...INTRODUCTION The international trade theory experienced several periods of development from Classical to Neoclassical, New Trade Theory, and then the New Classical Trade Theory. The earliest over international trade had its birth in the end of 15th century and initial period of 16th century. That is, during the period of western countries’ primitive accumulation of capital and the main theory is mercantilism. It is claimed of the theory that the only form of wealth is the metal---gold and silver. People can gain them though exchange and for a nation, it is to increase the social wealth. Hereby, the way to gain gold and silver is international trade. II. THE DEVELOPMENT PROCESS OF THE THEORIES: 1. CLASSICAL INTERNATIONAL TRADE THEORY In the late 1790s, the point of mercantilism was challenged by the classical economists. Based on criticizing the mercantilism, Adam Smith proposed the division of labor theory. It has been 41 years from Adam Smith proposed the absolute cost in his the Wealth of Nations in 1976 to David Ricardo proposed the comparative cost in his the Principles of Political Economy and Taxation in 1817. This is the foundation period of international trade theory, that is, the Classical period. The absolute cost of Adam Smith is based on the division of labor theory. Adam introduced the division of labor theory to the field of international trade and established his absolute cost theory, thus demonstrating the fact that a nation can make the sources of each country most efficiently...
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...International Trade As An Engine of Growth In Developing Countries: a Case Study of Nigeria (1980-2003) SECTION ONE 1.1 INTRODUCTION A ll economies are increasingly open in today’s economic environment of globalization. Trade plays a vital role in shaping economic and social performance and prospects of countries around the world, especially those of developing countries. No country has grown without trade. However, the contribution of trade to development depends a great deal on the context in which it works and the objectives it serves. In recent decades, a number of developing countries, most notably the East Asian newly industrializing countries, have been able to purposefully use the elemental force of trade to boost growth and development within a relatively short time span. At the same time many other developing countries, especially the least developed countries (LDCs), have embarked on unilateral trade liberalization in recent years, with very limited results at best in terms of increased growth and development. To act as an engine of development, trade must lead to steady improvements in human conditions by expanding the range of people’s choice, a notion that the concept of human development 3 tries to capture. From this standpoint, the trade and development performance of a country cannot be seen as the mere sum of its economic growth and export performance. Instead, it is a composite notion, reflecting how trade relates to the range of choices available...
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...of what defines cross-cultural management. The answer depends on which perspectives on ‘management’ and the relation of this process to ‘culture(s)’ we choose to emphasise. Mead and Andrews define cross-cultural management as the ‘development and application of knowledge about cultures in the practice of international management, when the people involved have different cultural identities’ (Mead and Andrews, 2009: 16). This can be compared with the definition given by Laurie Jackson in his book International HRM: A Cross-Cultural Approach (2002). He emphasises the importance of ‘examining the contributions of different cultures in interaction’. This emphasis on the complexities of ‘interaction’ or ‘communication’ between ‘cultures’ (i.e. groups of people or stakeholders) is one shared by Mead and Andrews, and it is developed throughout this course, where we discuss several case studies from the field of human resource management (HRM) and international human resource management or IHRM (cf. Briscoe and Schuler, 2004; Harris, et al., 2003). The text Cross-cultural Marketing, edited by Rugimbana and Nwankwo (2003, from which you’ll be reading in Unit 5) highlights the importance of communicating one’s cultural identity in international and cross-cultural management. The book eschews the traditional practice of asking how far marketing ideas that work in one context may be applied elsewhere. It focuses instead on the realities of marketing to different cultures both ...
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...was a system that encouraged the prevalence of trade disputes and war between nations instead of peaceful cooperation between them. In 1776 an English academic and philosopher published a book that broke through will all economic assumptions held to be true at the time, and advocated for a completely different system. His name was Adam Smith and his work became known as “An Inquiry into the Nature and Causes of the Wealth of Nations”. Adam Smith began by disproving the mercantilistic notion of trade protectionism where exports were maximised in detriment of heavy restrictions on imports. According to Smith, international trade could in fact be beneficial to all participants if each country would specialise in the production of goods where it had an absolute advantage in terms of costs. By producing a good cheaper than everyone else and by importing others, a country could immensely gain from international trade. Although revolutionary, Smith’s theory of absolute advantages was not free from flaws. In fact if a country didn't have such advantage in producing a given good it wouldn't have access to trade, or in another words, trade wouldn't occur if country A couldn't be the most efficient in producing good B. In this context and in attempt to improve Smiths’ theory, David Ricardo a British political economist of Portuguese origin, introduced the theory of comparative advantages. In sum Ricardo argued that even if a country didn't have...
