The world economics report

Topics: International trade, International economics, Free trade Pages: 19 (5418 words) Published: March 24, 2014
Content Page
Abstract1
1. Introduction:2
2. International Trade2
2.1 Free trade2
2.2 Absolute and comparative advantage3
2.3 Three gains from trading internationally:3
2.4 Protectionism and barriers to trade4
2.5 WTO5
2.6 Trade blocs7
3. International Finance8
3.1 UK balance of payments8
3.2 Trends in UK trade16
3.3 Sterling prices and the balance of trade18
3.4 Exchange rate regime 19
3.3 Effects of exchange rate regime20
4. International investment21
4.1 LDCs21
4.3 Issues facing LDCs21
4.4 Impact of transnational firms22
5. Conclusion22
6. References:22
Abstract
The report is about world economics which related to free trade, international trade and some organizations such as EU, WTO, MNCs, LDC, etc. In the form of an overall view of world economic development to make some explanation and analysis. Besides, the report selects which topic and categories will be included in world economics, which help more members to draw attention to international trade and economic globalization trend. Without doubt, with regard to the general trend of global economic development, China as a major country is becoming a hot land of investment favored by overseas investors.

Key Words: International trade; Balance of payments; NICs; LDCs; Single currency

1. Introduction:
This report is mainly to analyze some issues of world economy. Firstly, it has introduced some knowledge point like the free trade. Then, it will explain the “protectionism” and “barriers to trade” and describe the role of the World Trade Organization (WTO) in the development of free trade to readers and the European Union. Lastly, it also introduces the informations about the LDCs and its impact and issues. In this report, I will analyze 14 elements in next three parts to make a clear explanation of benefits of joining the EU.

2. International Trade
2.1 Free trade
Free trade is a policy by which governments do not discriminate against imports or exports. Free trade is exemplified by the European Union / European Economic Area and the North American Free Trade Agreement, which have established open markets with very few restrictions on trade. Most nations are today members of the World Trade Organization (WTO) multilateral trade agreements. However, most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes, and non-tariff barriers, such as regulatory legislation.

2.2 Absolute and comparative advantage
Absolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service to pre-determined quality more cheaply than another country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries. In the 19th century, the British textile industry has an absolute comparative advantage, its advanced production technology, high production efficiency. The late 20th century, increased production costs. Production technology in developing countries catches up with Britain, the British textile industry reduced production efficiency, comparative advantage gradually disappeared.

2.3 Three gains from trading internationally:
To begin with, international...

References: European Commission. (2010a). Bilateral Relations. Directorate-General for Trade. European Commission. (2010b). Statistical Annex of the European Economy. Directorate-General ECFN, Spring.
Featherstone K
Francois, J. F., McDonald, B. and Nordstrom, H. (1996). ‘A User’s Guide to the Uruguay Round Assessment’, Working Paper No ERAD96.003 WTO.
Jackson, J
Kose, M. A., Otrok, C. and Whiteman, C. H. (2003). ‘International Business Cycles: World, Regions and Country-specific Factors’, American Economic Review, 93(4), pp. 1216-1239.
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