade decreased, because of the high cost of HR, the UK is few to doing the manufacture, most goods is depend on imported, no exported. But the financial services, renting and business, is totally increased, so in the past 30 years, the UK financial has been steadily increasing.9. The balance of payments affected by exchange rates(1) The effects of exchange rates for tradea. Imported goods will be dearer, therefore the Trade in Goods is likely to move into deficit. Consumers may turn to consume more imported goods; Inflation may be lower because domestic firms may reduce prices. The price of imported raw materials may go down again affecting the Trade aspect. Consumers may find it easier to buy imported goods.b. Domestic goods and services will be cheaper both in foreign and domestic markets. A country which has reduced the value of its currency would certainly be looking to sell more abroad. This should mean an improvement in Trade in Goods.Cheaper currency helps boost the exportSee an example: A UK firm manufactures hard discs for a computer firm in the USA. Selling price: 100 pounds.Exchange rate: 1 pounds = $1.5Cost to the American: $150.Exchange rate: 1 pounds = $2Cost to the American: $200The American firm may consider this to be too expensive and look elsewhere for a cheaper alternative.If:Exchange rate: 1 pounds =$1Cost to the American: $100The American firm may consider this to be cheaper, and buy more.(2)The effects of exchange rates for capital accountsa. Manufacturing firms might for example build up stocks at te cheaper price andforeign investment may increase because profits sent back will be worth more intheir domestic currency.b.It could encourage firms and individuals to invest abroad in that the forigncurrency earned will be worth more when sent back to the domestic market. 10. Advantages and disadvantages of fixed rate and floating rateFloating exchange rate or fluctuating exchange rate is a type of exchange-rate regime in which a currency's value is allowed to fluctuate in response to market mechanisms of the foreign-exchange market. A currency that uses a floating exchange rate is known as a floating currency. A floating currency is contrasted with a fixed currency.Advantages.Large reserves will not be necessary to protect the currency against changes or speculation. A country has no obligation to maintain exchange rate stability, and therefore it does not need foreign exchange reserve as much as in the fixed exchange rates, which can save foreign exchange funds.The exchange rate will not become a target because whichever way it moves, the mechanism should start to operate quickly to restore equilibrium. The imbalance of a country's international balance of payments can be eliminated by free fluctuation of exchange rate.Governments do not have to introduce measures to keep the value at a fixed rate, which might be harmful to other sections of the economy. Because the balance of payments of each country can adjust by themselves, which ensures the stability of foreign exchange market in a certain extent.Disadvantages.The futures market is designed to prevent this. By buying forward for commodities a price is agreed which does not change when the commodity is delivered. It causes all countries' instability of ability of international settlement and commodity price .Demand may be unstable because external prices of domestic goods will be subject to change. Planning production may be difficult. The instability of exchange rate increases the risk of international tradeIf 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 inflation.Fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of valueAdvantages.They reduce uncertainty, this makes trade and investments between the two countries easier and more external and more predictable and is especially useful for small economies in which external trade forms a large part of their GDP.Long term granting of credits, long-term contracts and investment overseas are seen to carry less risk. It makes the capacity of the international settlement and the price of import and export goods be stable.The fixed rate played a crucial role in achieving this growth in FDI. The stability of the exchange rate suppressed the speculation of foreign exchange market to a certain extent.Disadvantages.If deficits persist then reserves of foreign currency may be used up quite quickly. It leads to reduction of exports, the deficit of international balance of payments and more unstablethe currency.Countries which have a persistent deficit or surplus will have to take some action which may have severe impacts upon exports and imports or both.If inflation occurs the underlying cause will need to be tackled. Countries cannot rely on devaluing the currency to get rid of the problem. It weakened the autonomy of domestic monetary policy.11. Effects of fixed rate and floating rate on individuals and company Floating ExchangeCompany.Floating exchange rate system put forward higher requirements for company's macro-economic management capacity and development of financial market.It increases company’s management and operation cost.The company directly produces exchange loss.Individuals.In the floating exchange rate system, exchange rate tend to fluctuate significantly, which is not conducive to individuals investment With floating exchange rates, individuals might speculate in financial markets Individuals are beginning to realize the challenge of price advantage recession and the necessity of improving non price competitiveness.The individuals began to realize the importance of