Please answer the following questions in your post.
1. a. What is trade?
b. Choose one of the following terms, define it, and explain how it is related to trade. You cannot choose a term that has already been defined.
- division of labour
- specialisation
- economies of scale
- purchasing power
- free trade area (give examples)
- living standards
- products
- foreign exchange
- comparative advantage
- tarrifs
- trade barrier
- fair trade
2. Imagine that you were the Minister of Trade, write a brief speech to explain why Trinidad and Tobago needs to trade.
3. In what ways has this exercise framed your opinion on trade.
1. a. Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. A network that allows trade is called a market. This simply means the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.
ReplyDeleteb. Foreign Exchange
Foreign exchange is the exchange of one currency for another or the conversion of one currency into another currency. Foreign exchange also refers to the global market where currencies are traded virtually around the clock. The largest trading centers are London, New York, Singapore and Tokyo. The term foreign exchange is usually abbreviated as "forex" and occasionally as "FX."The foreign exchange market is the market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. With the foreign exchange markets, this is how trade can take place with the various buyers and sellers.
2. Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need. Trinidad and Tobago needs to trade our natural resources such as oil, natural gas and asphalt to earn foreign exchange and increase the exports. Trinidad and Tobago can also utilized its natural resources like the land to cultivate crops to export and distribute within the country so increase foreign exchange on local produce. Although goods and services are likely to be imported from abroad for several reasons. Imports may be cheaper, or of better quality. They may also be more easily available or simply more appealing than locally produced goods. This will also create a relationship with other countries and both countries may benefit from the foreign exchange. Seeing that the cost of production is increasing some goods can be imported from cheaper countries or we can look at alternate or substitute products to make the goods. Cutting cost in whatever way we can will tried to be achieved and earning foreign exchange for the country will be the main goal since it is what was the country functions. Giving Trinidad and Tobago, the opportunity to participate in the global economy through trade helps grow own economies, creates jobs, and reduces poverty therefore development will occur.
3. This exercise has framed my opinion on trade because I know see how trade can be important to the country as well as assisting in development and earning foreign exchange for the country. Trade is important as it is a vital interaction for every country in the world. Without trade, countries would have to provide their own resources for every aspect in their daily life. Take for instance items such as food, clothing and technology. This would mean that a country is completely self-reliant which is difficult as the resource capacity for each country is limited. This is a particular issue for developing or less developed countries that cannot fully provide for themselves due to a lack of technology or education. However, even a developed country would struggle if it had to be fully self-reliant. Look around the room you are in and pick up an item, it is very unlikely it will be made in the country you are in. Trade is also used within a country. For instance, a small farm may provide produce for a local shop. Trading is also important as it contributes to the economy of a country. For instance, one country produces a good and then sells it to another country. This provides income which can then be used for development within the country such as by funding education and the emergency services.
Very interesting insights, Keisha. Looking forward to hearing you deliver your speech!
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ReplyDeleteTrade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.
ReplyDeleteTrade and Division of Labour
All the terms given above influence how companies make decisions as according to their products and how they make profits based on their products. The aspect of division of labour in any company depends also on the production of these products as well as the management of these products.
Trade, by eliminating the duplication of coordination costs, leads to a greater variety of intermediate goods, each produced at a larger scale than economically independent. The greater variety of intermediate inputs implies greater division of labour and hence gains
from trade. Similarly to models of trade under imperfect competition, the volume of trade depends on the relative sizes of the trading partners. Extending the model to two factors of production yields the additional result that if the two countries are sufficiently similar in their relative endowments, then both factors of production can experience
gains from trade. Basically Division of Labour helps trade as as well as organizes the production of products in a company.
Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need. Clear evidence of trading over long distances dates back at least 9,000 years, though long distance trade probably goes back much further to the domestication of pack animals and the invention of ships. Today, international trade is at the heart of the global economy and is responsible for much of the development and prosperity of the modern industrialised world. Trinidad and Tobago needs trade to the benefit of their country and their production of goods and services. Goods and services are likely to be imported from abroad for several reasons. Imports may be cheaper, or of better quality. They may also be more easily available or simply more appealing than locally produced goods. In many instances, no local alternatives exist, and importing is essential. This is highlighted today in the case of Japan, which has no oil reserves of its own, yet it is the world’s fourth largest consumer of oil, and must import all it requires.
This exercise framed my thinking of trade as it focused on different areas in relation to trade and it expanded my thinking where companies should focus on trade as a main factor of profit and production.
Your speech starts exactly like Keisha's. Why?
DeleteI specifically wanted to give a definition of trade.
DeleteA. Trade means the volunteer exchange of values between two parties, toward their own mutual benefit. voluntary means that no force is initiated by either party; that both parties enter the trade of their own free - will, since they think they both think they will be better off by trading than if they didn't.
ReplyDeleteB. Trade barrier are measures that governments or public authorities introduce to make imported goods and services less competitive than locally produced goods and services. Not everything that prevents or restricts trade can be characterized as a trade barrier. The most common barrier to trade is a tariff -a tax on imports. Tariff raise the price of imported goods relative to domestic goods (goods produced at home)
Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets. This results in a lower domestic price. Both tariffs and subsidies raise the price of foreign goods relative to domestic goods, which reduces imports.
Yet another barrier to trade is an embargo which is a block trade or political agreement that limits a foreign country's ability to export and import.
C. Barriers to trade are often called protection because their stated purpose is to shield or advance particular industries or segments of an economy. From an economic perspective, through, the cost to the economy almost always outweighs the benefits enjoyed by those who are protected. Trinidad and Tobago needs to improve on their trading. As a country we need to find ways to bring in more foreign exchange into our economy. Foreign exchange will help us improve our economy and our public sectors such as our health care, education etc. Trade has and important role to play in the economy of Trinidad and Tobago. Yes we export our oil and natural resources but we need to think of other resources to export as the natural resources is depleting.
It is often better to understand the economic history to avoid the worst of recent crisis. this exercise framed my thinking in advance. Trade probably got a little ahead of itself but the growth is still sluggish. Earnings expectations for 2018 have drifted back slightly but I guess that's normal which they still indicate fairly decent positive growth. Taking this into consideration, I see trade as a whole new dimension in the future.
1a. Trade is the activity of buying, selling, or exchanging goods or services between people, companies, or countries.
ReplyDeleteb. Specialization and trade
Specialization refers to the tendency countries to specialize in certain products which they trade for other goods, rather than producing all consumption goods on their own. Countries produce a surplus of the product in which they specialize and trade it for a different surplus good of another country. The traders decide on whether they should export or import goods depending on comparative advantages.
Imagine that there are two countries and both countries produce only two products. They can both choose to be self-sufficient, because they have the ability to produce both products. However, specializing in the product for which they have a comparative advantage and then trading would allow both countries to consume more than they would on their own.
One might assume that the country that is most efficient at the production of a good would choose to specialize in that good, but this isn’t always the case. Rather than absolute advantage, comparative advantage is the driving force of specialization. When countries decide what products to specialize in, the essential question becomes who could produce the product at a lower opportunity cost. Opportunity cost refers to what must be given up in order to obtain some item. It requires calculating what one could have gotten if one produced another product instead of one unit of the given product.
2. Trade is most necessary and important in our country of Trinidad and Tobago. As a republic we need trade because as a country development is most important and through trade we are able increase exports, create jobs, increase foreign exchange and international relations. Most importantly due to the availability of our natural resources such as oil and gas we are able to create trading links with numerous countries around the world to increase the development of trade in our country as it creates relationships that is beneficial to countries who engage in Trade.
3. By doing this exercise I learned that trade is vital to the success of a civilization. Why? The civilization that can produce just enough of everything it and its people need to survive is rare indeed. Can you think of an example, today or in the long history of people? Keep thinking…….Trade is simply the trading of something for something else. This can be one good for another good, one good for money, one good for a service, a service for a good, money for a service, etc. You get the idea. Trade is an exchange of things. Usually, people or civilizations trade things that they have too much of for things that they don't have enough of.
