Essay: TYS N2003 Q4
For many years the USA did not conduct normal trading relations with Vietnam. In 2001 a trade agreement was signed between the two countries which reduced tariffs, encouraged foreign direct investment and opened up export markets.
a. How does the theory of comparative advantage explain why a developed country such as the USA might wish to trade with a developing country such as Vietnam?  b. Discuss what effect such a trade agreement might have on the economies of the participating countries. 
Although most candidates made a reasonable response to this question, part (b) of the question once again produced a generally disappointing discussion. Part (a) discriminated well, with…show more content… |
|Linking to context and provide an approach to the question |
|An FTA between USA, a developed economy, together with Vietnam, an emerging economy, brings about benefits and costs to both participating economies. |