Mercantilism is a bankrupt theory that has no place in the modern world. Discuss.

Mercantilism is a bankrupt theory that has no place in the modern world. Discuss.

Question
CRITICAL QUESTIONS AND DISCUSSION
Note: Questions from the end of the chapters can also be used for discussion questions

Chapter 2:Foundations of Modern Trade Theory: Comparative Advantage

Critical Thinking and Discussion Questions:

QUESTION 1: Mercantilism is a bankrupt theory that has no place in the modern world. Discuss.

QUESTION 2: Is free trade fair? Discuss.

QUESTION 3: Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition. Is such competition “unfair”? Do you think that this argument is in the best interests of (a) the unions, (b) the people they represent, and/or (c) the country as a whole?

QUESTION 4: What are the potential costs of adopting a free trade regime? Do you think governments should do anything to reduce these costs? What?

QUESTION 5: 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! Discuss.

Chapter 3: Sources of Comparative Advantage

Critical Questions:

QUESTION 1: In a world of zero transportation costs, no trade barriers, and nontrivial differences between nations with regard to factor conditions, firms must expand internationally if they are to survive. Discuss.

QUESTION 2: A transnational strategy is responsive to pressures to have both a low cost and locally customized product offering.What do you see as the main organizational problems that are likely to be associated with implementation of a transnational strategy?

QUESTION 3: What is the relationship between corruption in a country (i.e., bribe- taking by government officials) and economic growth? Is corruption always bad?

Chapter 4: Tariffs

Critical thinking and Discussion Questions:

QUESTION 1: Do you think that governments should consider human rights when granting preferential trading rights to countries? What are the arguments for and against taking such a position?

QUESTION 2: Whose interests should be the paramount concern of government trade policy – the interests of producers (businesses and their employees) or those of consumers?

QUESTION 3: Given the arguments relating to the new trade theory and strategic trade policy, what kind of trade policy should business be pressuring government to adopt?

QUESTION 4: You are an employee of an U.S. firm that produces personal computers in Thailand and then exports them to the U.S. and other countries for sale. The personal computers were originally produced in Thailand to take advantage of relatively low labor costs and a skilled workforce. Other possible locations considered at that time were Malaysia and Hong Kong. The U.S. government decides to impose punitive 100% ad valorem tariffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict U.S. exports to Thailand. How do you think your firm should respond? What does this tell you about the use of targeted trade barriers?

Chapter 7: Trade policies for the Developing Nations

Critical Thinking and Discussion Questions:

QUESTION 1: Free market economies stimulate greater economic growth, whereas state-directed economies stifle growth. Discuss.

QUESTION 2: A democratic political system is an essential condition for sustained economic progress. Discuss.

QUESTION 3: What is the relationship between corruption in a country (i.e., bribe- taking by government officials) and economic growth? Is corruption always bad?

QUESTION 4: The Nobel prize-winning economist Amartya Sen argues that the concept of development should be broadened to include more than just economic development. What other factors does Sen think should be included in an assessment of development? How might adoption of Sen’s views influence government policy? Do you think Sen is correct that development is about more than just economic development? Explain.

QUESTION 5: You are the CEO of a company that has to choose between making a $100 million investment in Russia or the Czech Republic. Both investments promise the same long-run return, so your choice is driven by risk considerations. Assess the various risks of doing business in each of these nations. Which investment would you favor and why?

Chapter 10: The Balance of Payments

Critical Thinking and Discussion Questions:

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