Business Finance
S. Wright
Finance
Mr. Cambronero
“International Trade and the Effects of the current Financial Crisis”
What is International Trade? According to Reem Heakal,
“International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events”.
For example, Political change in Asia could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes. Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. However, in reference to “Econometrica” Vol. 70, No. 5 (Sep., 2002), pp. 1741-1779 by Jonathan Eaton and Samuel Kortum, Published by: The Econometric Society, “the theories of International Trade have not yet come to grips with a number of facts: (1) trade diminishes dramatically with distance; (2) prices vary across locations, with greater differences between places farther apart; (3) factor rewards are far from equal across countries; (4) countries’ relative productivities vary substantially across industries”. The first pair of facts indicates that geography plays an intricate role in economic activity. The second pair suggests that countries are working with different technologies. With such findings, disadvantages and advantages are evident. International trade allows countries to exchange goods and services with the use of money
Finance
Mr. Cambronero
“International Trade and the Effects of the current Financial Crisis”
What is International Trade? According to Reem Heakal,
“International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events”.
For example, Political change in Asia could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes. Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. However, in reference to “Econometrica” Vol. 70, No. 5 (Sep., 2002), pp. 1741-1779 by Jonathan Eaton and Samuel Kortum, Published by: The Econometric Society, “the theories of International Trade have not yet come to grips with a number of facts: (1) trade diminishes dramatically with distance; (2) prices vary across locations, with greater differences between places farther apart; (3) factor rewards are far from equal across countries; (4) countries’ relative productivities vary substantially across industries”. The first pair of facts indicates that geography plays an intricate role in economic activity. The second pair suggests that countries are working with different technologies. With such findings, disadvantages and advantages are evident. International trade allows countries to exchange goods and services with the use of money
Cited: Econometrica, Vol. 60, No. 1 (Jan., 1992), pp. 57-76 * Michael W Journal of Money, Credit and Banking, Vol. 38, No. 4 (Jun., 2006) * Economic Crisis in Asia: The Case of Thailand Economic Crisis in Asia: The Case of Thailand * “Econometrica” Vol. 70, No. 5 (Sep., 2002), pp. 1741-1779 by Jonathan Eaton and Samuel Kortum, Published by: The Econometric Society