Explain the various types of aid, which a developing country might rceive. “Aid is an effective means of promoting the development of poorer countries.” Evaluate this statement.

Developing countries search for ways to grow economically in the most efficient way. There are various ways that a country tries in developing and growing the economy. Aid is one the largest single source that developing countries are assisted with. Aids are given in three main ways such as humanitarian, bilateral, and multilateral. First, humanitarian way is done by an individual, country or via major organizations. It is usually sent to help countries suffering from a specific problem such as drought. Second, bilateral way is an aid given by one country to another. It is  a loan that are granted as soft or below market terms. Multilateral way is when separate countries pay money into one central organization, which could be given through a large international agency.

A successful aid is to try to overcome the low savings ratios, help reduce foreign exchange outflows, and reduce the dependency on private investment.

Reflection on End of Unit Test Section4

I have done poorly on this unit test and I think it is because I have made mistakes here and there. I could have drawn the diagrams perfectly but I switched things and labeled wrong by mistake. Also, while going thorough Ms.Q’s comments, I have noticed that I was not explaining in details about several things. Therefore, I think I should be more specific when explaining and provide real world examples as well.

Yemen

 

Yemen

GDP: $61.88 billion

GDP per capita: $2,600

Population: 23,495,361

Life expectancy at birth: total population= 63.36 years

HDI ( Human Development Index): 0.489

Gini Index: 33.44

Unemployment Rate: 35%

Industries: crude oil production and petroleum refining; small-scale production of cotton textiles and leather goods; food processing; handicrafts; small aluminum products factory; cement; commercial ship repair; natural gas production

Evaluate the extent to which protectionism may be justified in international trade

Evaluate the extent to which protectionism may be justified in international trade

how stakeholders will be effected

my opinion

In my point of view, protectionism is important to “preserve” the goods of one’s own country. Of course protectionism can anti-globalize a country so it is crucial to not to over protect. After all, it is not always good to expose one’s country to the outside forces. In history, according to what happened to East Asian countries such as Korea, Japan, and China, defending one’s own country from other countries help. Countries can develop their own ways of producing goods and services in creative ways without others help. Imposing more tariffs on imports or increasing import quotas would be part of protectionism.

At the same time, if countries conceal themselves completely from the outside world, it would be detrimental for them. To maintain favorable relationships with other countries, they should open themselves to others to a certain degree. For example, North Korea’s concealment from other countries are mostly bringing negative consequences. The nation are starving to death and international hostilities are increasing and increasing due to lack of communication.

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Evaluate the extent to which protectionism may be justified in international trade how stakeholders will be effected my opinion In my point of view, protectionism is important to “preserve” the goods of one’s own country. Of course protectionism can anti-globalize a country so it is crucial to not to over protect. After all, it is not always good to expose one’s country to the outside forces. In history, according to what happened to East Asian countries such as Korea, Japan, and China, defending one’s own country from other countries help. Countries can develop their own ways of producing goods and services in creative ways without others help. Imposing more tariffs on imports or increasing import quotas would be part of protectionism. At the same time, if countries conceal themselves completely from the outside world, it would be detrimental for them. To maintain favorable relationships with other countries, they should open themselves to others to a certain degree. For example, North Korea’s concealment from other countries are mostly bringing negative consequences. The nation are starving to death and international hostilities are increasing and increasing due to lack of communication.

Explain three types of protectionism that a government might adopt in the context of international trade

Protectionism: Protectionism occurs when countries adopt policies to protect their domestic industries from foreign competition. The main protectionist policies are tariffs, quotas, and subsidy.

•       Tariff

Tariffs are taxes on goods imported into a country. They are often used by governments trying to reduce the level of imports into a country. The imposition of tariff upon the product indicates that the price will rise from Sw to Sw + tariff. Imports will fall from Q1Q2 to Q3Q4 and domestic production will increase from Q1 to Q2.

ex)Mexico imposes tariffs on US apples

•       Quota

Quota is a limit on the quantity of goods that can be imported into a country. Results in loss to domestic consumers, gain for domestic producers and a windfall profit to some overseas suppliers. No direct financial cost to government but will result in hostility from trading partners.

ex) Mackerel quota in Iceland

•       Subsidy

A subsidy is a payment made to firms or consumers designed to encourage an increase in output.  A subsidy will shift the supply curve to the right and therefore lower the equilibrium price in a market. The domestic supply curve shifts downwards from Sdomestic to Sdomestic + subsidy. The price to consumers remains the same, but imports fall from Q1Q2 to Q3Q2 and domestic production increases from Q1 to Q3.

ex) UK’s subsidy on electric cars

Exam Review Blog Posts

Title

1. Demands of the question

2. Definition: cut + paste

3. Cut + paste from Triple A

4. Bullet points of this

5. Insert relevant PP slides

6. Diagrams

7. Evolution Suggestions

 

– Diigo: Tag international economics

Inspiration from Economics

While I was working on my Econ Portfolio, I realized that I have been influenced by studying Economics in different ways.