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...COLLEGE OF MANAGEMENT AND SOCIAL SCIENCES DEPARTMENT OF ECONOMICS DISCUSS THE VARIOUS ECONOMIC GROWTH THEORIES AND DEVELOPMENT THEORIES HOW CAN SUCH THEORIES BE USED IN ECONOMIC DEVELOPMENT IN NIGERIA. COURSE TITLE THEORY OF ECONOMIC DEVELOPMENT COURSE CODE;ECO 2911 INTRODUCTION According to Dennis Goulet in The Cruel Choice, “it matters little how much information we possess about development if we have not grasped its inner meaning”. Development is not purely an economic phenomenon. In an ultimate sense, it must encompass more than the material and financial sides of people’s lives, to expand human freedom. Every nation strives after development. Development and growth should therefore be perceived as a multidimensional process involving the reorganization and reorientation of the entire economic and social systems. The sources of economic progress can be traced to a variety of factors, but by and large, investments that improve the quality of existing physical and human resources, increase the quantity of these same productive resources, and raise the productivity of all or specific resources through invention , innovation and technological progress have been and will continue to be primary factors in stimulating economic growth in any society. ECONOMIC DEVELOPMENT THEORIES Definition of economic development It can be defined as the increase in the standard of living of a nation's population with sustained growth from a simple, low-income economy...
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...DEPARTMENT OF AGRICULTURAL AND RESOURCE ECONOMICS AND POLICY DIVISION OF AGRICULTURAL AND NATURAL RESOURCES UNIVERSITY OF CALIFORNIA AT BERKELEY Working Paper No. 887 FALLACIES IN DEVELOPMENT THEORY AND THEIR IMPLICATIONS FOR POLICY by Irma Adelman Copyright © 1999 by Irma Adelman. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. California Agricultural Experiment Station Giannini Foundation of Agricultural Economics May, 1999 FALLACIES IN DEVELOPMENT THEORY AND THEIR IMPLICATIONS FOR POLICY. by Irma Adelman I. Introduction No area of economics has experienced as many abrupt changes in leading paradigm during the post Word War II era as has economic development. Since economic development is a policy science, the twists and turns in development economics have had profound implications for development policy. Specifically, the dominant development model has determined policy prescriptions concerning the desirable: role of government in the economy; its degree of interventionism; the form interventionism; and the nature of government-market interactions. Changes in both theory and policy prescriptions arise mainly from the following five sources: First, there is learning. As our empirical and theoretical knowledge-base enlarges, new theoretical propositions, or new evidence concerning either resounding real-world successes...
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...The Heckscher-Ohlin theory explains why countries trade goods and services with each other. One condition for trade between two countries is that the countries differ with respect to the availability of the factors of production. They differ if one country, for example, has many machines (capital) but few workers, while another country has a lot of workers but few machines. According to the Heckscher-Ohlin theory, a country specializes in the production of goods that it is particularly suited to produce. Countries in which capital is abundant and workers are few, therefore, specialize in production of goods that, in particular, require capital. Specialization in production and trade between countries generates, according to this theory, a higher standard-of-living for the countries involved. New notes The Heckscher Ohlin model Introduction The Heckscher Ohlin model Predicts that different factor endowments between countries is a key issue in the international trade flows but others such a WW Leontief, who in 1954 tried o test the theory empirically, found that this model failed to explain United States trading patterns. Read more: http://www.ukessays.co.uk/essays/economics/heckscher-ohlin-model.php#ixzz2DPfWNkhU The Heckscher Ohlin assumption The Heckscher Ohlin theory explains why countries trade good and services to each other. To apply this theory countries have to respect conditions; one of those is that the countries obviously differ with respect to the availability...
