Impact of Oil on World Trade - Research Proposal Example

Name: Professor: Institution: Course: Date: TABLE OF CONTENT Table of contents............................................................................................................2 Abstract .....3 Introduction.....................................................................................................................3 Methodology...................................................................................................................4 Findings..........................................................................................................................5 Discussion and Analysis.................................................................................................8 Conclusion......................................................................................................................9 References......................................................................................................................page 7 ABSTRACT The main purpose of this report was to find and evaluate the suitable sources for the study of the impact of oil prices on world trade. We started off by understanding the study topic and then we looked for suitable sources for the study from the reliable websites as well as from Mdx database. Using Harris criteria (2007), we evaluated the best two sources out of the six we had found. The two sources gave great insights into the study topic. INTRODUCTION The main aim of this report is to evaluate sources related to the study of the impact of oil prices on world trade. What world trade and changes in the prices of oil has affect trade around the world. World trade can be defined as exchange of commodities between countries. World trade brings about a world economy in which the demand and supply of commodities are affected by global events such as an increase or decrease in the prices of oil. Increase in oil prices in the world market will lead to increased cost of production which would subsequently lead to an increase in the prices of goods and services. This would affect the demand of these products in the market. If oil prices increase or remain high over a considerable long time, it will have an impact on the economic growth and world trade. Prices of oil have closely been linked together to growth and development of a country’s economy. Past research studies have shown that there is a close link between oil prices and major macroeconomic indicators such as inflation, unemployment, GDP, interest rates and trade balance. The researchers concluded that oil prices have a major impact on the economies of countries. The main objective of the research was to find out the impact of high oil prices on trade. To achieve our objectives, we sought out to look for relevant resource materials that would assist us to achieve our objective. We were all interested in this topic as the issue of international trade was of great interest to us METHODOLOGY: To begin we had to find out how the oil price affects the world trade. In order to determine this we decided to find sources about increase on oil prices and its effect on macroeconomics indicators and hence on the world trade. To achieve this object, we started searching sources that relates to this topic. At the beginning, we had problems locating reliable sources since we were searching for the information on the internet and most of it could not be authenticated for accuracy as they did not have the name and contact of the author. Moreover, the sources were not to date and hence not suitable for this task. However, we were able to get reliable information and our of sources were from Mdx database and additional sources were retrieved websites such as WTO, and New York Times News paper. Lastly, we evaluated our sources in accordance to Harris criteria (2007) which are credibility, reasonableness, accuracy and support. To ensure credibility of our sources we checked that they were from trustworthily sources, the author’s credentials as well as evidence of quality control. For accuracy, we evaluated if our sources we up to date, factual, detailed, exact, comprehensive and complete. Our sources we also evaluated for reasonableness by ensuring that they were fair, balanced and had no fear of conflict of interest. Finally, we evaluated them according to Harris criteria (2007) which are credibility, accuracy, reasonableness and support. We evaluate all the sources if they are trustworthy or not, if their authors are known or respected authority or not, whether they are up to date or not, if they are impartial, reasoned, detailed and balanced or not. Also, we evaluate them in terms of, whether there is any contact information so that the questions can be asked about the sources, and if there is site list or not. After this process which lasted a week, we found four sources which are reliable, accurate, credible, valid, reasonable and related to our subject and we also found three sources which are unsuitable for our subject. FINDINGS: There are five sources in this section. Two of them are good and suitable for our report and were used them. The others are not suitable for the report. Unsuitable source Title : The dynamic relationship between the US GDP, imports and domestic Production of crude oil Type : e-book Author : Jabir I Year : 2009 Vol : 1 Page : 3171 – 3178, 8p Website : Learning resources – summer mdx Although the article was up to date, the information in it was not related to our topic. Also, there was no information about the author’s credentials, academic