trade

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Costs and benefits of globalisation

Globalisation is a complex and controversial issue. This is a look at some of the main benefits and costs associated with the greater globalisation of the world economy. Definition of Globalisation – the process of increased integration and co-operation of different national economies. It involves national economies becoming increasingly inter-related and integrated. Globalisation has involved: Greater free trade. Greater movement of labour. Increased capital flows. The growth of multi-national companies. Increased integration of global trade cycle. Increased communication and improved transport, effectively reducing barriers between countries. Benefits of globalisation 1. Free trade Free…

Impact of US tariffs

Impact of US tariffs

Readers Question: I’m an American, and I have a question on tariffs. Donald Trump has said he will place a tariff on all Chinese steel, and on Mexican cars. My question is, “Are tariffs still useful, and if so, why not put tariffs on all cars from Japan, Korea, Mexico, and Germany?” A tariff on Chinese Steel is designed to help the US steel industry. At the moment, American producers may find it cheaper to import steel from China so US steel producers lose out. This has led to job…

UK Balance of Payments

UK Balance of Payments

The balance of payments is the record of a country’s transactions / trade with the rest of the world. The balance of payments consists of: Current Account (trade in goods, services + investment incomes + transfers) Capital Account / Financial Account (capital and financial flows, net investment, portfolio investment) Errors and omissions. It is hard to collect all data so some is missed out. In theory there should be a balancing between capital and current / financial account. If there is a current account deficit, there should be a surplus on…

Mercantilism theory and examples

Mercantilism theory and examples

Mercantilism is an economic theory and practise where the government seeks to regulate the economy and trade in order to promote domestic industry – often at the expense of other countries. Mercantilism is associated with policies which restrict imports and foster domestic industries. Mercantilism stands in contrast to the theory of free trade – which argues countries economic well-being can be best improved through reduction of tariffs and fair free trade. Mercantilism involves Restrictions on imports – tariff barriers, quotas…

TIPP – UK / US trade deal

TIPP – UK / US trade deal

TIPP (Transatlantic Trade and Investment Partnership) is a potential trade deal between the EU and US. It is currently being negotiated by the European Commission and the US. The aim of the agreement is Encouraging trade and investment between the EU and the US. Extend principles of European Single Market to include the US, enabling lower prices for consumers, greater trade and prosperity. However, critics of the agreement fear that the proposal will lead to lower environmental standards, job losses, privatisation of public services, and overall…

An end to globalisation?

An end to globalisation?

Readers Question: Why doesn’t WTO make into law that all manufactured goods should either be assembled or made in the continent where its been sold? There is so many reason why this should be put in place in our globalised world I don’t agree. The benefits of a globalised world are that we can benefit from goods and services produced in many different continents. If Japan is…

The effect of a current account surplus

The effect of a current account surplus

Readers Question: how does a current account surplus affect domestic employment ? A current account surplus means an economy is exporting a greater value of goods and services than it is importing. A country with a current account surplus will have a deficit on the financial / capital account. i.e. a country with a current account surplus will have surplus foreign exchange it can use to invest in other countries. There is no hard and fast rule about what will happen if a country has a current account surplus. It…