1.a) What is Trade? Trade is the buying and selling of goods and services, with a compensation being made to the seller from the buyer. Trade does not only involve the exchange of commodities for money but the exchanging of commodities between both parties.
ReplyDelete1.b) Comparative Advantage: this is the condition under which a party ( an individual, a firm or a country) is better suited to producing a good or service with a lower opportunity cost, than another party. The Law of Comparative Advantage simply explains that a party should specialize in the good or service they have a comparative advantage in. For example Billy and Mandy are two science students who planned a study date, on that study date they aim to complete both Biology and Chemistry pass papers within 12 hours. From a previous study date given the same time Billy had completed 3 Bio pass papers and 5 chem pass papers, Mandy, however, had completed 5 bio pass papers and 1 Chem pass paper. Therefore Billy had a comparative advantage over Mandy when it came to Chemistry, but Mandy had the comparative advantage over Billy when it came to Biology, so for this study date, all bio papers would be done by Mandy and all chem papers will be done by Billy and all results would be shared. This example can be applied to countries, resources and trade; in the Chemical industry, countries such as Saudi Arabia, Kuwait and Mexico as well as the U.S will have a comparative advantage over other countries as they are oil-producing nations and the basis for chemical production comes from the oil, therefore there will be a low opportunity cost for these countries to produce chemical as opposed to other countries around the world. However with the listed countries, Saudi Arabia, Kuwait and Mexico has the comparative advantage over the U.S in the chemical industry as their opportunity cost is less, due to the low cost of the other resources needed in the process. In the textile industry, countries such as India, China and Bangladesh has a comparative advantage over the world as opportunity cost is low due to the large labour force, availability of raw material and skills. With specific countries focusing on chemical production and others on textile there will be trade between them as it will cost less to import chemicals from the oil-producing nations than to make it, and less to import textiles from India and China than start an industry where there is the lack of resources.
2) “Take a look at the tags on your T-shirts. The producers of the drinks you have at high end parties, the manufacturers of your favourite snacks, the manufacturers of the cars you drive and the companies that hire you. If it were not for trade we as Trinbagonians would be drinking Bitters, eating doubles, building houses out of pitch and riding bull carts to the jobs we won’t have…and who’s to say we’ll even have that! We as Trinbagonians do no hold the capacity or resources to fulfil our needs and wants, therefore it is in our best interest to engage in trade as it allows us a variety or goods and services, as well as the luxuries we enjoy. We have destroyed all hope of living on a sustainable agricultural based economy and even if possible the time and resources it will take to recovered would be too long, thus leaving future generation to suffer. Trade is probably the best and only way as alternatives do not exist. Through this we shall benefit from foreign exchange and the partnerships of countries and economies whose methods, if integrated in an adaptable manner may help us to one day be a better and sustainable country.
Delete3) In what way has this exercise framed your opinion on trade.
This exercise has framed my opinion on trade as it made me more away of the smaller elements which the entire process consist of…meaning that it’s not just the obtaining of a resource and handing it to someone else. However I think I’ve developed a further dislike for the under appreciation of the trading process. I’ve always have a mind that trading was unfair, I am not one for brand names but having a brother who was, made me realize something, we have a way of looking down on the poor and underprivileged but the designer brands which makes the statement that we belong to some elite class…do you know where those things really come from? …or the nature of people who spend hours hand crafting the design? It comes from countries such as Bangladesh, India, Benin and Uzbekistran (I’m sure Nike, Levis and Gucci owners don’t know where it is located or even how to pronounce the name). It starts from underage children working long hours and being exposed to pesticides in order to transfer pollen from one plant to another, or hand weaving silk from silk worms, these material go into lining of bags, which cost tens of thousands more than those children will make in their life time. I am aware that raw material will obviously cost less than the final product, but when selling or purchasing these expensive commodities, is there any thought of the two questions which I previously stated. All these elements, concepts and ideas exist due to trade, yet that entire process is eliminated. Does a bag or dress cost thousands due to its use by celebrities or because individuals half way around the world, who can barely feed their families spend hours obtaining the raw resources which aren’t even mentioned on the tag. It’s disturbing that the concept of “trade” is so important and consist of so many complex elements yet filled with the most disturbing corruptions and inequalities.
