ENT201 Introduction to Entrepreneurship

Question 1

(a) Globalization 

Globalization refers to a relatively more liberal process integration between two or more countries in the global economy (Beck 2018). By the process of globalization, the conduction of trade has been easier between two or more countries. In this process, the trade policies between the countries would be reduced (Burlacu, Gutu and Matei 2018). Some countries may form trading blocs with their trade partners to make the process of globalization easier.

Several factors have been contributed to expanding the scope of a country’s globalization path. These key factors have been mentioned in the following section of the paper.

a Reduction Or Removal Of Trade Barriers

A government of an open economy has been enforced various types of trade barriers within the country to restrict or limit the unbalanced trade practices within the economy (Peters 2017). If the government of an economy reduces the import tariff or import quota on the importable commodities of its trade partners then the process of globalization will be easier than the previous situation.

The High Rate Of Unemployment In An Economy

If a country persists with a high unemployment rate then the government can take globalization policy to create a greater rate of employment generation within the economy (Suci, Asmara and Mulatsih 2016). Because a relatively high trade is associated with a comparatively high rate of production directly or indirectly which creates high employment.

Trading Bloc Development

If the two or more countries are bonded to each other with the help of the reading bloc then globalization is relatively easy for those countries with a relatively more liberal trade policy (Muye, and Muye 2017).

(b) The state of globalization of these mentioned countries has been discussed with the help of their import-export data and the total amount of trade as a percentage of GDP.

For the country whose contribution in total GDP is highest, that country conducts the highest amount of trade among the other countries. From the above table, it has been observed that Cambodia has conducted the highest amount of trade than the other countries concerning its GDP. The countries which have been practicing more trade because the country might follow a relatively more globalization rule. Because a country will get more trade advantages when it takes a relatively globalized pricing policy. Based on the above calculation, it can say that after Cambodia, Bahrain is the most globalized country than other countries. Chad and Nigeria are considered as the 3^rd and 4^th rank respectively of this rank. On the contrary, the level of globalization in Brazil is lowest than in other countries.

Question 2

(a) The below figure shows the trade practices between two countries such as The United States and Australia. Here, the export and import values have been represented in the following diagram concerning the USA.

The ‘-‘ value for a traded product implies the USA has been imported that commodities from Australia and the '+' value imply the product is exported to Australia from the USA. Here, it has been found that the USA exports machinery except electrical, different transportation equipment, computer and other electronic products and lastly other products to Australia.  On the other hand, the USA imports only primary metal MFG from Australia.

(b) The USA and Australia are very strong trade partners in international trade practices (Zhang et al. 2017). The USA operates at a trade surplus while conducting trade with Australia. The value of the trade surplus of the USA economy with Australia is equal to $9,054,780,571 which means the USA is exported a relatively high amount of product to Australia than that it imported from it. According to the international trade theory of comparative advantage, that a country would export only those commodities for which it has a comparative advantage (Davis and Dingel 2020). Comparative advantage occurs for a product within a country when the country can produce a commodity at the lowest opportunity cost. Thus, the opportunity cost of producing machinery except for electrical, different transportation equipment, computer, and other electronic products and other products is relatively low in the USA than in Australia. Whereas, Australia can produce primary metal MFG at a comparatively lowest opportunity cost than the USA. As a result of these trade practices between Australia and the USA would improve the degree of specialization for those commodities which each country exported. This would improve the terms of trade of those countries.

Question 3

It has been observed from the annual report of 2020, the country has targeted $900 billion export by the year 2015-2020 through its foreign trade policy. The major exportable commodities in India are Petroleum and Petroleum products, gems, jewelry, and other types of precious metals, machinery, computer, chemical, steel, iron, etc.

On the other hand, the country, India has been usually imported from its trade partners several commodities such as pearl, gold, crude petroleum, electronic products, waxes, oil, plastic and plastic products, etc.

The significant export partners of the country, India are China, the United States, UAE, Iraq, Switzerland, Hong Kong, etc. Whereas, its topmost import partners in recent years are the same as its export partners.

In India, the population growth rate is very high and it is the world's second-largest economy by its population. Thus, it is very clear that labor in the Indian economy is relatively abundant than capital. Thus, according to the H-S model, it will produce and export labor-intensive commodities. By observing the trade pattern of India, it has been noted that the country will produce that commodity relatively higher amount for which a relatively greater amount of labor has been needed. The country has been still used relatively backdated, labor-intensive techniques since the era of mid-1980s. India mainly imports those commodities for which highly advanced technology is used. On the other hand, its main trade partners are China and the USA which are highly technologically advanced countries. Thus H-S model holds for the trade pattern of India.

References 

Avgerou, C. and Walsham, G. eds., 2017. Information technology in context: Studies from the perspective of developing countries. Routledge.

Beck, U., 2018. What is globalization?. John Wiley & Sons.

Burlacu, S., Gutu, C. and Matei, F.O., 2018. Globalization–pros and cons. Calitatea, 19(S1), pp.122-125.

Davis, D.R. and Dingel, J.I., 2020. The comparative advantage of cities. Journal of International Economics, 123, p.103291.

Descamps, S., Gaillard, J.M., Hamel, S. and Yoccoz, N.G., 2016. When relative allocation depends on total resource acquisition: implication for the analysis of trade‐offs. Journal of evolutionary biology, 29(9), pp.1860-1866.

Etro, F., 2017. The Heckscher–Ohlin model with monopolistic competition and general preferences. Economics Letters, 158, pp.26-29.

Muye, I.M. and Muye, I.Y., 2017. Testing for causality among globalization, institution and financial development: Further evidence from three economic blocs. Borsa Istanbul Review, 17(2), pp.117-132.

Peters, M.E., 2017. Trading barriers: immigration and the remaking of globalization. Princeton University Press.

Suci, S.C., Asmara, A. and Mulatsih, S., 2016. The impact of globalization on economic growth in ASEAN. BISNIS & BIROKRASI: Jurnal Ilmu Administrasi dan Organisasi, 22(2), pp.79-87.

Zhang, L., Chen, T., Yang, J., Cai, Z., Sheng, H., Yuan, Z. and Wu, H., 2017. Characterizing copper flows in international trade of China, 1975–2015. Science of The Total Environment, 601, pp.1238-1246.

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