Global Trade Theory: The Economy Of International Trade

1132 Words 5 Pages
HOMEWORK 1-INTERNATIONAL TRADE THEORY & POLITICAL ECONOMY OF INTERNATIONAL TRADE

1. Read the Samuelson critique from Chapter 5. Explain briefly what you understand from this critique. Do you agree or disagree with this critique?
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Free trade agreements also stimulate the growth in investments in the poorer countries. This affect the whole country’s economy – from developing banking sector because of the great inflow of money, to the reducing of child labor, as now high technology equipment is available to the producers, and that requires more skilled adult workers. Thus another advantage occurs – one way or another free trade encourages education, which is a good thing in every way. Developed countries relocate their manufacturing to developing countries, giving new jobs, what leads to higher standards of leaving, and provide economic growth in the end.
The other huge effect of trade in developing countries is reducing poverty. For example, 30 years ago, South Korea was as poor as Ghana, and thanks to trade, now it is as rich as Portugal.
On the other hand, some local producers might not survive the competition, but that will encourage them to improve their own production, and to find new ways of handling
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4.
1. If agricultural tariffs and subsidies to producers were removed overnight the impact on average consumer would be buying products for a less price, because it will allow producers from developing countries to sell their goods in U.S and EU for a less price. Some farmers would have to leave the market because of growing competition. I believe that total benefits will outweigh the total costs, but in a long term.
2. Removing all agricultural tariffs will definitely be more helpful, as in a long term it will cause a great economic growth, and at some point this countries just will not need any help.
3. First of all because producers of agricultural products have always had a huge influence on politics. Also, even though government spends a lot of money as subsidies, they still win more out of the international

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