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1、I. IntroductionThis report introduction some economics about the world economy including free trade, exchange rate, balance of payment, NIC and LDC and so on. In this report i will analyze 14 elements to make a clear explanation about world economy.II. Text1. Explain free trade including the theory
2、of absolute advantage and comparative advantageFree trade had the original intention that goods and services could be exchanged freely between countries with no barriers to this exchange. Trans-Pacific Partnership Agreement, or TPP, as its more commonly know. 12 countries like America, Japan, Austra
3、lian and so on, they reach on agreement about TPP on 5th of October in 2015. Between TPP members, the products and service price will decrease and logistics speed will increase. Add the 12 countries which accounts for 40% of the global economy. The TPP will reduce or decrease tariff on 18000 categor
4、ies of products.Absolute advantage is said to occur when one country can produce a good or service to a pre-determined quality with less resources than another country.The benefit or advantage of an economy to be able to produce a commodity at a lesser opportunity cost than other entities is referre
5、d to as comparative advantage in international trade theory.In 1970s, manufacture industry take up large proportion in UK, its manufacture industry has absolute advantage. However, its industry began transfer to overseas from 1980s. Particularly manufacture industry, UK environment become very bad d
6、uo to much manufacture industry, so UK government decide close some domestic factory and invest Financial industry. Financial industry rose sharply base on this opportunity. Financial industry dont have to cause pollution, and its profitability also very good.2. Identify three gains from internation
7、al tradeFirst of all, goods and services could exchange freely between countries with no barriers to this exchange. And the goods can decrease cost, and that can increase employment rate and rose the economic in the local area.Second, International trade can improve global productivity because that
8、can use absolute advantage and comparative advantage to make cost deduction and after that the productivity will increase.Third, International trade customer can get more products from other countries, and low product cost can make the goods become more cheaper and international trade make the marke
9、t become large and increase product will make scale effect.3. Explain barriers to trade including two forms of protectionTrade barriers are government-induced restrictions on international trade. The barriers can take many forms, including the following tariffs and non tariffs.Give a example about t
10、ariffs, 35% tariffs on Chinese tyres imposed on the United States on 11th September in 2009. It make Chinese tyres firms have to increase price if sales in America.For example about non tariffs, Russia to Ukraine for embargoes which suspension of Ukraine imports of juice on 29th July in 2014. It mak
11、e Ukraines juice not allow sale in Russia.4. Explain why government may wish to rise barriers to international tradeBecause government want to protect the countrys job opportunity and avoid anti-dumping. For example, Local shoemaker in Elche, the capital of Spains once flourishing footwear industry,
12、 argue that “Made in China” is taking away their jobs by means of ultra-low pricing.For example about anti-dumping, earlier in May 2012, solar panel manufacturers in the United States led the U.S. Government to impose anti-dumping duties, ranging from 31% to 250% on solar panel imports from China, w
13、hich were accused of selling panels in the U.S. Market at prices below cost.5. Describe the role of WTO in development of free tradeThe WTO was founded in 1994 on April 15. WTO has 164 member states, headquarters in Geneva, Switzerland. WTO objective is improve life level ensure sufficient job oppor
14、tunity and solar improve income level and keep the sustainable development road and ensure developing countrys interests.WTO basic on open, equality and mutual benefit, escalate decrease tariffs and non tariffs and eliminate discriminate between the member states in the international trade. That wil
15、l promote the development of free trade.On 7th December 2013, 18 years have passed since the establishment of the WTOs first global trade agreement was born. That will promote the development of tree trade.6.0 Explain how EU promote free tradeEuropean Union or EU establish 1st of November in 1993. T
16、here are 28 member of country in the EU now like Netherlands, France, Italy and so on. Headquartered in Brussels, Belgium. The purpose of EU is Strengthen the coordinated development of economy and society and establish the economic and monetary union of the final implementation of the unified monetary union, and promote the balanced development of economic and social development of the member states.