1 a) Trade is the act of buying and selling of goods and services for money or money's worth between people or countries (Akrani, 2011). It usually involves the exchange of some commodity.
ReplyDeleteb) A tariff is defined as a tax levied on imports and/or exports (Customs and Excise Division, Government of the Republic of Trinidad and Tobago, 2012). Tariffs provide additional revenue for governments at the expense of the foreign producers who are importing the products as well as the consumers purchasing the products. Since imposing a tariff increases the price of imported goods and services, it will be more expensive for consumers. Some tariffs imposed on products being imported into Trinidad and Tobago are car parts and jewelry.
Tariffs are imposed to restrict trade. However, on one hand, imposing a tariff will allow domestic firms to grow in the local market by increased sales of lower priced goods and services and on the other hand governments will receive an extra source of income as a result of imposing tariffs on goods and services imported and/or exported.
2) Explain why Trinidad and Tobago needs to trade.
Trinidad and Tobago is regarded as one of the most wealthiest country's in the Caribbean. It is one of the most wealthiest as a result of its oil and natural gas reserves. In fact, the main exports are natural gas and oil, along with other products like ammonia, alcohols, iron, and fertilizers. The main imports include vehicles, heavy machinery and transport equipment, food and beverages, mineral fuels and lubricants, chemicals and related products among many others.
Trinidad and Tobago needs to trade in order to obtain a high revenue especially from export goods and services to sustain the economy. We must obtain a trade surplus from the amount of goods exported to our number main trading partners like the USA, Brazil, Chile, Japan and China among others. Data retrieved from the Observatory of Economic Complexity revealed that in 2015, Trinidad and Tobago exported $11B and imported $5.9B, resulting in a positive trade balance of $5.14B. Therefore, in order to obtain a positive trade balance, trade in necessary to generate more income in the economy.
3) Based on the research that I have done, I've realized that our economy has over the years benefited immensely from trading with a lot of country's by earning an extra source of income. Although we may not produce as much goods and provide as much services as other countries around the world, as a small island state we have done quite well in earning a lot from the export of Petroleum Gas, Ammonia, Acyclic Alcohols, Refined Petroleum and Crude Petroleum. This means that trade is necessary.
OMG!.. Just a few minutes apart!
DeleteI like your take/ interpretation on Tariff
Trade: Is the buying and selling of goods and services, that of Nations sell products to other nations. In the mention of Trade: terms such as Import and Export frequently occurs;
ReplyDeleteImports; good and services bought from other nation
Export; good and services sold to other nations.
Also it is a form of international trade policy.
One main goal of Trade is increase the variety of goods and services available to all nations
Tariff: "A tax or Duty to be paid on a Particular class of import or Export"
In other words, it is the taxes impose on internationally traded commodities when they cross the national boundaries. It is imposed by the Government on imports and not on export as all countries are interested in exports promotion and if tax burden is imposed on exports, the exports will reduce. Tariff is used to protect: Domestic employment, consumers and infant industries. Tariffs are often created to protect Infant industries and developing economies, but are also used by more advances economies with developing industries.
There are Tariff Barrier and Non- Tariff Barriers
Trade Barriers are classified as Tariff Barriers and Non-Tariff Barriers. A country may use both Tariff And Non- Tariff Barriers in order to restrict the entry of foreign goods.
The purpose of both tariff and non tariff barriers is same that is to impose restriction on import but they differ in approach and manner.
Tariff barriers ensure revenue for a government but non tariff barriers do not bring any revenue. Import Licenses and Import quotas are some of the non tariff barriers.
