Activites for rest of Anglia's club

Activities for Anglia's club

Summary of International Trade Teory

What it is? Is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries.

The senior trade commissioners working in the Canadian embassies and consulates are very helpful because the Canadian exporters but when you ask them for advice importing from another country there is not the same level of assistance.

Adam Smith said about the each nation should specialize in producing things it has an "absolute advantage" what refers to the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources. Adam Smith first described the principle of absolute advantage in the context of international trade, using labor as the only input.

In my opinion the New Trade Theory tries to explain empirical elements of trade that comparative advantage-based models above have difficulty with. These include the fact that most trade is between countries with similar factor endowment and productivity levels, and the large amount of multinational production (i.e. foreign direct investment) which exists. New Trade theories are often based on assumptions like monopolistic competition and increasing returns to scale. One result of these theories is the home-market effect, which asserts that, if an industry tends to cluster in one location because of returns to scale and if that industry has high transportation costs, the industry will be located in the country with most of its demand to minimize.

The mind map

International economics is concerned with the effects upon economic activity of international differences in productive resources and consumer preferences and the institutions that affect them. It seeks to explain the patterns and consequences of transactions and interactions between the inhabitants of different countries, including trade, investment and migration.economies of scale are benefits from bulk buying:

• International trade: studies goods-and-services flows across international boundaries from supply-and-demand factors, economic integration, and policy variables such as tariff rates and trade quotas.
• International finance: studies the flow of capital across international financial markets, and the effects of these movements on exchange rates.
• International monetary economics and macroeconomics: studies money and macro flows across countries.

TYPES OF INVESTMENT

Investment is putting money into something with the expectation of profit. More specifically, investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, dividends, or appreciation of the value of the instrument (capital gains). It is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments.


In the case of investment, rather than store the good produced or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits. In the first case, the individual creates durable consumer goods, hoping the services from the good will make his life better. In the second, the individual becomes an entrepreneur using the resource to produce goods and services for others in the hope of a profitable sale. The third case describes a lender, and the fourth describes an investor in a share of the business. In each case, the consumer obtains a durable asset or investment, and accounts for that asset by recording an equivalent liability. As time passes, and both prices and interest rates change, the value of the asset and liability also change.

CAUSES OF INFLATION

• The demand-pull inflation: Inflation occurs when aggregate demand increases more rapidly than reduction. This increase may have different origins: an increase in household consumption, increased public spending or spending on business investment.

• The cost-inflation: Inflation would by increasing production cost. Maybe motivated by the rising cost of asic natural resources, or the cost borrowing or interest rate.

• The structural-inflation: Is an existence of imperfect markets, which set prices at levels higher than those of free competition, conflict between economic agents, the existence of administered prices to project or benefit certain social sector.