International Business Finance and Economics of Globalisation

Format the assignment with 1.5 line spacing and size 12 point Arial font

You must clearly acknowledge all sources using Harvard referencing system including the textbook. The textbook called International Economics 7th edition by J Gerber, published in 2017 by Pearson.

Use reliable resources such as journals, journals peer-reviewed, government sites, textbooks and reliable websites or so.

You should be familiar with materials covered until week 7 to answer this assignment. You may also use library resources and other online articles to support your answers

Week 1: Introduction to the world economy

In this session we discussed:

1. Trade, capital flows and migration

2. Trade-to-GDP ratio and its significance

3. First wave of globalization and what factors are different today

4. Trade and Economic growth

5. Important International Institutions since World War II

Week 2: Theory of comparative advantage

In this session we discussed:

1. Absolute advantage

2. Gains from Trade

3. Comparative advantage

4. Comparative vs Competitive advantage

5. International Trade and Economic Restructuring

Week 3: Factor endowments and trade

In this session we discussed:

1. The Heckscher-Ohlin Trade Model

2. Trade and Income Distribution

3. The Product Cycle Model

4. Intra-firm trade and OLI theory

5. International migration

6. International Trade, Wages and Jobs

Week 4: Modern trade theories

In this session we discussed:

1. Intra-industry Trade

2. Economies of Scale – Internal vs. External

3. Transportation costs and Trade

4. Trade and External economies of Scale

5. Industrial Policy

Week 5: Trade barriers: Tariffs and quotas

In this session we discussed:

1. Consumer and Producer surplus

2. Impact of Tariffs, especially on Resource Allocation and Income Distribution

3. Tariffs imposed by a large country

4. Rates of Protection

5. Impact of Quotas

6. Other forms of Protection

Week 6: Trade policy

In this session we discussed:

1.Trends in tariff rates - Across sectors and over time

2.Costs of protectionism

3.Common reasons behind protectionist policies such as revenue generation, job protection, infant-industry protection among others

4.Politics of protection in the U.S.

Week 7: Labour and environmental standards

In this session we discussed:

1. Income, Development Indicators and Standards

2. Trade and labour standards

3. Child labour

4. Trade and Environment

5. Alternatives to Trade measures

Rubrics:

Highly developed skills in expression and presentation of ideas. Fluent writing style. No major grammatical and spelling errors. All references, including recent literature, cited and used accurately.

Excellent use of knowledge gained and awareness of deeper and more subtle aspects of economic issues and theories. There is clear evidence of researched/read more widely beyond the core materials.

Provides well-argued and articulated statements with supporting evidence. Evidence of originality and independent thought. Has highly developed analytical skills & consistently demonstrates high levels of critical analysis. Demonstrates ability to reflect on conclusions and their implications.

Question 3 (15 marks, 800 words)

Recently, there have been instances of large open economies imposing significant tariffs on imports from their trading partners. Details of the two such cases are provided below.

1. Starting from a most favoured nation (MFN) average tariff rate of 3.1% in 2017, the US increased its tariff on Chinese exports to 21% by January 2020. This was carried out by a series of tariff hikes under Section 301 from the beginning of 2018.

2. In May 2020, the Commerce Ministry of China ruled that Australia had indulged in dumping and subsidisation of barley exports to China and imposed a combined 80.5% tariff on Australian

barley (73.6% anti-dumping duty and 6.9% countervailing duty).

(a) Based on the theories we have studied, discuss the possible explicit and implicit reasons that may explain the decisions by the US and Chinese governments to implement such a sharp increase in their tariff rates.

(8 marks, 400 words)

(b) What are the likely impacts of the higher tariffs on the different sections of the economy in the importing and the exporting country? Provide a brief explanation for each case.

(7 marks, 400 words)

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