monetary settlement timing.The individuals began to realize the importance of monetary currency selection.Fixed ExchangeC ompany. Rigid exchange rate arrangements may be considered implicit exchange rate guarantee, so as to encourage capital inflows in the short term and no hedging of foreign debt, damaging the company’s health of the financial system. Fixed rate makes the company’s adjustment of rela tive price be easier and smoother.It is beneficial to a long-term stable development of company’s economic.It is directly generate the exchange rate lossesI ndividuals. It Is conducive for individuals to make cost and profit accounting, which avoids the risk of exchange rate fluctuations.It easily leads to currency overvaluation and weaken the competitiveness of local exports, causing personal imbalances of long-term current-account.It helps individuals to eliminate the risk of exchange rate and reduce the transaction cost of international trade and investment.12. The characteristics of the newly industrialized countries and the developing countriesNewly industrialized countries’economic structure especially industrial and agricultural structure changes significantly, and the proportion of industry is larger than agriculture. In total exports, the proportion of manufactured goods increased, getting rid of the situation of a half of the developing countries depending on primary products. Many intermediate products and machinery and equipment required for production is still in the hands of the developed countries. In some production ofmanufactured goods, Brazil is only developed countries’ assembly processing factory. Due to the introduction of a large number of foreign capital, Brazil has large foreign debts, and the amount of principal and interest is huge. From 2011 to 2014, the economy of Brazil is not optimistic the situation of the period for these four years, the average economic was only 1.4%.The developing countries rely heavily on agricultural production. From the production structure of agriculture, low-income countries’ share of agriculture in the GDP is much higher than that of developed countries; from the employment structure, the proportion of agricultural labor in India up to 50% ~ 70%; from the urbanization level, the proportion of urban population in total population of low and middle income is much lower than those of high income countries. Underdeveloped market economy is the nat ure of India’s economy. Due to the long suffering bound colonial plunder and feudal relations of production, as well as government’s improper intervention after independence, the market of India failed to operate and was distorted severely, unable to function as the basic means of resource allocation.13. The issues of the newly industrialized countries and the developing countriesNewly industrializing country:While Brazil introducing large-scale foreign capital and borrowing from the international financial capital, Brazil can not solve the problem of excessive dependence on international capital in the economy and can not solve the problem of establishing independent economic system in the international division of labor. Brazil's wealth gap is 21 times that of France, in Brazil's 1.6 billion of the national population, "marginalized people" with no fixed income was highly up to 50%. Brazil is not only the country with the most capital in the third world, but also the countrywith the largest foreign debt. Larger and larger foreign debt of principle and interest makes economic development be on the brink of collapse.Less Developed Country:China faces the debt crisis and fund backflow. The agricultural infrastructure deteriorates and per capita output of grain decreased continuously. Because population growth exceeded the growth of social material production, the society has overburdened. Labor roductivity of developing country is only 1/23 of that in developed countries. Political instability and frequent wars aggravated the existing difficulties, making residents become destitute and homeless.14. The influences Multi-National Corporations bring to newly industrialized countries.Overall, General Electric Corporation plays a positive role for the economic development of these countries. General Electric’s foreign investment has brought the capital required for Singapore’s economic development, technology and advanced management idea, driving the development of the national industry, which helps these countries to realize rapid economic growth and quick increase in national power objectively. General Electric Corporation provides a large number of employment opportunities, which solves the serious unemployment issue, maintaining the stability of society.However, it also has negative effects on the state power. Generally speaking, General Electric Corporation has some negative effects on the independence of Singapore’seconomic and social development. Some key sectors and departments of national economy has risk of being controlled by the General Electric Corporation, or have even been controlled. Some implementation of national industrial policy, anti-unfair competition policy, labor and environmental policy are weakened because of the existence of General Electric Corporation.ConclusionForm this report, We have know so many useful knowledge about international trad and we can know much about the advantages of trade and the functions of different organizations plays in trade. And we also know a lot of Balance of Payment of UK and the characteristics and problems of less developed countries.Reference (1)(2)(3)(4)(5)(6)。