HND 世界经济报告

Contents Page
Summary (2)
1.Introduction (3)
2 (4)
3 (4)
4 (5)
5 (5)
6 (6)
7 (6)
8 (7)
9 (7)
10 (8)
11 (8)
12 (9)
13 (9)
14 (10)
15 (10)
16. Conclusion (11)
17. References (12)
Summary
This report is an analysis of the world economy in the aspects of international trade, trade organizations, balance of payments and exchange rate, as well as the single currency and some specific kind countries.
With these information we can see clearly that it will bring us many benefits to join in EU.
1.Introduction
As a member of the government of a nation which is on the periphery of Europe, I think the currently consideration of join in European Union is a meaningful project, and in the following i will talk about 14 points of the benefits of joining EU.
2
Firstly, I will briefly explain the current conditions of our country.
The characteristics.
Birth rate. In less developed countries, there is often a high birth rate. For example, in 2010 05.18, the United Nations economic commission of Africa published 2010 African economic report ,it said between 2008 and 2009, Africa's population increased by 2.3%, the total number reached 1 billion, of which 70% is not more than 30 years old.
Unemployment. Unemployment is usually very high with very little industry because most people work on their own small plots of land. For example, in 2009, the manager of United Nations economic commission of Africa said, even in the year of rapid economic growth, Africa's unemployment rate is still very high, and the economic crisis will make this a more serious problems. Official figures showed that in 2008, sub-saharan Africa's unemployment rate is 7.6%, north Africa is 10.1% while the average level in the world is 6%.
Some problems that face us.
Indebtedness. This is a major problem for LDCs. It increases year by year, which makes it almost impossible to borrow more. For example, in 1991, Congo economic decline, and debt is as much as $5 billion in 1990, an average of $2500 per person. According to the report: African countries have the highest debt: the debt ratio of República de Mo&ccedil is equal to 426% of GDP, guinea Bissau is 323.7%, Tanzania is 250.8%. In addition, Egypt, equatorial guinea, Zambia, Congo, Mali,, Madagascar, SAO tome and principe, Sudan, Zaire, more than 20 countries has their debt outstrip nation's GDP, almost completely lost the solvency.
Aid programmes. The aid they get from the World Bank or IMF often carry conditions which they feel are difficult to comply with and are too expensive. For example, in 2000, the loans and grants of 20 million dollars they got from IMF been used in some high technical industry, which didn't use in some aspects of poverty. We can see from this case that the money didn't spend in the area that they most been needed
3
If we join in EU, there will be more multi-nationals come to our country.
The multi- nationals can bring in new methods and technology to the NICs and LDSs. For example, the branches of Microsoft operated in China can transfer the new management skills and most importantly, the technical skills to China to help him promote.
The multi-nationals can increase employment. A new stores of a famous company
who built in one country can solve the problems of unemployment. For example, a new branche of Wal-Mart which settled in HanDan, China, a small city in China recently, make thousands of people find their jobs in the city where the competition is fierce, which of course is a good thing.
4
There are many advantages from trading internationally. If we join in EU, we will have more opportunities of free trade.
First, it can increased world-wide output. As with the theory of comparative advantage, which means that countries should specialise in trading in goods and services in which they have the biggest advantage, so specialisation as we have seen can lead to increases in output.
Second, goods and services produced at lower cost. Because of the comparative advantage, every country will concentrate on the industry which he has the biggest advantage, which, of course, the cost is lower than other nations, as well as the competition, the advantaged country will make his cost even lower to have a place in the economic world.
Third, greater range of commodities for consumers, more choice. World trade allows countries to exchange their range of goods with other countries producing a different range. This gives the population of each country a greater choice.
5
There I illstruate an example to help me better explain the benefits of free trade. There is a free trade agreement(FTA) between Korea and United States which will realise in 2012.01.01. This means that many goods and services could be exchanged freely between the two countries with no barriers to this exchange. I will mainly narrate the agriculture content.
In the agriculture part, for the Korea in the food crops, the manufacture potatoes will take season tariffs, very year from December to April tariffs is promptly abolished, but during May to November it will remain the tariffs of the 7 years before, at the 8th year Korea will began to lower tariffs year by year, and at 15th year it wil completely abolished the tariffs on manufacture potatoes.
For the meat, like beef which the two parties regarded as very important. In the FTA, they agreed they will abolished the tariffs in 15 years step by step, during that period ASG is available.
