What are the impact on each group in terms of gains and losses from trade? What do each group gain or lose when trade occurs? For the international trade affects consumers, producers and workers.
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on Apr 15th, 2009 at 9:40 pm
SmarterHousing: Residential Sales
hey.
so free trade is basically the movement of goods AND services among nations without political or economic obstruction.
So first you have to know some key terms
Comparative advantage theory: Theory that states that a country should see to other countries those products that it produces most effectively and efficiently, and buy other countries those products that it cannot produce as effectivly or efficiently
Balance of trade: A nations ratio of exports to imports
Exporting: Selling products to other countries
Importing: Buying products from another country.
FREE TRADE
Pros:
- The global market contains more than 6 billion ppl which are all potential customers for these goods and services.
-Productivity grows when countries produce goods and services in whch they hav a ‘comparative advantage’
- Global competition and less-costly imports keep prices down, so inflation does not curtail economic growth
-Free trade inspires innovation for new products and keeps firms competitively challanged
- uninterrupet flow of capital gives countries access to foreign investments, which helps keep intrest rates low.
Cons:
- Domestic workers can lose their jobs due to increased imports or production shifts to low wage global markets.
-workers may b forced to accept pay cuts from employers who threaten to move their jobs to lower-cost global markets
- Moving operations over seas bcause of intense competitive pressure often means the loss of service jobs and growing numbers of White Collar Jobs
- Domestic companies can lose their ‘comparative advantage when competitors build advanced production operations in low wage countries
okay hope this helps. ask if you have any other questions
on Apr 16th, 2009 at 6:01 am
SmarterHousing: Houses for sale
First of all, we will never have completely free trade. There’s always going to be tariffs, subsidies, etc.