Allied Business Schools Free Trade Sustainability Discussion

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INB 5807 - Foundations of Global Business. (Working on answering a question – 2 Parts) Part (1) & Part (2) Very Important Notes: To start proceeding on this task, and gain the full marks, you will need to consider the followings: 1) Read the (Chapters 4 and 5) from the textbook entitled: (International Business Competing in the Global Marketplace, 14th Edition (Hill, Charles) (z-lib.org). It can be found at this free link (https://1lib.us/). Or ( the google drive link). 2) Chapters titles: • Chapter 6: International Trade Theory • Chapter 7: Government Policy and International Trade 3) Read the pdf files entitled: ➢ (Overview). ➢ (Lecturette 1_ Lecture 1_ Trade Theory). ➢ (Lecture 2_ Product Life in the Twenty-First Century). Note: (Within some of those uploaded files, you will find a YouTube links. Please click on them and explore more information given to you to have more knowledge and information which will absolutely help you to enrich your answer for parts (1&2). 4) After reading and going through the indicated entire given materials, chapters (6&7) and the pdf files indicated above, please, ✓ (Part 1) Answer ONLY ONE of the following questions below. ✓ (Part 2) answer two quality replies of other classmate’s posts. (Will be sent to you 2 classmates posts later once they post their work). ✓ Remember to Include your chosen prompt at the top of your post. Note and clarification: (DQ stands for Discussion Question) Quality posts mean you are providing value-added academic content and/or examples to enrich our understanding of the course’s concepts (so everyone can learn and be better prepared for the exams) usually, these value-added DQ answers are about 100 words or more per question; and quality replies can be anywhere from a complete paragraph to many. Try to use and cite the course textbook to reinforce some topics that are important for understanding the chapters. You can paraphrase the assigned readings or provide “direct quotations” to reinforce important concepts, while always providing proper citations such as (Mujtaba, 2022, p. 55) and complete references in the APA format. The Questions: A. What is Mercantilism is a bankrupt theory that has no place in the modern world. Discuss. B. Is free trade fair? Discuss. C. Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition. Is such competition “unfair”? Do you think that this argument is in the best interests of (a) the unions, (b) the people they represent, and/or (c) the country as a whole? D. What are the potential costs of adopting a free trade regime? Do you think governments should do anything to reduce these costs? Why? E. Is there a difference between the transference of high-paying white-collar jobs, such as computer programming and accounting, to developing nations, and low-paying blue-collar jobs? If so, what is the difference, and should government do anything to stop the flow of white-collar jobs out of the country to countries like India? F. Drawing on the new trade theory and Porter's theory of national competitive advantage, outline the case for government policies designed to build a national competitive advantage in biotechnology. What kind of policies would you recommend the government adopt? Are these policies at variance with the basic free trade philosophy? G. The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export. They have no capital; their land is of poor quality; they often have too many people given available work opportunities; and they are poorly educated. Free trade cannot possibly be in the interests of such nations. Discuss. H. Do you think that governments should consider human rights when granting preferential trading rights to countries? What are the arguments for and against taking such a position? I. Whose interests should be the paramount concern of government trade policy: the interests of producers (businesses and their employees) or those of consumers? J. Given the arguments relating to the new trade theory and strategic trade policy, what kind of trade policy should business be pressuring government to adopt? 5) Required pages: (Part 1) - A maximum of 1 page is required. Total = 1 Page (Part 2) - (Will be sent to you 2 classmates posts later on once they post their work). - A maximum of 1 page for classmate’s post [First Student]. - A maximum of 1 page for classmate’s post [Second Student]. Total = 2 Pages 6) APA style is essentially required to gain the full mark. Week 3 Overview Welcome to this week’s session. Please continue being ahead on your assigned readings, research and teamwork. Learning Outcomes This week we will be discussing the following chapters: Chapter 6: International Trade Theory Chapter 7: Government Policy and International Trade Learning Outcomes This week’s learning outcomes include the following: 1. Understand why nations trade with each other. 2. Summarize the different theories explaining trade flows between nations. 3. Recognize why many economists believe that unrestricted free trade between nations will raise the economic welfare of countries that participate in a free trade system. 4. Explain the arguments of those who maintain that government can play a proactive role in promoting national competitive advantage in certain industries. 5. Understand the important implications that international trade theory holds for management practice. 6. Identify the policy instruments used by governments to influence international trade flows. 7. Understand why governments sometimes intervene in international trade. 8. Summarize and explain the arguments against strategic trade policy. 9. Describe the development of the world trading system and the current trade issue. 10. Explain the implications for managers of developments in the world trading system. Week 3 Lecturette 1: Trade Theory Free trade refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. There must be certain gains from trade for each nation or party. Smith, Ricardo, and Heckscher-Ohlin show why it is beneficial for a country to engage in international trade even for products it is able to produce for itself. International trade allows a country to specialize in the manufacture and export of products that it can produce efficiently and import products that can be produced more efficiently in other countries. Some patterns of trade are fairly easy to explain—it is obvious why Saudi Arabia exports oil, the United States exports agricultural products, and Mexico exports labor intensive goods. Yet others are not so obvious or easily explained, such as cars exported from Japan. The various theories have differing prescriptions for government policy on trade. Mercantilism makes a crude case for government involvement in promoting exports and limiting imports. Smith, Ricardo, and Heckscher-Ohlin promote unrestricted free trade. New trade theory and Porter’s theory of national competitive advantage justify limited and selective government intervention to support the development of certain export-oriented industries. All these theories lack agreement in their recommendations for government policy. Mercantilism suggests that it is in a country’s best interest to maintain a trade surplus—to export more than it imports, and advocates government intervention to achieve a surplus in the balance of trade. It views trade as a zero-sum game—one in which a gain by one country results in a loss by another. Adam Smith argued that countries differed in their ability to produce goods efficiently, and should specialize in the production of the goods they can produce the most efficiently. Thus, a country