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...español INTRODUCTION THEORY OF MODERNIZATION THEORY OF DEPENDENCY THEORY OF WORLD-SYSTEMS THEORY OF GLOBALIZATION A MODO DE COLOFON BIBLIOGRAPHY NOTES 1. Introduction The main objective of this document is to synthesize the main aspects of the four major theories of development: modernization, dependency, world-systems and globalization. These are the principal theoretical explanations to interpret development efforts carried out especially in the developing countries. These theoretical perspectives allow us not only to clarify concepts, to set them in economic and social perspectives, but also to identify recommendations in terms of social policies. For the purposes of this paper, the term development is understood as a social condition within a nation, in which the authentic needs of its population are satisfied by the rational and sustainable use of natural resources and systems. This utilization of natural resources is based on a technology, which respects the cultural features of the population of a given country. This general definition of development includes the specification that social groups have access to organizations, basic services such as education, housing, health services, and nutrition, and above all else, that their cultures and traditions are respected within the social framework of a particular country. In economic terms, the aforementioned definition indicates that for the population of a country, there are employment opportunities...
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...International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. Although the path of world trade growth has been uneven in the past few years (Contraction in 1998, rebound in 1999 and 2000, followed by a slowdown in 2001), the fact that trade continued to expand faster than output is indicative of the increasing openness of national economies. Part of this development is due to the gradual but continued trend towards more liberal trade policies around the world. Since the establishment of the WTO in 1995, Members have been implementing staged reductions in bound tariffs, in domestic levels of support and export subsidy levels for agricultural products, and lifting non-tariff barriers. Specific measures, targeted on improving market access for least-developed countries in particular, have also been implemented...
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...all nations to become rich simultaneously by following mercantilist prescriptions because the export of one nation is another nation’s import. However, all nations would gain simultaneously if they practiced free trade and specialized in accordance with their absolute advantage. Table I, illustrating Smith’s concept of absolute advantage, shows quantities of wheat and cloth produced by one hour’s work in two countries, the United States and the United Kingdom. Division of labor and specialization occupy a central place in Smith’s writing. Table I indicates what the international division of labor should be, as the United States has an absolute advantage in wheat and the U.K. has an absolute advantage in cloth. Smith’s absolute advantage is determined by a simple comparison of labor productivities across countries. Smith’s theory of absolute advantage predicts that the United States will produce only wheat (W) and the U.K. will produce only cloth (C). Both nations would gain if they have unrestricted trade in wheat and cloth. If they trade 6W for 6C, then the gain of the United States is 1/2 hour’s work, which is required Absolute advantage U.S. Wheat (bushel/hour) Cloth (yards/hour) 6 4 U.K. 1 5 Table 1 to produce the extra 2C that it is getting through trade with the U.K. Because the U.K. stops wheat...
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...Creation. What does an MNE need in order for it to create value through the globalization process? Global business, like any business, is the social science of managing people to organize, maintain, and grow the collective productivity toward accomplishing productive goals, typically to generate profit and value for its owners and stakeholders. A multinational enterprise (MNE) needs three fundamental elements in order to build firm value: (1) an open marketplace; (2) high quality strategic management; and (3) access to capital. 1-3. Value Creation and the Concept of Capitalism. How does the concept of capitalism actually apply to the globalization process of a business, as it moves from elemental to multinational stages of development? Open markets and insightful leadership is all for nought if the MNE cannot gain ready access to affordable capital. It is capital that allows the investment needed to obtain the technology, execute the strategy, and expand across global markets. It is the “capital” in capitalism; it is the ability of the enterprise to reach out and obtain resources from outside of the firm to pursue the firm’s vision and create the value for all of the key stakeholders in the enterprise itself, and subsequently for the community and society of which it is an...
