I need an answer to my professors question about my discussion post. My Post Tra

Question

I need an answer to my professors question about my discussion post.

My Post

Trade is the basis of an economies growth and ensures that consumers get what they need at their disposal. It ensures that all the essential goods are available to the consumers. If trade I cutoff among the world nations USAs nation will not be able to get the following products: machinery, vehicles, technical equipment, furniture, electronic equipment, plastics, precious metals, organic chemicals, engines, stones, plaster, signs and food waste, (Manova, 2013). This will have adverse effect on the economy as it will lead to an increase in the prices of the domestically produced products. The increase in the prices will lower the ability of the consumer to purchase the products, (Melitz, & Ottaviano, 2008). The quality of the products is likely to go down due to lack of competition. Because of the inability of the consumers to spend the economic growth of the nation is likely to decrease lending to a change in its international position. The rich countries may become poor as the consumers spending power will be reduced while for the poor country the condition is likely to worsen as it may continue to poor and poor to a state where some of the citizens may live in absolute poverty.

To the businesses that depends on the imported products they will automatically close as they will no longer access the products. The close of such businesses will lead to unemployment of the employees working there. This cuts down the employees purchasing power which in turn will decrease the economic growth as such people will no longer contribute towards the growth of the nation. Egypt also will be affected if trade is cut down as it will have to do without the following products: sisal, fresh fruits, jute and other textile fibers, commercial crafts, Aluminum, spices, Soda ash, tobacco and dairy products.

WC: 303

References:

Manova, K. (2013). Credit Constraints, Heterogeneous Firms, and International Trade. The Review of Economic Studies, 80(2), 711-744.

Melitz, M. J., & Ottaviano, G. I. (2008). Market Size, Trade, and Productivity. The review of economic studies, 75(1), 295-316.

Wild and Wild (2016). International Business: The Challenges of Globalization. 8th edition (with MyIBLab SAC). Pearson Publishing

My Professor Question

Thanks for your answer. While it could be argued that another country could make the product more efficiently already, is it fair to limit a country’s ability to develop its industrial base?

Explanation / Answer

The concept is quite relative in this aspect because limiting a country's industrial base depends on the capability of the country to manufacture and make business globally or in the domestic market. I believe that if a country is able to make products taking into consideration all the requirements as well. The economy of the country is quite important in this aspect and if outsourcing will help the other country who is lagging economically, then the action is quite fair.

Again there are two aspects, one from the national point of view and one from the global aspect. Nationally if we look at it, then the country should possess the abilities but globally it would be better for the health of the business and countries who actually need trade and commerce may look for such opportunities to make it better for themselves.

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