6
The 2 kinds of advantages is the reasons of free trade. It is also the reason why we need to join in EU.
Absolute advantage. This exist when one country can produce a good or service much more efficiently than another when they are each using the same level of resource to produce the good or service.
Comparative advantage. It is formulated on the basis that, despite having absolute advantage over other countries in production of goods and services it will be beneficial for a country to specialise in the good or service it is best at produc in and trade with other countries which have a comparative advantage in some of the range of goods and services the countries wish to trade in. This occurs because the opportunity costs of switching resources will be higher in the country with absolute advantage than it will be in the countries with comparative advantage.
Here is a worked example. With the same resources of 100 units, countries A and B can produces the commoditis as follow.
Sugar bread
Country A 10 100
Country B 5 80
It is clearly that country A has absolute advantage over country B.
Now, we will look at the local opportunity cost ratios.
For A, the cost of 1 sugar is 10 units of bread: 100/10=10
For B, the cost of 1 sugar is 16 units of bread: 80/5=16
For A, the cost of 1 bread is 0.1 units of sugar: 10/100=0.1
For B, the cost of 1 bread is 0.0625 units of sugar: 5/80=0.0625
From the outcome I have calculated above, we can see in terms of opportunity cost, bread is cheaper in country B than in country A. country B has a comparative advantage in bread.
7
While there are many advantages of free trade, we still can't forget the protectionism to maintain the employment rate, protect our local companies from the fierce competition if we join in EU.
The protectionism is a kind of measure that the domestic country has some restriction
on other countries on import of the world trade to protect local industries from competition, and supply some preferential means to local company to help them develop as well as raise revenue from tariffs and quotas. It contains protecting employment, industries, protecting against dumping, protecting against over specialisation, cure persistent balance of payments deficit.
For example, in 2011.10.11. The United States senate passed the 2011 of currency exchange rate supervision reform bill, the main content of the bill is of request to the U.S. Government to impose punitive tariffs to major trade partners who is called his exchange rate is undervalued. It was obviously that the U.S. want to impose tariffs to China to force the value of RMB apprecation, in this way the import of U.S. from China will decline, which, in turn, will protect local industry and protect employment. In another case, in 2010 Argentina pass some policies to limit the import which make 540,000 people find their jobs in financial crisis, among this 360, 000 textile worker be employed, followed 64,000 people in wooden furniture and 50,000 people in capital goods, which protect the local employment.
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There are many barriers of trade, if we join in EU, most of them can be cancelled. One of the barriers to trade is tariffs. Tariffs are surcharges on the price of imports , a tariff requires the importer of a good to pay a specified fraction of the price to the government. For example, in 2011.01.20. To protect the local production enterprise from the impact of the imported products, one of the most important global textile powers, Turkey, issued an official statement, which plans to impose import tariffs of woven fabric from the impoters.
Another is quotas. It is the most important non-tariff trade barrier. It is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported. For examle, in 2011.11.17. The customs union committee of Belorussia, Russia,Kazakhstan set the amount of impot quotas, which contains: Russia's quota- 70000 tons to 250000 tons of frozen chicken bone, 10,000 tons of frozen Turkey. The quota for Belorussia-15,000 tons of poultry and poultry products. Kazakhstan's quota-110,000 tons of poultry and poultry product s.
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Now, let me talk about the role of EU.
The free movement of goods, people, services and capital is the fundamental role of
EU.
It also aims to eliminate customs duties and quotas between members, establish common external tariff for non members, establish free movement of people, services, goods and capital between members, reduce anti-competitive practices, associate with countries outside union to increase trade, move towards full economic and monetary union, develop common foreign, security and defence policy.
In 15 October 2009, in Brussels, Belgium, which is the European Union headquarters, the EU trade commissioner ashton and south Korean foreign trade minister signed the free trade agreement between EU and South Korea. The agreement will eliminate almost all of the tariff and non-tariff barriers to trade between two economies.
As we kown the bilateral trade between the 2 countries in 2008 to more than $90 billion, this assignment will promote the free trade and bring benefits to EU membership countrise.
10
There is also an world organization called World Trade Organization, which paly the same role in some aspects with EU
it is the body established in 1995 to regulate world trade. This covers goods, services and intellectual property rights. It seeks to encourage the lowering of trade restrictions and to settle disputes with a common dispute procedure.
