role of international trade

Question 1

barriers of international trade in economic developing countries

Answer 1

• overspecialization
• price volatility of primary sectors products
• inability to access international markets

Question 2

long term change in the TOT

Answer 2

• low transfer technology
• low access to capital
• low access to foreign consumer goods

Question 3

strategies of international trade in economic developing countries

Answer 3

• trade strategies for development
• import substitution
• export promotion
• diversification

Question 4

overspecialization risk

Answer 4

• primary commodities price increase = benefit to economic growth if revenue well used
• primary commodities price decrease= deteriotation in tot, current account deficit increase

Question 5

price volatility of primary sector products risks

Answer 5

• demand and supplies = inelastic
• lack predict the future (=weather)
• instability for investors

Question 6

inability to access international markets risks

Answer 6

• protectionist measure
• tariff escalation
• non convertible currency

Question 7

import substitution advantage

Answer 7

A deliberate effort to replace major consumer imports by promoting the emergence and expansion of domestic industries such as textiles, shoes and household appliances.

• protect jobs
• protect local cultures
• protect economy from multinational company

Question 8

export promotion advantage

Answer 8

Encourages free trade in goods and the free movement of capital and labor. The theoretical justification is that export promotion increases output and growth arising from the use of comparative advantage

• liberalized trade
• liberalized capital flow
• floating exchange rate
• investment in infrastructure
• deregulation

Question 9

diversification advantage

Answer 9

• over independence on a product/service

- developing countries want to export manufactured good

Question 10

import substitution problems

Answer 10

• lack interaction with world
• produce inefficiently
• retaliation from other country

Question 11

tariff escalation

Answer 11

refers to a situation where tariffs rise along processing chains. This practice can afford significant protection to processed products in importing countries, depending on the share of value-added in final output.

Question 12

protectionist war

Answer 12

The economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow (according to proponents) fair competition between imports and goods and services