As an art student, I tend to find inspirations from various sources here and there from news, magazines, exhibitions. However, I never knew that Economics could influence me in doing my art work. After hearing comments from interviewers from the National Portfolio Day held in New York, I was trying to create another piece regarding my Korean background. Then I related my thoughts to Protectionism, which we even had a debate session in class. I thought that I could create a piece demonstrating Korea’s trade with other countries. After such brainstorming, I could finish a piece illustrating Korea’s acceptance of foreign cultures and protection of its traditional culture by using Korean traditional paper and pieces of American goods at the same time!

In the art schools I am applying, they mostly focus on art but I think it is also very important to study other areas as well to expand my view to be more creative and imaginative in produce my own original art works. I think I have made a progress just by collaborating my knowledge of very different fields together.

Extended Blog Post on Currency

Evaluate the US claim that China is manipulating its currency.

[A fixed exchange rate system is when the value of the exchange rate is fixed to another currency. This means that the government intervenes in the foreign exchange market to maintain the fixed rate.

A fixed exchange rate is compatible with free trade because the dollar price Chinese exporters charge for is the result of two things: the exchange rate and the cost in yuan for production. (Triple A reading)]

For the past years, China had a fixed exchange rate but recently managed to shift to the managed exchange currency rate. However, this change has brought about some frictions among some countries and China. US has recently been suffering from China and other countries’ current account surpluses. The US Treasury claimed that they had serious concerns about the rigidity of China’s exchange rate. According to the Chinese central bank, China’s foreign exchange reserves increased nearly 20% from a year ago to 2.27 trillion at the end of September. Some US lawmakers and industry groups claim that China keeps its currency intentionally on low levels against the dollar to gain advantages in trade.

China’s current account surplus with the U.S. this year may increase to $250 billion and some see this as China’s effort in trying to manipulating its currency, trying to destroy jobs and to limit growth in the U.S. However, it is true that China’s rate policies and the trade surplus is threatening the US. China’s effort in keeping the yuan undervalued leads to rising trade deficits, which will lead certain industries to increase pressure for protectionist US trade policies. Moreover, US concerns if they can continue to rely on China to buy US debt as US deficit grows because US will suffer if they lose the interest rates by China to finance their debt.

The graph above illustrates the increased supply of Yuan.  The supply curve has shifted to the right and the price of Yuan in terms of U.S. dollars has decreased from P1 to P2 while the quantity has increased from Q to Q1.

Because Chinese yuan in undervalued, China had a current account surplus and so it is self-correcting the currency to depreciate. With weaker yuan, China would be able to export more to other countries but would decrease in imports. On the other hand, other countries such as US would have appreciating currency and suffer from trading with China. As a result, US export business will lose competition against China because China’s import goods are cheaper. However, if yuan’s exchange rate increases, the exports will decrease due to an increased price and the imports will decrease due to the decreased price.

All in all, China’s yuan is negatively impacting other countries. For the countries to earn back a “balanced” balance of payments, China should disregard its currency policy and let it self-correct on its own.

Peru’s History of GDP (via Irfani’s IB Economics Blog)

The current account of a country can be measured through the country's GDP growth. If the growth rate is high it means that the country's current account is in deficit. As seen from the graph above, Peru's GDP growth between January 2006 through January 2009 was quite highly constant indicating that the country's current surplus at the time was in deficit. From January 2009 through January 2010 the GDP growth was quite low indicating that their c … Read More

via Irfani's IB Economics Blog

Blog post on: “Australia Third-Quarter Current-Account Deficit Widens as Currency Gains” article

http://www.bloomberg.com/news/2010-11-30/australia-third-quarter-current-account-deficit-widens-as-currency-gains.html

– Current account is a measure of trade because it includes investment flows as well as goods and services shipments.

– A deficit represents money a country has to borrow overseas to pay for the goods and services it imports, and to finance investment not covered by local savings.

As Australia’s strengthening currency lowered exports, its current-account widened. From July to September, the value of exports dropped for the first time in a year as the Australian currency climbed 15 percent over the period, the second-biggest quarterly gain.

The main problem is that Australia cannot pay back the money borrowed from other countries.With a large deficit, it can be inferred that Australia currently is facing economic weakness. Also, because its iron imports exceed the exports, goods produced are not made well-enough to be sold more than foreign goods. In a deficit situation, a country could enjoy a higher standard of living, but in the long term, Australia may be hurt from increased foreign investors.