Thursday, June 13, 2019
International business Essay Example | Topics and Well Written Essays - 1000 words
International business - Essay ExampleIt would be prudent to assure why world over free- clientele agreements surrounded by the nations have got so much importance in last few decades. Suranovic (2010) describes following key resolves behind each international betray between the nations. Resource Differences Each country differs in availability of resources, especially natural resources such as mines, minerals, energy sources, water and life-and-death raw materials. This resource benefits put them into proceeds over other countries to produce good. Technological Differences Technological differences put one country ahead of other because deploying fall in technology country can produce goods at lower cost using lower resources. Economies of Scale Economies of scale put one country into improvement over others because that helps reduce the cost of production. Those who fail to operate at the economies of scale impart be at disadvantageous situation. It is obvious that global demand will rush toward the lowest production centers. Government Regulations Tariffs imposed on the imported goods or subsidies provided to domestic producers can boost or bust the trade between the nations. ... That augurs well for the overall growth of the market. Inefficient domestic producers are the biggest sufferers who cannot stand due to their non competitiveness. Their inability to compete with the good from other countries could be for any reason however, they opine that they should be protected if domestic workers jobs are to be saved (Suranovic, 2010, Ch.2). The Ricardian Model states that free trade raises production and consumption efficiencies. It also states that labor is officious and economy achieves full employment soon however, in the real world full employment cannot be achieved due to impending complexities of the market. Labor productivity changes when they guide one from one market to another. In reality it does not remain a win-win situation for all. One group of workers who have a competitive advantage get benefitted in terms of real income but at the same time other groups of workers lose on real wages. That is to say, a free trade arranges redistribution of the income among participatory nations (Suranovic, 2010, Ch.2). US Free trade with Latin America, Central America and the Caribbean needs to be seen in the above perspectives. US entered into a free trade agreement with the five countries of the Central American namely Costa Rica, Honduras, Nicaragua, Guatemala, El Salvador, and Dominican Republic. The agreement is known as CA-DR FTA. The textile and clothing sector is the almost vibrant nontraditional and industrial export sector of the Central America which is responsible for most of the foreign exchange earnings. Thus, the biggest impact that the US industries may start out will be in textiles, apparel and leather sectors (Jensen et al., 2007 p.1). Butcher and Stamps (2004) state that the economic benefits to the US econ omy are mixed in
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