In the recent years, there has been an increase in the number of multinational businesses. Many factors have contributed to this growth, one of which is the increasing realization of businesses that specialization can cause an increase in production efficiency…
Download file to see previous pages...
A world of whose making - Economic Interdependence and Political Order
These advantages cannot be transferred from one economy to the other, and therefore countries aim to use the advantages they have for producing goods with relative competence. This provides an insight into the reasons for countries like Japan and U.S. to develop their technology with relative efficiencies. When countries produce a specific good with comparative efficiency, they may not focus on the production of other goods. As a result, they would have to trade their goods with other countries. This is the argument buttressed by the theory of comparative advantage (Madura 2008). The theory provides an insight into the dynamics of the international trade and helps to show how trade provides advantages to the trading parties (D'Anieri 2009). The theory of comparative advantage in economics refers to the concept of production of goods and services at a lesser cost than that produced by another country. The country has a margin of superiority in the goods produced; this pertains to the notion that the opportunity cost of the goods produced by one country is less than that in the other country. David Ricardo was the developer of the basic theory of comparative advantage. He was of the view that absolute advantage is a subset of the more general theory. After Ricardo, a number of theorists furthered and developed the theory of comparative advantage including Heckscher, Ohlin and Samuelson. The theory projected the facts that different countries have varying factor endowments of labor, land and capital input. Countries are going to prefer the production of those products which extensively use the factors of productions with the greatest endowment (Tutor2u 2011). This follows that if the countries gain advantage by specializing in these goods, there will be an increase in the total output and economic welfare. This holds credibility even when one nation may have an absolute advantage over the other country. One of the assumptions which constitute the theory of comparative advantage is that there is perfect occupational mobility of the factors of production. This means that the resources of one industry can be transferred to another without significant loss of efficiency. The theory also assumes that there should be constant returns to scale; a proportionate increase in the inputs leads to an equal increase in the outputs. There are no externalities surfacing from production and consumption. Also transportation costs are not taken into consideration. Increased returns are a product of specialization and the idea was put forward by Paul Romer and Paul Ormerod. If businesses take advantage from increasing returns to scale, the gains from the trade are more. There is no transport costs associated with comparative advantage. Costs do not vary and economies of scale are not present. There are two economies producing and trading homogenous goods. Moreover the trade carried out between the two countries is not impeded by trade barriers. Also the buyers and sellers have perfect knowledge and the buyers are able to trace down the cheapest goods available in the market (AC Mulligan n.d.). Comparative advantage is not a static concept; rather it keeps changing. Businesses may have had comparative advantage in a market in one product for years in a row. However the gains made during this period may suddenly be at stake as new competitors enter the market. The contribution of Ricardo in the basic theory of
...Download file to see next pagesRead More
Cite this document
(“A world of whose making - Economic Interdependence and Political Order Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1408178-a-world-of-whose-making-economic-interdependence-and-political-order
(A World of Whose Making - Economic Interdependence and Political Order Essay)
“A World of Whose Making - Economic Interdependence and Political Order Essay”, n.d. https://studentshare.org/macro-microeconomics/1408178-a-world-of-whose-making-economic-interdependence-and-political-order.
World War ll: Political Mistakes, Economic and Environmental Impacts. When we talk about the World War II, most would quickly think of the Holocaust, Pearl Harbor, and the atomic bomb on Nagasaki and Hiroshima. What if Hitler had been assassinated or had a heart attack in 1940?
Particularly, relationships between states are defined by cultural, social, economic and political aspects. History has it that global power between states has been changing phenomenon over time. With colonialism and world wars, numerous countries were robed off their state powers.
He supported the view that society was best served by one supreme leader supported by the military. He was called the "Generalissimo" and, like other dictators, he had his secret police to enforce law and order - the Blueshirts. Their job was to hunt down communists and to develop a spying system that would allow them to infiltrate the communists.
It evokes strong emotions because it is associated, rightly or wrongly, with most of the world's significant challenges and opportunities. It cuts across many academic disciplines-such as economics, political science, history, geography, and environmental science-and many professional practices-such as diplomacy and international relations, management (public and private), journalism, national and global security, and international development (Anton, 2004).
In a sense inter dependence help business units and organizations to add value and improve quality of services. While businesses grew beyond national boundaries and aggressively penetrated into other continents and countries, business houses were compelled to focus on their core competence.
People often work harder and more efficiently when they have a stake in the company. Unlike capitalist managers, cooperative worker/owners are also committed to keeping firms from moving to cheap-labor, low-tax havens, since their own jobs and communities are threatened by the deindustrialization f America's manufacturing base.
A recent news article from France (Raim, 2012) notes that the word “civilization” has negative connotations of an implied ethnocentric hierarchy and that the American Right have adopted this word in the so-called “war on terror” with deliberate intention to denigrate Islamic ideology.
Under the banner of New world order, where the world is given an outlook of a global village, is actually based on utter exploitation, resources capturing and targeting the areas and domains that are there for the general masses, yet being exploited and used by the influential ones.
eories assist in forming a state with legitimacy, justice and humanity for the enrichment of political situations and the creation of ideal political order (Wissenburg, 2012). In this regard, a German philosopher named Friedrich Nietzsche reflected views about Christian
6 Pages(1500 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic A world of whose making - Economic Interdependence and Political Order for FREE!