Macroeconomics - international trade Term Paper

Macroeconomics - international trade - Term Paper Example The paper will then talk about some protectionism and why should be some government interference in trade. I then talk about how the terms of trade (TOT) of a country are affected by the price of exports and imports and finally the paper ends with an explanation on the impact of exchange rates on a country’s trade in the international arena. International trade refers to the exchange of goods and services that occurs across international boundaries that is between two or more countries (Grant 452). Countries that are involved in international trade are known as open economies while those that do not engage in it are called autarky or a closed economy. International trade differs from domestic or internal trade that takes place within the country. Restrictions are usually imposed by regulating authorities, international organizations and governments on the imports (foreign goods coming into a country) and exports (local goods supplied abroad). Communication can also be a problem in international trade however due to the advancements in technology and as a result of globalization this problem has been solved to a great extent. There are also high transport costs involved as products often need to be transported from one part of the world to another. In order to buy a foreign good one must have the foreign country’s currency to buy that good. Although these assumptions are unrealistic however they need to be made in order to understand the two concepts more clearly. A country has an absolute advantage in production of a product when the country can produce more of the product than the other country by using the same amount of resources. In other words producing the same amount if the product by using lesser resources. Let us illustrate this through an example. Suppose that there are only two countries, A and B, in the world producing only two goods, cloth and wheat. They produce per unit of

'China should prioritise improving its relationship with the ASEAN Essay

'China should prioritise improving its relationship with the ASEAN countries over its relationship with the US'. Discuss - Essay Example It is indeed, an open secret that the relationship between some countries is more cordial, integrative and coordinated than others. Commonly, a nation will consider a number of factors before deciding the type of countries it would forge alliance or relations with. Over the past decade or two, the need for economic advancement and growth has become one of the most paramount factors considered in the stake for selecting partner (Hyer, 2004). Political factors have also been very influential as a means of seeking political dominance. Like all other countries, China has its own international partners and coordinated countries. China’s relations with the United States for instance have been one of the most talked about over the past decade. Apart from the United States, China also has had a higher level of relationship with the Association of South Eastern Asian Nations (ASEAN). In this essay, there is a careful scrutiny to the relationship that exists between China and the United States as well as China and ASEAN to discuss why prioritizing her relationship with ASEAN would do more good to China than a prioritized relationship with the United States. Overview of International Relations International relation is basically the study of relationship that exists between countries. ... ernational relations is a pathway that leads to and brings about an essential and itemized formulation of foreign policy strategy (Dowdy and Trood, 2007). What this means is that countries engage in relationships with other countries as a means of forging and achieving long term foreign policy plans to rule their nations. Commonly, countries want to achieve political and economic power over others. But to make political dominance possible, the counties ought to have several representation and seats in as many international organizations and institutions as possible (Prakash, 1994). To this end, they would relate with other countries so as to gain voting support when the need arises for such international office elections. For economic dominance to be possible also, it is important that countries have as many international markets as possible as the size of a country’s market is proportional to the size of its economy (Shenon, 2005). Against this backdrop also, countries would want to have as many international partners as possible. Indeed, as long as the phenomenon of the League of Nations through the United Nations Organization continues to exists, there is the tendency that such flexibility and allowances that make easier inter-national relations will continue. History of China-US relations The relationship between China and the United States dates back to 1844 when it took place in the form of the Treaty of Wanghia in 1844. Among other factors, the treaty and for that matter relationship was necessitated as a means as allowing much and easier accessibility of the movement of people and good to and from the two countries. To this end, there was the fixing of trade tariffs for the two countries. Citizens of the United States were also allowed the freedom or right to