Government Policies and International Trade

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benefits the factor owner and both the source and destination countries.

When considering factor mobility, the ideas of absolute and comparative advantage also come into play. Absolute advantage, advanced by Adam Smith, says that a nation should only produce goods if it can do so with the same of fewer resources than another. Comparative advantage, on the other hand, argues that the ability to produce at a lower opportunity cost is paramount (Kilic, 2002).

Trans Pacific Partnership: On the surface the TPP looks like a great deal. Minimizing trade barriers for 40 percent of international commerce, improving working conditions for workers in signatory countries, protecting capital investments are all good things. However, as stated in the journal entry for this unit, there are winners and losers in any business arrangement. Only in a perfect world, with no distortions, perfect competition and full information can have truly free trade. In such an environment no one would worry about factor mobility because it would be beneficial to everyone. Before we consider such sweeping regional trade agreements as the TPP we must look inward at US domestic and foreign policy, there is a great gulf between current reality and the utopian vision represented by the Ricardian model (Kilic, 2002).

References

Ashiru, V. , (2017). UNIT II STUDY GUIDE International Business Global Framework, Part 2. Personal collection of V. Ashiru, Columbia Southern University, Orange Beach, AL. Retrieved on October 28, 2017 from https://online.columbiasouthern.edu/CSU_ Content/Courses /Business/MBA/MBA6601/15L/unitiv.pdf?target=blank

Bernanke, B., (2015). Federal Reserve Policy in an International Context, Brookins Institute. Retrieved on October 28, 2017 from: http://www.imf.org/external/np/res/seminars /2015/arc/pdf/Bernanke.pdf

Cashen, E., 2017. The Impact of Economic Sanctions, World Finance April 20, 2017. Retrieved on October 30, 2017 from: https://www.worldfinance.com/special-reports/the-impact-of-economic-sanctions

Clay, J., (2013). Are Agricultural Subsidies Causing More Harm Than Good, The Guardian, August 8, 2013. Retrieved on October 30, 2017 from: https://www.theguardian.com /sustainable-business/agricultural-subsidies-reform-government-support

Mann, K., 2016. Environment and trade: Do stricter environmental policies hurt export competitiveness?, Organisation for Economic Co-operation and Development, March 10, 2016. Retrieved on October 30, 2017 from: http://www.oecd.org/eco/greeneco/do-stricter-environmental-policies-hurt-export-competitiveness.htm

Mundell, R., 1968. International Trade and Factor Mobility, pp. 85-99. Retrieved on October 30, 2017 from: http://www.columbia.edu/~ram15/ie/ie-06.html

Kilic, R., (2002). Absolute and Comparative Advantage: Ricardian Model, Michigan State University. Retrieved on October 30, 2017 from: https://msu.edu/course/ec/340 /Kilic/lecture3.pdf