Non tariff barriers are country specific and often based upon flimsy grounds that can serve to sour relations between countries whereas tariff barriers are more transparent in nature.
Non-tariff barriers can be urgently introduced whereas introducing tariff barriers takes quite a long time.
Trade is a necessity for Trinidad and Tobago, there are factors in which that would significantly be affected, that of the Development of the Economy; Meeting the shortages; Imports for better living standard; Improving quality of production; Growth of the Economy- Production; Employment; Expansion; Demand of other goods; utilization of resources and source of Foreign exchange where it is International or from our Caricom neighbors. Also it is a crucial source of foreign exchange to help a us balance our finance, especially in times such as now "Recession". It is a way of finance import of essential capital equipment, technology and components.
This exercise has shaped my view on trade more critical, in that Yes trade to any nation is an important commodity and it place a significant role towards the development of an economy; "in that it can either Make or Break"
After reviewing my peers comment and posting my own, Trade is a necessity, especial for our Nation. This exercise has allow me to really tap inn on what are the factors involved in trades and its significant.
This was a Nice exercise!
ReplyDeleteTrade: the act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a country or between countries. Trade refers to buying and selling of goods and services for money or money's worth. Typically, the manufacturers or producer produces the goods, then moves on to the wholesaler, then to retailer and finally to the ultimate consumer.
B: Product and Trade
A product is an item offered for sale. It can be a service of an item either physical or in virtual or cyber form. Every product is made at a cost and is sold at a price. This price can be changed dependent on the market, the quality, marketing and market segment among other factors. Trading has everything to do with products, as products are the foundation on which any trading can occur. How can trading occur if there aren’t any goods or services(products) available? Products are critical to every form of trade ranging from domestic to international.
2. Speech: explain why Trinidad and Tobago needs to trade.
Trade has been taking place for centuries. It is the backbone of any economy without which the country will not be able to generate revenue, provide jobs, pay employees or efficiently take care of its affairs. Trade has become a necessity to Trinidad and Tobago as the country do not possess all the resources necessary to manufacture all the commodities that is utilized daily or to satisfy the needs of its population. Trade allows countries to take advantage of its economies of scale and generate revenue through trading with other countries. It would not be economically feasible for our country to attempt to manufacture or produce all the commodities it utilizes. We do not have the resources, technology or the skill sets required for such an endeavor, thus we must engage in trade. Every sector of the country depends on trade to be able to execute its functions. Medicines, equipment, computers, medical skills and numerous other products and services required for the country’s medical sector to function relies on trade (products and services imported from another country). The country’s largest revenue and foreign exchange generator is as a result of trading our natural resources including oil, gas, asphalt and manufactured goods with other countries. Our exports allow us to be able to generate revenue to finance the country. A large percent of the food, clothes, medicine, equipment, and other commodities used daily by the citizens of this country are imported. Trade encourages innovation by facilitating exchange of know-how, technology and investment in research and development, including through foreign direct investment. Without trade the citizens will have limited choices and may have to pay higher prices as trade allows for expanded choice and lowers prices for consumers by broadening supply sources of goods and services and strengthening competition. Trade also strengthens ties between nations by bringing people together in peaceful and mutually beneficial exchanges and as such contributes to peace and stability which are some of the aims of organizations such as CARIFTA. Trade facilitates export diversification by allowing developing countries to access new markets and new materials which open up new production possibilities. Trinidad and Tobago needs trade in order to keeps its economy running and to benefit from all of the advantages achieved from engaging in trade.
