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International Management Homework

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HOMEWORK 1-INTERNATIONAL TRADE THEORY & POLITICAL ECONOMY OF INTERNATIONAL TRADE

1. Read the Samuelson critique from Chapter 5. Explain briefly what you understand from this critique. Do you agree or disagree with this critique? 2. The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export. They have no capital; their land is of poor quality; they often have too many people given available work opportunities; and they are poorly educated. Free trade cannot possibly be in the interests of such nations! Do you agree or disagree, discuss. 3. Read the section on “Evidence for the Link Between trade and Growth” in Chapter 5 from your text book. With the help of this information as well as other sources (internet, books, magazines) identify and explain the channels through which trade positively affects economic growth in a nation. 4. Read the case on “Agricultural Subsidies and Development” (page 308 in the 7th edition; page 300 in the 8th edition) and answer the 4 questions that follow the case.

1.
According to Samuelson Critique, rich countries, USA in particular, might not gain from free trade, but loose, because some jobs are being relocated to poorer countries (such as India and China). I agree that USA economy suffers in some way because of this, but on the other hand I am sure that this is only short term loses, and in general economy will benefit in a long run. Indeed, I guess it is worth to suffer some jobs in order to let people purchase goods and services cheaper. Also, if USA government will restrict such trade agreements, that would mean that it is encouraging insufficiency in particular sectors of economy. Other benefit from offshoring some jobs is that it might upgrade the level of education in developing countries.

In other words, I see that free trade in this

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