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York University
Administrative Studies
ADMS 1000
Peter Tsasis

Page 126-138, 188-195 Case:138-140 Global Context II International Trade - Sales/purchasing of goods and services across countries The Logic Trade -Free trade will allow each country to specialize on the goods that it can produce more efficiently, and maintain an absolute advantage Mercantilism - The trade theory from the 1500-1800 that claimed a countries wealth depends on its holdings of treasure (usually gold). - The government encouraged trade surpluses by imposing tariffs or quotas and banning imported commodities. - As well as acquiring less developed regions as sources of cheap raw materials. This resulted in large profits Trade Protection: protecting a countries domestic economy through the restrictions of imports Two Problems imports are a threat to the countries economy: 1. Low priced foreign goods can compete with goods produced here 2. A country that imports more than it exports will have more money flowing out Tariff: a tax placed on goods entering the country to make sure the good is not cheaper than domestically produced goods Import Quota: a limit on the amount of products imported -The problem with Mercantilism and Protectionism is that it is a zero- sum gain, which means it increases shares of profit to some nations in another nations expense, like a one way street Regional Economic Integration can occur at different levels: 1. Free trade area: removal of tariffs within member countries (NAFTA) 2. Custom Union: removal of trade barriers among member countries, has a greater degree of economic integration, there is less member autonomy regarding how to deal with non members and what barriers it should construct against non members 3. Common Market: removal of trade barriers and implementation of a common trade policy between non members, as well as the generation of a freer flow of labor across the borders (EU) 4. Economic Union: builds on previous three, but requires higher integration with fiscal, monetary, and tax policies and often a Page 126-138, 188-195 Case:138-140 creation of common currency European Union (EU) -Common market with a single currency, a free flow of money, people, products and services -27 Member states adopting the Euro and monetary policy including Austria, Belgium Denmark Germany Greece Ireland Italy Portugal and the UK Asian Trading Bloc -Two billion (twice Euro) -Singapor
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