3. In what ways has this exercise framed your opinion on trade.
DeleteThis exercise has shown me that there are a lot more to trade than simply an exchange of goods or services for money. The benefits a country derives from trade extends far beyond that of obtaining a good or service or foreign exchange. Through this exercise I was able to recognize some of the various ways a country can benefits from trade. Trade can enable growth and development in a country by providing foreign exchange through exportation of locally available resources such as oil, gas and asphalt as is the case with Trinidad. An interesting benefit of trade is the strengthening of ties with other nations as these trading nations become mutually dependent on each other for survival thus encouraging countries to become their brother’s keeper. The growth and development of business and creation of employment resulting from trade aids in the development of the country. The benefits of trading can be enjoyed by all members of society as the government is able to earn foreign exchange, the top businessmen are able to keep their business operational, the middle men are able to earn a livelihood and the consumers have options to choose from when making purchases. Trade enables each member of society to enjoy a higher standard of living as imported goods and services are available to them at a reasonable price. Many of the items that I utilized daily including clothes, shoes, food, medication, phones, books and other necessities are all available to me as a result of trade. Trade is critical for the survival of any country as its benefits are extends beyond the government or businessmen, affecting the citizens of a country.
Free-trade area is the region encompassing a trade bloc whose member countries have signed a free-trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barrier, import quotas and tariffs, and to increase trade of goods and services with each other so that trade can grow as a result of specialisation, division of labour, and most importantly via comparative advantage.
ReplyDeleteMembers of a free trade area do not have a common external tariff, which means they have different quotas and customs taxes, as well as other policies with respect to non-members. Examples of free trade areas are CARICOM, European Free Trade Association, The European Union just to name a few.
No one country produces every commodity that is necessary to sustain itself and the welfare of its citizens. Because of this fact, Trinidad engages in trade with other countries to benefit collectively from the particular advantages that they all possess and vice versa.
In 2015 Trinidad and Tobago imported $5.9B, making it the 119th largest importer in the world. Trinidad imports include cars, food, crude petroleum, wood, iron ore etc these are things we need and use on an everyday basis.
In 2015 Trinidad and Tobago exported $11B, making it the 83rd largest exporter in the world.
Trinidad and Tobago is the leading Caribbean producer of oil and gas, and its economy is heavily dependent upon these resources but it also supplies manufactured goods, notably food and beverages, as well as cement to the Caribbean region. Oil and gas account for about 40% of GDP and 80% of exports. So trade is something Trinidad and Tobago depends on. Without trade, Trinidad might survive but may be very poor.
It formed my opinion on trade in that I see free trade as putting the little guy in the same league as the big dogs. Trade benefits everyone. The movement of goods across international borders has been the basis of the greatest creation of wealth in the history of the world. While some may profit more than others through this process, free trade offers an influx of wealth to a society that can used to alleviate societal needs and provide gainful employment to every economic level within that society. The creation of wealth and employment proves that free trade is a positive policy.
Trade also called barter is an exchange of goods and services for currency. Trade can take place within a region such Caricom countries. In the past trade entailed exchange of commodities among each other, and has been going on since the beginning of civilization.
ReplyDeleteLiving Standards: this term refers to the level of wealth, comfort, materials goods and necessities to a certain socioeconomic group of people within a country.
i will relate this to the 1% population. They have the wealth to purchase anything their hearts desire. In an interview with Anthony Bourdain one of the wives said that the ingredients for some of the dishes that they make is not available in Trinidad. It had to be imported. So the working class may never taste what they eat on a regular basis. The purchasing power of the people is important in what they can purchase or trade. If you don't have currency you cannot purchase certain items. Countries who can produce certain goods and services will benefit other countries. You have what i want and i have what you want so we can enter into an agreement.
Every country is rich in resources but in its own way. Trinidad has oil and gas, Guyana has bauxite and other countries have other resources. We need to trade to help each other get the goods and services we require for a good standard of living. This is the only way we can survive. In Ancient times people relied on trade for their survival and it has become an important part of their lives. It was done in the past and worked, so it can most definitely be done in the future. When we trade we also cross barriers, we learn about each other in terms of culture and legacies.
Ive always listened to the news and radio programmes that speaks about current issues involving trade in Trinidad. We have been exporting our products to other parts of the world. For example Bitters can be seen all over the world, even some of of our soft drinks and beers. Trinidad earns billions in exports.