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...relating to peace and non-violence, but for the purpose of this essay only the area of international relations will be examined. “We are in a new millennium, and the time has come to review the age-old challenges with new thinking wherein we can conceive pf peace as not simply the absence of violence, but the active presence of the capacity for a higher evolution of the human awareness, of respect, trust, and integrity; wherein we all may tap the infinite capabilities of humanity to transform consciousness and conditions which impel or compel violence at a personal, group, or national level toward developing a new understanding of, and a commitment to, compassion and love, in order to create a “shining city on a hill”, a light of which is the light of nations”.[1] The Department of Peace and Nonviolence would consist of a Secretary who would be appointed by the President with the consent of the Senate. The department would be staffed by six Assistant Secretaries and one General Counsel who would also be appointed by the president with the consent of the Senate. For the purpose of this essay three roles will be examined; that of the Secretary, the Assistant Secretary of International Peace Activities, and the Secretary for Arms Control and Disarmament. Again the legislation covers myriad of topics relating to peace and non-violence only those duties relating to the development of international peace will be examined. The legislation also call for the creation of a peace academy...
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...Free Trade in the Real World: Competing perspectives about the role and impact of trade in developing countries. By James Lawrie Since the end of the Second World War the Western World has lead the way in the quest for free trade between nations. In particular, various arms of The United Nations, chiefly The World Bank, The International Monetary Fund (IMF) and The World Trade Organisation (WTO) have been the main bodies through which the developed world has pushed its agenda of liberalisation. The policies pursued by these supranational organisations are based on western economic concepts and theories and have become broadly known as the ‘Washington Consensus’, a term first coined by John Williamson in 1989. The Washington Consensus is rooted firmly in the Neoclassical approach to economic thinking and has been criticised by two main schools of thought; Structuralists and Dependency Theory. These two schools question many of the assumptions made by the Neoclassical framework and use real world observations to discredit Neoclassical policies. While Neoclassical theory suggests that all free trade is eventually mutually beneficial to everyones welfare, Dependency Theory advocates argue that free trade is a destructive force and a threat to the Developing World or the Least Developed Countries (LDC’s). Structuralist make their position in the middle ground and acknowledge that while there are gains from free trade to be made for LDC’s and Developed Countries (DC’s) alike...
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...FOREIGN DIRECT INVESTMENT AND THE MULTINATIONAL CORPORATION CHAPTER 2. 2.1. INTRODUCTION International business activity is by no means a recent phenomenon. The lives of Phoenicians and Carthaginians, in the ancient world, were deeply dependent on international business. This economic activity included foreign direct investment (FDI), joint ventures and strategic alliances, among other forms of internationalisation (Moore and Lewis, 1999). Several multinational corporations (MNEs) can also be identified in Europe in the middle ages and in the beginning of the modern era (Dunning, 1993a; Jones, 1996). The origins of modern international business activity however, are associated with the industrial revolution. Modern MNEs, in particular, have their roots in the massive international movement of factors that took place in the nineteenth century (Dunning, 1993a: p.99). Resource-seeking was the most common motivation of FDI in this period, even if by 1850 many firms had already crossed the Atlantic, in both directions, in what can be defined as market-seeking investment (Dunning, 1993a: p.100; Jones, 1996: p.5). 8 Despite the presence of FDI, most foreign investment in the nineteenth century - and indeed until the late 1940s – was portfolio capital. As a result, international business activity was largely ignored in economic theory until the late 1950s. On the one hand, the phenomenon did not have a major perceived economic impact. It was widely assumed that MNEs were...
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...existing securities— derivatives, whose value is based on market value changes in the underlying securities. The health and security of the global financial system rely on the quality of these assets. 1-3. Eurocurrencies and LIBOR. Why have eurocurrencies and LIBOR remained the centerpiece of the global financial marketplace for so long? Eurocurrencies and LIBOR (and there are LIBOR rates for all eurocurrencies) reflect the “purest” of market driven currencies and instrument rates. They are largely unregulated, and therefore reflect freely traded assets whose value is set by the daily global marketplace. 1-4. Theory of Comparative Advantage. Define and explain the theory of comparative advantage. The theory of comparative advantage provides a basis for explaining and justifying international trade in a model world assumed to enjoy free trade, perfect competition,...
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