has an absolute advantage in the production of a product. If Ghana were to specialize in cocoa production and South Korea in rice production, Smith argued that both Ghana and South Korea could consume more cocoa and rice than if each only produced for their own consumption. Thus, trade is a positive sum game. David Ricardo asked what might happen when one country has an absolute advantage in the production of both goods. Ricardo’s theory of comparative advantage suggests that countries should specialize in the production of those goods they produce most efficiently and buy goods that they produce less efficiently from other countries, even if this means buying goods from other countries that they could produce more efficiently at home. Ricardo’s theory suggests that consumers in all nations can consume more if there are no restrictions on trade. The simple example of comparative advantage by researchers makes a number of assumptions: only two countries and two goods; zero transportation costs; similar prices and values; resources are mobile between goods within countries, but not across countries; constant returns to scale; fixed stocks of resources; and no effects on income distribution within countries. While these are all unrealistic, the general proposition that countries will produce and export those goods that they are the most efficient at producing has been shown to be quite valid. The simple model of comparative advantage assumes constant returns to specialization. A more likely scenario is diminishing returns to specialization where after some point, the more of a good that a country produces, the greater will be the units of resources required to produce each additional item. If crops are grown on increasingly less fertile land, mining is done on less productive ore, or less skilled personnel need to be hired to perform highly skilled jobs, production per unit of input will decrease. In reality, countries do not specialize entirely, but produce a range of goods. It is worthwhile to specialize up until that point where the resulting gains from trade are offset by diminishing returns. Opening an economy to trade is likely to generate dynamic gains of two types. First, trade might increase a country's stock of resources as increased supplies become available from abroad. Secondly, free trade might increase the efficiency of resource utilization, and free up resources for other uses. Samuelson argues that in some cases, the dynamic gains from trade may not be so beneficial. He argues that the ability to offshore services jobs that were traditionally not internationally mobile may have the effect of a mass inward migration into the United States, where wages fall. The Heckscher–Ohlin theory predicts that countries will export those goods that make intensive use of factors of production which are locally abundant, while importing goods that make intensive use of factors that are locally scarce. It focuses on differences in relative factor endowments rather than differences in relative productivity. Using the Heckscher-Ohlin theory, Leontief in 1953 postulated that since the United States was relatively abundant in capital compared to other nations, the United States would be an exporter of capital-intensive goods and an importer of labor-intensive goods. To his surprise, however, he found that U.S. exports were less capital intensive than U.S. imports. Since this result was at variance with the predictions of the theory, it has become known as the Leontief Paradox. Raymond Vernon suggested that as products mature, both the location of sales and the optimal production location will change, affecting the direction and flow of imports and exports. Week 3 Lecturette 2: Product Life in the Twenty-First Century New trade theory suggests that because of economies of scale and increasing returns to specialization, in some industries there are likely to be only a few profitable firms. Firms with firstmover advantages will develop economies of scale and create barriers to entry for other firms. New trade theory does not contradict the theory of comparative advantage, but instead identifies a source of comparative advantage. A nation may be able to specialize in producing a narrower range of products than it would in the absence of trade, yet by buying goods that it does not make from other countries, each nation can simultaneously increase the variety of goods available to its consumers and lower the costs of those goods. The pattern of trade we observe in the world economy may be the result of first-mover advantages (economic and strategic advantages that accrue to early entrants into an industry) and economies of scale. New trade theory suggests that nations may benefit from trade even when they do not differ in resource endowments or technology. The theory also suggests that a country may predominate in the export of a good simply because it was lucky enough to have one or more firms among the first to produce that good. You can watch the following video lecture as a review: 1. Differences in Political, Legal and Economic Systems. Link: https://youtu.be/-WJzjngMVJw (https://youtu.be/-WJzjngMVJw) Differences in Political, Legal and Econom… Econom… Minimize Video
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What are the potential costs of adopting a free trade regime? Do you think governments
should do anything to reduce these costs? What?
In a free trade scenario, a government refrains from attempting to restrict what its
nationals can purchase from or create and export to another nation via quotas or levies. The
potential costs of implementing a free trade system are primarily caused by the job losses it
would bring about in specific markets. Although there isn't much the government can accomplish
to prevent it, apprenticeships may be developed to assist individuals in being more innovative in
the workforce. Several sectors might experience employment deficits as a result of the adoption
of a free trade policy. Still, they might not agree on the precise measures to address these losses.
Most can contend that the federal state should offer apprenticeship programs, whereas everyone
else may counter that individuals lose their employment each day and aren't given help finding
new models. In the manufacturing sector, the potential costs and benefits of implementing free
trade relations vary from the elimination of expensive and time-consuming protectionist
measures, including such import duties, price controls, and requirements, which intrinsically
leads to extremely easy and faster trade of commodities, to the outsourcing of job positions to
countries with the lower cost labor force, as well as the service quality of the final product and
service delivery (Hill, 2008, pp. 201). The elimination of trade restrictions, such as tariffs,
eliminates importation and exporting levies, rescuing businesses' time, revenue, and
documentation. The difficulty in finding a job in expanding businesses is why more outstanding
State support is required to aid the disadvantaged.
Free trade has the additional drawback of increasing global pollution when manufacturers
are relocated to nations with laxer environmental regulations and do not possess the necessary
processes to discard certain pollutants properly. The general financial position will rely on the

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nation and what is excellent at large-scale manufacturing. Consequently, we must control any
possible costs associated with modifying. Free trade management is ill-suited for developing
countries because they occasionally operate indep...


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