The Global Economy and International Trade

In this chapter, talks about Globalization and Trade. Wheelan starts by using the example of a magical machine that turns corn into stereo equipment. “Imagine a machine that can convert corn into a stereo equipment”. He says that no matter where in the world you look, trade is a machine that can turn anything into anything else. In trading we are practically taking what we produce and turning it into what we can’t or do not produce. The best part of the trade machine is that it allows countries to specialize in producing just one good and then taking that one good and turning it into another good. Since in the trade machine you just need one thing to get whatever you want, you basically take whatever you are better at and focus only on producing that in order to trade it with different people that can offer you what you lack. This is the heart of trade, specialization.

The United States imports more than it exports, and this creates a trade deficit of five hundred and forty billion dollars. Even though America exports billions of dollars in oil, consumer goods and automotive products, it imports more even more. (About.com, 2013)

Exports gains were significant for crude oil and natural gas and consumer goods led by food and beverages, appliances and cleaning products and pharmaceutical p roducts which in total, have been rising more than imports, but still lower than imports. Regionally, exports to the United States led to the gains for goods exports, which helped raise demand for Canadian products in that country as it increased by $19.1billion. Also, US takes up 75.8% of their overall trade while the European Union was the only major trading partner to which Canada’s exports fell last year.

What is international trade? International trade is the bartering of goods in exchange for financial compensation between two international countries. Why is this beneficial? The country purchasing the goods are receiving items that they either cannot make in their home country, or they are purchasing them at a lower price than locally available. The country selling exports receives more funds than they would on their own land, but they are also continuing a relationship with a foreign nation that they are receiving exports from.

But national security is also a question of maintaining a nation 's way of life,

The U.S. market share of Chinese made products has increased significantly in recent years and the US trade deficit with China has been growing as well. It 's not possible to determine subsides in a non-market economy such as China, Chinese goods are not subject to countervailing duties. As a

In the recent years, business become more larger due to the advancement of technology, a renewed enthusiasm for entrepreneurship and a global sentiment that favors international trade to connect people, business and market. The economist emphasize about the international trade can increase the production of goods and service, increase the demand from the consumer in local or international, the diversification of goods and services and the stability in the supply and prices of goods and services. As a result, it becomes the main part of the international business and motivated countries to trade with borders. The United States implied the government intervention since the great depression through the financial sector rescue

In addition, environmentalists worry that the industry is now following proprer safetyt precautions with the chemicals it uses.

a. International sales and trade can be a source of higher profit margins through additional sales. Unique products or technological advantages can provide competitive advantage that a company wishes to exploit by expanding sales in a foreign market

Companies need to follow the rule to playing the game in a foreign country. Furthermore, government is another part the CEO needs to think about it, some government will stop or against some products unless under their control. The most well-known examples will be the Facebook and Google in China. Google China was founded in 2005 as the google subsidiary corporation and shut down the service in 2010 by not cooperate with the Chinese government. In the main while, the Facebook CEO puts lots effort dealing with the Chinese government, but still unable to entry the Chinese market.

The principal purpose of global trade is and always will be to capitalize on the gains from international trading for each party involved. The global trade models below each have one thing in common; each has attempted to examine trade patterns while suggesting methods in an attempt to take full advantage of the gains from trade.

Free trade occurs when there are no artificial blockades put in place by governments to restrict the flow of goods and services between trading countries. When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers from international competition and redirect, rather than create trade flows. This results in less productivity and competition. Free Trade promotes international trade, multilateralism, the development of lesser-developed nations and increases the standard of living.

In 1930s the industrial specialized countries began reductions in protection from the high level, the process of policy reform was not just to reduce tariffs. During period of 1950s, a vital element of globalization and openness was the elimination of restrictions presented for equalization of trade. This process of liberalization had many challenges to face. During the same period, agriculture industry neglected from the multilateral system and this decision was made to support domestic agriculture industry support price. In the mid-1950s there was a rapid growth in world trade and in the liberalization of economies. According to a report world trade in this period has grown more rapidly than world income, more than

The international trade of goods across the world accounts for approximately 60% of the world Gross Domestic Product (The World Bank, 2014). A great proportion of goods transactions occur every second. The primary question is whether international trade benefits a country as an entirety, and, if so, why would a country implement protective trade policies to restrict particular exports? To address this question, this essay aims to explore the impact of trade on various economic stakeholders, including consumers, producers, labour and government and, furthermore, will compare models and theories with reality to ascertain the true winner/ loser in the international trade market.

International trade is focused on the exchange of goods, services and capital across national borders. According to Ball et al. (2012) international trade brings many benefits to the consumer, such as larger variety of products and services, on the other hand also benefits the country’s economy such as creation of jobs, innovation or reduction of poverty.