International Trade Concepts
March 12, 2010
The Simulation on International trade concepts is a study of the country of Rodamia and the decisions the leaders made regarding imports and exports for the country. While Rodamia is a fictitious country, the concepts of international trade, tariffs, quotas, and imports and exports are all applicable to the effects on the U.S. economy. This paper will discuss in detail the meaning and effect each of these concepts have on the economy.
Advantages and Limitations of International Trade
Trade is important because different countries have various quantities and types of resources, such as land, capital, labor, and businesses. Each country wants to use their resources as a source of income as much as possible. For example, a country with a great climate for agriculture would use their natural resources to grow and sell fruits, vegetables, etc. Rodamia is a large country where the largest percent of GDP comes from services. The country has roughly 4 % of its GDP in agriculture, with crops such as corn, rice, tobacco, etc. Overall, free trade is better than imposing trade restrictions; there are situations in which trade restrictions are preferred. Protecting a developing domestic industry from competition from abroad or preventing dumping are two such situations. However, as will be discussed in later sections, trade restrictions on other countries can have negative effects on the economy. Trade restrictions on imports reduces the demand for products and services from other countries.
Effects on International Trade on the U.S. Economy
According to The Trade Resource Center, “The World Trade Organization (WTO) stimulates U.S. economic growth creates good jobs and improves living standards for Americans by reducing barriers to trade, the multilateral trading system benefits American businesses, farmers and workers.” (TRC, pp 1). How does that happen? The WTO...
References: Halliburton. (2010). History of Halliburton. Retrieved March 12, 2010 from http://www.halliburton.com/AboutUs/default.aspx?navid=970&pageid=2312
Trade Resource Center., World Trade Organization (WTO) and U.S. Economy (2006), Business round table.org., Retrieved March 12, 2010 from http://trade.businessroundtable.org/trade_2006/wto/us_economy.html
University of Phoenix. (2009). Economics for business [Computer Software]. Retrieved from University of Phoenix, Simulation, ECO/372 - Principles of Macroeconomics website.
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