For example,in the 2003 December 13th to 18th, the sixth ministerial conference of WTO held in Hong Kong, China, the meeting pass the minister declaration, which said "by the end of 2008, the developed countries and part of developing countries will allow non-tariffs and non-quotas standards be available to the most undeveloped countries; The developed members cancel cotton export subsidies in 2006 , cancel all form of export subsidies in agricultural product by the end of 2013.
In this case, we can see the WTO is playing his roles to promote the development of free trade, to help the poor countries become more strengthful in the competitive world.
11
The balance of payments is one of the most important documents of one country, it can help us find our problems. Here I use the figures of UK to help us understand it. The balance of payments a record of all financial transactions between a country and the international economy. The structure of the UK now consists of the current account and the capital account, the financial account.
The current account concerns income and expenditure and is dividen into four parts.
(1). Trade in goods. This covers the exports and imports of goods.
(2). Traded in service. This covers the exports and imports of services.
In 2002, the trade in goods/services are -21,023 million pounds
(3). Income.it consists 2 parts. Direct investment income and portfolio investment income and other income like earning s on loans and deposits and reserve assets. In 2002, this figure is 20,646 million pounds.
(4). Current transfers. This aspects contains payments and receipts where there is no corresponding exchange of a good or service. In 2002, the number of current transfer is -9,247 million pounds.
The capital account. It consists of capital transfers and acquisition and disposal of non-produced goods. In 2002, the figure is 1,096 million pounds.
The financial account. It is the flow of direct portfolio and other investment and reserve assets. In 2002, the financial account is 7,188 million pounds.
12
If we join in EU, our exchange rate is tend to be more stable, so our balance of payments can be more steady.
The exchange rate is the price of a currency in terms of other currencies.
If the value of currency rises imported goods will be dearer, therefore the trade in goods is likely to move into deficit.
If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall.
For example, a UK firm produces bread for a cake company in the China. The cost is 100 pounds. The rate of the Yuan to the pounds is 10 Yuan to 1 pound. Cost to the Chinese firm is 1000 Yuan. If the rate changes to 11 Yuan to 1 pound, which means the pound is stronger and the cost of the bread to the Chinese firm is now 1100 Yuan. The Chinese firm may consider this to be too expensive and look elsewhere for a cheaper company. If the value of the pound then falls to 9 Yuna to 1 pound, then the cost to the Chinese firm will be 900 Yuan and they are likely to purchase more at this cheaper price.
13
There is no doubt however that it was the move towards becoming a Service-based economy which changed the emphasis in the UK economy. All the heavy manufacturing and engineering industries largely disappeared, for example: shipbuilding, steel, mining etc.
The balance of payments figures show that the deficit in the balance of trade in goods
has widened considerably, and a marked increase in the balance of trade deficit. Even a very marked increase in the income generated in the income section has not been sufficient to overcome this deficit and therefore the current account balance has also usually been in deficit. The reason of the deficit is that the trend for UK consumers to buy more imported goods.
But the current figures suggest that the UK economy is heading for an annual growth of 2002 of 3.7%.
14
If we join in EU, it is likely that we will be a single currency country. So here I will say something about the single currency.
There are 2 advantages of the single currency for the UK.
Reduce costs. Firms and individuals do not have to pay as they move themselves or goods or services from one EU country to another.
Reduce exchange rate uncertainty. The UK pound will be at the same rate for all Euro members.
There are also 2 disadvantages of the single currency.
Loss of independent monetary policy. Scope for fiscal policy adjustments is restricted by need to stay within 3% of GDP.
Inability to devalue independently. Individual governments lose this policy instrument.
15
There are many benefits of being a single currency country if we join in EU.
There are many impacts of single currency to the individual as well as businesses.
For person. first, as long as you are in the countries of EU, you don’t need to purchase other currencies and change them back, you also needn’t to calculate the cost of purchases in different denominations against the UK pound. Second, the price of goods in each country will be easily compared.
For companies. First, the company can aviod the additional cost when it was to settle accounts because the EU countries all use the same currency. Second, increased foreign investments. Because the market size as it was in a union.
16. Conclusion
With the contents I have talked above, we can see that if we join in EU, the benefits is obvious. It will bring more opportunities to our people and company, bring in new technology and ideas to widen our horizon to help us think in order to develop our nation's environment and most importantly, develop our economy to make our people have a better life.
17. References
1./
2./
3.China daily
4.the world economy
5.financing international trade
6./
7.An Inquiry into the Nature and Causes of the Wealth of Nations
8.World economy。