economies that are open to trade grow faster, rich countries are protectionsir, poverty in 3rd world

8/14/2019 Economies that are Open to Trade Grow Faster, rich countries are protectionsir, poverty in 3rd world

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conomies that are open conomies that are open

o trade grow faster

o trade grow faster


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Economies that are open to trade grow fasterRanking ( )core of 10

US 1 .73

Austral ia 2 .29UK 3 .10

Canada 4 .09

Norway 5 .07Sweden 6 .89

Singapore 7 .87


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OPENESS OF COUNTRIES (AS DATA OF 2007)

+ / =EXPORT IMPORT GDP OPENESS RATIO

( )1 . + . / . = .69 8 92 9 2 13 76 38

( ) . + . / . = .2 32 7 37 8 2 53 27 86

COUNTRY

EXPORT IMPORT GDP OPNESS

US 69.8 92.9 2.13 76.38

UK 32.7 37.8 2.53 27.86


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Effect of us financial crisis in us

Year average rate

- .2009 3 60.2008 0 40.2007 2 13.2006 2 65


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Growth of china


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YEAR REAL GROWTH RATE %

2001 8.3

2002 9.1

2003 10.0

2004 10.1

2005 10.0

2006 11.1

2007 11.4


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In 2008 the global economic crisis began to

reduce China's growth rate .The significance of all this is that althoughChinas headline GDP growth is widely tipped to slow to 9-10% in 2008, if a bigger chunk of this growth comes from domesticconsumption and investment, then inabsolute dollar terms China could wellcontribute more to global demand .


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Australias opennessOne of the most open economies in the

world

- average tariffs 5 percent

- open financial and telecoms

- open to foreign investment


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dp real growth rate of ukdp real growth rate of uk

Year average growth rate

- .2009 5 20.2008 0 75.2007 2 53.2006 2 85


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Above all data shows that country likeUK,USA,CHINA .etc.are grow faster .But in the time of recession thiskind of all country are highly affected .So weconcluded that for growth country have to open totrade but also have to depend on domesticdemand


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ich Countr ies are ich Countries are ore Protectionist ore Protect ionist

han poor one han poor one


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What is Protectionism?Protectionism is the economic policy of restraining trade between states, throughmethods such as tariffs on imported goods,

restrictive quotas, and a variety of otherrestrictive government regulations designed todiscourage imports, and prevent foreign take-over of local markets and companies. This policyis closely aligned with anti-globalization, andcontrasts with free trade, where governmentbarriers to trade are kept to a minimum. The termis mostly used in the context of economics, whereprotectionism refers to policies or doctrineswhich "protect" businesses and workers within acountry by restricting or regulating trade withforeign nations.


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Free Trade V/s ProtectionFree trade that enables firms and countries to specialize inactivities they perform best; leading thorough graterefficiency, more production and higher standard of livingthroughout the world.

Due to free trade jobs are created, consumers enjoys a widerchoice of the goods, firms have a wider market and there isextensive communication between people in differentnations.

But at the same time some countries continue to userestrictive measures in order to improve their balance of payment.

All the countries have import tariff; some have exchangecontrols and non tariff restrictions; a few variety of hiddenimport barriers.


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easons or e cCountries to adopt the

protectionist policy The first reason for protection is tariff are imposed toreduce the level of imports and improve the balance of payment and to raise the revenue of the state.

Saving the domestic jobs; Foreign competitors paying lowwages e.g. NAFTA

Developing infant industriesProtecting old and inefficient industries while they are

modernizing. The counter argument here is thatunprofitable firms should be allowed to go to the wall,

and that any business with reasonable prospects oughtto be able to attract backers to finance its rationalism.Preserving national heritage and culture. Certain

agriculture and craft industries have been protected onthis justification.


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easons or e cCountries to adopt the

protectionist policyFacilitating the implementation of an overall industrialstrategy through encouraging the development of someactivities while discouraging others.

Strengthening the countrys bargaining position ininternational trade negotiations.

Diversifying the domestic economy, especially if the countrydepends on the exports of just one or few items of itsearning of foreign exchange.

Stimulating production in industrial sectors which supplygoods that compete with imports. Retention by othercountries is the obvious problem with this approach.

Defending Strategic industriesAttracting Foreign investment


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Arguments against the

ProtectionInvariably provoke retaliation by other countries.Reduce the overall volume of world trade, there by lowering

global income and employment.Create unemployment among those concerned with the

handling storage, transportation and distribution of imported goods.

Might encourage domestic priceFoster(Promote) complacency and inefficiency within

domestic firms, which might not bother to introduce thelatest working methods or invest in new equipment..

Reduce variety of product available to the domesticconsumers.


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Techniques for Protection TariffsQuantitative RestrictionsOther Non tariff barriersAdministrative BarriersExchange control (Rate)Anti dumping Measure

Direct subsidiesExport subsidies


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ree Trade ree Trade

ncreases the ncreases the overty in the overty in the

.hird world .hird world


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The amount of money the UK spends On chocolate eachyear could make Africa NOT live in poverty


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IF, ,frica East Asia South

sia nd atin America ncrease Exports by %

he resulting gains in ncome could lift 28 Million people ut of

Poverty. . . . xfam Report 2002


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Economic Freedom is

developmentFormer colonies do not have economic

freedom

The currency values are not set basedon productivity but based on balanceof payment

Equal pay for equal work is the

answer to world poverty Rich paying far less than full value of

natural resources a consequence of technological dependence


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Percentage of people living below the poverty line

Europe and Central Asia

3.5%Latin America and Caribbean

23.5%

Sub-Saharan Africa38.5%

Middle East and North Africa4.1%

South Asia43.1%


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A new WTO Secretariat study published today(19 June) finds that trade liberalization helps

poor countries to catch up with rich ones andthat this faster economic growth helps toalleviate poverty.

For example, 30 years ago, South Korea was

as poor as Ghana. Today, thanks to trade ledgrowth, it is as rich as Portugal.


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Why do some countries succeed and others fail?Why do some go from poor to rich while others gofrom rich to poor?

A 1960 to 2002 comparison of Hong Kong (with

virtually no natural resources) and Venezuela(with an abundance of oil and other naturalresources) illustrates how economic freedom canmake a difference. [See Figure IV.]

In 1960 , the average per capita income inVenezuela was $6,720 , more than twice as muchas in Hong Kong ($3,249).

But by 2002 , average per capita income in HongKong had reached $26,910 - more than five timesas much as in Venezuela ($5,380).

What differences caused Hong Kong to become richand Venezuela to become poor?

Clearly, natural resources do not provide theanswer. Hong Kong's success is primarily theresult of economic freedom. Hong Kong held aneconomic freedom ranking of 8.4 in 1970 and 8.6in 2001. In contrast, Venezuela had an economicfreedom rating of only 7.0 in 1970 and had fallento 5.3 b 2001.


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Economic freedom improvesoverall humandevelopment.

There is a clear correlation between countries that scorehigh on the UN's Human Development Index and thosecountries that score well in the EFW Index. The moreeconomically free a country, the greater the level of human development enjoyed by its citizens. The top fifthmost economically free countries have an average score of 9 out of 10 on the Human Development Index whereasthose in the bottom fifth have an average score of about 5.

"Human development in terms of health, education, livingstandards and other factors is much higher."

Take adult literacy, a component of the HDI. Figure XIIIshows that the least free countries had an average adult


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economies that are open to trade grow faster, rich countries are protectionsir, poverty in 3rd world

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