What are the advantages and limitations of International Trade identified in the simulation?
The advantages and limitations of International Trade that was identified in this simulation is that the level of tariff that I have chosen to charge is higher than what is needed to equate the export price of watches in Rodamia to the market value of watches. There are three facts that I must prove in order for the product to be sold in the importing country at prices less than the domestic price of the product, the availability of the product at lower prices causes material injury to the domestic, and that there is a casual link between the availability of the product at the lower price. Once I prove these facts, the market value of the dumped product is calculated. Based that I must protect the infant domestic industry is to give it time to attain productive efficiency which was a good decision that I made. But considering that the free trade leads to greater overall welfare for the nations concerned than trade with restrictions, not imposing a tariff would also be a good policy to consider. The decision by moving toward negotiating free trade agreements (FTA) with Alfazia alone was a wise choice; however, it may not be beneficial to me in the short run as a small country with weak infrastructure. In the long run, I made find markets for some of the products. I may consider investing in the country to generate more jobs and increase the size of the market. FTAs between countries lower trade barriers, increase the volume of trade, allow producers to explore different markets, allow consumers a better range of products, and open up new avenues for investments. This enables the flow of investment between countries. The FTA can lead to more employment in the country where investment is taking place, and better returns on capital for the investing country. By negotiating and FTA is a complex task for all countries concerned as each... [continues]
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