ECONOMICS OF GLOBALIZATION:

ACTIVITY 6: INTERNATIONAL TRADE AND

GLOBALIZATION
1.INTERNATIONAL TRADE
a) What is International Trade? And Exports and Imports?
International trade is the exchange of goods and services between countries. Some
countries produce certain goods faster and at a lower cost, making it easier for them to
sell their goods internationally.
Meanwhile, if another country can’t produce an item efficiently it can obtain it through
trade. This lets countries expand their markets and access to products that are not
available domestically. International trade makes the market more competitive, which
leads to more competitive pricing and cheaper products for the consumer.
A product that sold to the global market is called an export. A product that bought is
called an import. Global trade allows countries to use resources more efficiently by
importing cheap goods and exportin their own goods.
An export is a product that is sold to the global market, meanwhile a product that is
bought from the global market is an import.
b) Define the concept of Comparative Advantage and the importance of economic
specialization?
Comparative advantage explains why protectionism is usually unsuccessful. If a
country leaves a trade agreement or imposes tariffs, this can create local jobs that
country will soon be at a disadvantage to other that produce these items at a lower
cost.
So according to the theory of the comparative advantage, each country would
eventually recognize the facts and stop attempting to make the product that was more
costly to generate domestically in favour of engaging in trade.
So if each country specially in what they can do cheaper and faster, we can see then
that for both countries, the opportunity cost of producing both products is greater than
the cost of specializing.
c) What are the advantages and disadvantages of implementing tariffs?
As Investopedia explains, in simplest terms, a tariff is a tax. These “taxes” are created
to protect in fact industries or developing economies. But also, this tool is used in
advanced economies of developed countries.
When a tariff is implemented, the direct advantage is that revenue will be increased by
entering the domestic market. This market is the one that benefits the most from the
implementation of tariffs, as it reduces the number of competitors, since exporting with
tariffs is more expensive and therefore not as profitable.
On the other hand, the disadvantages of the implementation of tariffs are the
consumers, since the prices of the products will increase, being as Investopedia
mentions "tariffs and trade barriers tend to be pro-producer and anti-consumer".
2. THE INDEX OF TRADE OPENNESS

(Exports+ Imports)
Trade Openess=
GDP
A)

TRADE OPENESS 1970 2022

ARGENTINA 6,98% 25,08%
AUSTRIA 35,54% 118,07%
KENIA 55,63% 34,78%
BANGLADESH 76,44% 411,62%

B)

GDP PER CAPITA

50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15 18 21
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20

ARGENTINA AUSTRIA KENIA BANGLADESH

TRADE OPENESS
140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15 18 21
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20

ARGENTINA AUSTRIA KENIA BANGLADESH