affiliation and contact. The journal was retrieved from mdx databases. Unsuitable source Title : The Weak Tie between Natural Gas and Oil Prices Type : Journal Author : Ramberg & Parsons Year : 2012 Vol : 33, No.2 Page : 13 – 35, 22p Website : Learning resources – summer mdx Although the article was up to date, the information in it was not related to our topic. Also, there was no information about the author’s credentials, academic affiliation and contact. The journal was retrieved from mdx databases. Good source Title : Reverse Globalization: Does High Oil Price Volatility Discourage International Trade? Type : Journal Author : Shiu-Sheng & Kai-Wei Date : Thursday, 26th August 2012 Website : mpra.ub.uni-muenchen.de/36182/1/MPRA_paper_36182.pdf We chose to use this source as it had information that was accurate and trustworthy. The author of the article had their contacts on the article and they have academic affiliation. It was published in the year 2012 and it is up to date. Unsuitable source Title : Oil Price Volatility: Origins and Effects Type : Article Author : Kilian L Year : 2010 Website : www.wto.org Although the information was accurate and trustworthy because of its official website WTO and it did not show a relationship between oil prices and world trade. Good source Title : Impacts of Changing Crude Oil Prices and Macroeconomic Conditions on Short-Term Output Fluctuations in Japan Type : e-book Author : Hsing Year : 2009 Vol : 36, No.2 Page : 103 – 114, 11p Website : Learning resources – summer mdx We used this source because it is trustworthy, accurate, author has academic institutional affiliation and the article is an academic study. We found this article from Middlesex Learning Resources. It is up to date, published in 2010. It was ccomprehensive and also it related to our topic. Unsuitable source Title : Inflow of Foreign Direct Investment into Saudi Arabia Type : e-book Author : Roberts & Almahmood Year : 2009 Page : 1730 – 1746, 16p Website : Learning resources – sommon mdx The information in this e-book made so many generalizations and did not go into specific details. It was found from Mdx database. Unsuitable source Title : Vertical specialization and the impact of oil prices on trade Type : Article Author : Krugman P Year : 2008 Website : http://krugman.blogs.nytimes.com/2008/06/21/vertical-specialization-and-the-impact-of-oil-prices-on-trade/ The article was found to be unsuitable as there were no authors’ credentials available. The author did not have any academic affiliation. DISCUSSION The main purpose of this report was to evaluate various sources that were available to the study of the impact of oil prices on the world trade. In order to fulfill this purpose, we had to find out how increase and decrease in the prices of oil affected the world trade. To find out about this we decided to look for research studies that had been carried out in the recent past on this subject. Of the resources named above, we found the research by Shiu Sheng and Hsu of very great help. The report explains in details how the volatility in oil prices reduces trade as it poses a great risk both to the importers and the exporters. The fluctuation in the prices of oil causes uncertainty about the future path of oil prices which in turn makes the consumers to postpone their purchases while firms postpone investment projects. Reduction in the local consumption and investment leads to reduction in the world trade. The other resource that was also of great help to us was the article by Hsing. This source indicated that for every 10% rise in the prices of crude oil, there would be a subsequent 0.19 % reduction in the GDP of Japan which would in turn increases the government spending. From the research conducted by Hsing, the results indicated that a high crude oil led to lower real output and higher government expenditure which means that the world trade is reduced. CONCLUSION To conclude on what has been analyzed above, the purpose of the report was to evaluate sources related to the study of the impact of oil prices on world trade. for this reason, we conducted thorough research and found several sources. We then evaluated each of these resources according to Harris criteria (2007) to determine their credibility, reasonability and accuracy. Out of the seven resources, two of the seven resources were found to be most suitable and were selected for the study. References Barbara M. R & Abdulaziz A (2009) Source Country Characteristics and the Inflow of Foreign Direct Investment into Saudi Arabia. Blackwell Publishing Ltd: USA Hsing Y (2009) Impacts of Changing Crude Oil Prices and Macroeconomic Conditions on Short-Term Output Fluctuations in Japan The Japanese Economy, vol. 36, no. 2, Summer 2009, pp. 103–14 Jabir I (2009) The dynamic relationship between the US GDP, imports and domestic production of crude oil. Applied Economics, 2009, vol. 41, 3171–3178 Krugman P (2008) Vertical specialization and the impact of oil prices on trade Retrieved on 26th July 2012 from http://krugman.blogs.nytimes.com/2008/06/21/vertical-specialization-and-the-impact-of-oil-prices-on-trade/ Shiu-Sheng C & Kai-Wei H (2012) Reverse Globalization: Does High Oil Price Volatility Discourage International Trade? Retrieved on 26th July 2012 from http://mpra.ub.uni-muenchen.de/36182/1/MPRA_paper_36182.pdf Ramberg D & Parsons J. E (2012) The Weak Tie Between Natural Gas and Oil Prices The Energy Journal, Vol. 33, No. 2. WTO (2012) Oil Price Volatility: Origins and Effects. Retrieved on 26th July 2012 from http://www.wto.org/english/res_e/reser_e/ersd201002_e.htm Read More