Question three
Ai
The main factors that have influenced international trade have been oil prices, trade agreements, and technology and world events. Oil is the backbone that runs every country’s economy. Both the North America Free Trade Agreement (NAFTA) and the European Union are trade barriers between the two continents (Offices of United States Trade Representation 2014). Canada supplies the United States with most of its oil (Energy Information Administration 2013). The U.S. also has oil refineries in the Gulf of Mexico. The (NAFTA) causes this to be market efficient. Europe imports its crude oil from the Russian Federation (Europa 2014). Japan is powered by mainly nuclear energy. Crude oil prices started off 26.72 $ per barrel in 2000. The subsequent years has seen them climb, reaching a high of 74.71$ in 2010 (Energy Information Administration 2014).
This has negatively impacted the growth of EU trade beyond the Europe. The European Union saw imports rise by .56 in the ten year period of 2000-2010. It is cheaper for companies to trade within the EU than for example United States market. The figure for rest of the world imports and exports in 2010 is almost the same. The major change in EU trade in the last ten years is China (World Trade Organisation 2011). In 2001 China became a member of the World Trade Organisation. International trade between the countries stands at around 1.4 billion euros per day in the years since (Reuters 2014). In contrast China’s decreased by almost a third. Over the past decade the rise of the internet and it growing number of users has been significant. Trade between countries is now easier than ever before. It is cheaper to gain information about different markets and their potential. The Unit...
... middle of paper ...
...tly through multi-national companies Ireland is a dominant exporter of pharmaceuticals. Ireland wet climate has created a globally recognised agriculture reputation. OEC Ireland’s main trade was with Belgium, Luxembourg, Germany and the UK in 2010.Ireland imports and exports mainly, packaged medicaments, nitrogen heterocyclic compounds and nucleic acids (Observatory of Economic Complexity 2010). Therefore the Hecksher-Ohlin does not apply. These products are essential for the pharmaceutical industry. Multi-national corporations can be attributed for this trade. Ireland has a David Ricardo’s comparative advantage. There is a two way trade pattern between Ireland and its trade partners. It is no coincidence that Ireland mainly trades with countries located in Western Europe. These economies are well developed. They can supply and demand specialized goods and services.
The European Union has been helped economically ever since World War II. Right after World War II’s end, Europe was struggling to hold on. The countries of the modern-day European Union thought it would be a good idea to come together and help each others struggling economy. To this day, this decision has had a very positive outcome on the EU’s economy. As shown in Diagram 1, the European Union combined together has the world’s highest GDP at 18.3 Trillion USD as compared to the United States’ 17.4 Trillion USD GDP and China’s 10.4 Trillion USD GDP. The idea
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
America is dependent on other nations for their ability to create energy. The United States is the world’s largest consumer of oil at 18.49 million barrels of oil per day. And it will continue to be that way for the foreseeable future considering the next largest customer of oil only consumes about 60% of what the U.S. does. This makes the U.S. vulnerable to any instability that may arise in the energy industry. In 2011, the world’s top three oil companies were Saudi Aramco (12%), National Iranian Oil Company (5%), and China National Petroleum Corp (4%). The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world making it an expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious,...
Since Japan started to import LNG as a way to decrease its dependence on crude oil, LNG price mechanism has close tie with crude oil price. The LNG price in Japan and other Asian countries is determined by based on a pre-fixed price formula. Japan’s average crude oil import price is used as a benchmark of the pre-fixed price formula along with some other key components to reflect market conditions. Therefore, Japan’s LNG import prices are directly influenced by Japan’s crude oil import prices. Higher crude oil prices since early 2011, caused by instances of political instability such as the Arab Spring and Iranian nuclear crisis, have resulted in higher LNG prices in the Asian market.
Over the course of sixty years, the European Union (EU) has evolved to become one of the most economically and politically integrated regions in the world. Compare and contrast the EU with one other major global trading bloc, such as NAFTA or ASEAN, with which you are familiar.
Academic Consortium on International Trade (2000) Letter to Presidents of Universities and Colleges. Available at: http://www.spp.umich.edu/rsie/acit/ [Accessed 1 April 2014]
"United States Oil - Exports - Economy." Index Mundi - Country Facts. Web. 26 May 2011. .
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
While free trade has certainly changed with advances in technology and the ability to create external economies, the concept seems to be the most benign way for countries to trade with one another. Factoring in that imperfect competition and increasing returns challenge the concept of comparative advantage in modern international trade markets, the resulting introduction of government policies to regulate trade seems to result in increased tensions between countries as individual nations seek to gain advantages at the cost of others. While classical trade optimism may be somewhat naïve, the alternatives are risky and potentially harmful.
...s particularly evident in Ireland where attractive tax regulations have lead to the influx of American technological companies. Finally there is little attention given to geographical scale within Gereffi’s model. Yes, geography of commodities is recognized on a global scale but the approach neglects the formation of regional and sub-national chains in order to support the larger global chains. (Smith et al 2002)
The current world dependence on oil leaves much to be said about the impact of Saudi Arabia and the Middle East on foreign policy and international politics. Presently the world's largest consumer of oil, the U.S. depends on Saudi Arabia and much of the Middle East for the energy to run its businesses, its homes, and most importantly, its automobiles. In the past few months U.S. consumers have felt the pressures of increasing gasoline prices as they struggle to commute and live their daily lives. This leaves the U.S. with important decisions to be made on behalf of its citizens and its position in the international realm.
In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...
Firstly, what should be noted here is that international trade has been providing different benefits for firms as they may expand in different new markets and raise productivity by adopting different approaches. Given that nowadays marketplace is more dynamic and characterized by an interdependent economy, the volume of international trade has grown substantially in recent years, reducing the barriers to international trade. However, after experiencing the economic crisis that took its toll in 2008 many countries adopted a different approach in terms of trade barriers by introducing higher tariffs in order to protect domestic firms from foreign competition (Hill). Secondly, in order to better understand the implications of the political arguments for trade it is essential to highlight the main instruments of trade policy (See appendix 1).
4. Discuss the forces that are leading international firms to the globalization of their sourcing, production, and marketing.
China’s economical strength comes from its international trades as the economy has grown to a rate of 10.3% in 2010. It has become the world’s largest exporter in the global economy. In the area of trade, three major strengths of China are 1) it is the single most important challenge for the European Union (EU) trade policy, 2) China is the second trade partner behind the U.S., and 3) it is the EU’s biggest source of imports by far with the dramatic increase in the EU-China trades over the recent years. The EU exports of goods to China were 113.1 billion Euros and in imports was 281.9 billion Euros in 2010. The service exports were 18 billion Euros and in imports were 13 billion Euros in 2009. China has also established trades with Australia. Recently, the two countries have been cooperating and assisting each other in industries such as agriculture, energy and minerals as they continue their free trade agreements (Jia Qinglin).