Nobody downloaded yet

Globalisation Transationals and Economic Policy - Essay Example

Comments (0) Cite this document
Aircraft manufacture is one industry that lends economy of scale and for which there is a great tendency for one dominant firm to take advantage of increasingly higher returns should it be the sole competitor in that industry. A country could raise more income if it favors a domestic aircraft manufacturer over a foreign firm…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.6% of users find it useful
Globalisation Transationals and Economic Policy
Read TextPreview

Extract of sample
"Globalisation Transationals and Economic Policy"

Download file to see previous pages 136-137). Assuming that Boeing has a headstart, the likely outcome is that of Airbus deciding not to produce the aircraft, in favor of 0 loss, rather than to enter the market against Boeing, in which both firms would each incur losses amounting to -5. However, once Europe decides to subsidize Airbus, the outcome of the game shifts in favor of Airbus, and it can decide to go head-on with Boeing in the market, earning profits while Boeing incurs losses. Moreover, should Boeing decide to not produce as it would be incurring 0 loss in this, Airbus by producing the aircraft would allow it to raise its profits from 0 loss in the previous scenario with no subsidy to 110 profits post-subsidy by Europe. Krugman further notes that out of this, 100 represents a gain of national income for Europe, and conversely, a loss of the same amount for America. This shows that under some circumstances, a country can lift its welfare by supporting its own firms against foreign competitors. At the same time, a domestic firm can lower the profits of other firms which wish to enter the domestic market.
Another reason for strategic trade policy as the case above is when viewed from the possibility of existence of external economies - one in which it has been observed that innovative firms, with huge investments in R&D fail to "appropriate fully the knowledge they create". This case is not evident in "perfectly competitive models" as when increasing returns is tied with economies of scale in markets with imperfect competition. The argument for strategic trade policy based on externalities however need not affect other countries' welfare negatively - as when governments choose particular industries or firms to support. However, this is not the case when externalities are at the national level, in which clearly free trade is at the mercy of a government's protectionist policies.
Pursuing a strategic trade policy is limited by at least three factors that make it a less desirable option. First, external economies are difficult to measure, measurement of which is needed to formulate interventionist policies (i.e. difficult to measure the exact external benefit of say, a $10 investment in R&D). Second, rent-seeking firms could water down the gains from interventionist policies. Third, a country's considerations for its economy overall adds greatly to the empirical difficulty of formulating strategic trade policies (that is, "a country cannot protect everything and subsidize everything").
The above considerations however, according to Krugman do not render the pursuit of strategic trade policy undesirable. In most cases, they point to caution as to the difficulties are due to empirical considerations - and yet, governments are not altogether, lacking in information.
In what sense, of any, is it appropriate to consider that international trade in today's world is free

International trade in today's world can be considered free to a certain extent by measuring the progress done compared to the past. For example one indicator suggests that the pace of international tra ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Globalisation Transationals and Economic Policy Essay”, n.d.)
Retrieved from
(Globalisation Transationals and Economic Policy Essay)
“Globalisation Transationals and Economic Policy Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Perspectives on Globalisation and Economic Crisis
Economy is a vast subject and there are various sectors inside the realm of integration. On these grounds, different types of globalization can be defined, such as globalization of commodity markets, financial globalization. Globalization is regarded in the essay as a policy level integrative process with financial shock absorbent capabilities.
8 Pages(2000 words)Essay
Globalisation, Transnationals and Economic Policy
Foreign direct investment (FDI) is described the long-term investment by a foreign based direct investor in a business organization or enterprise residing in an economy. Basically, the relationship in a foreign direct investment supply scheme, consists of a investing parent enterprise and the foreign affiliate where money is invested in.
6 Pages(1500 words)Essay
Economic Policy
There are also policies that increase the economic welfare that applies locally and from wider perspectives. The government has the authority over the political units and ruling power in the society. The government has the functions to make laws, to adjudicate and to influence all the administrative decisions.
6 Pages(1500 words)Essay
Economic migration and globalisation
The theoretical perspective known as positive globalist approach is explained and then its links with the topic of economic migration are explored. Globalisation can be defined as “the intensification of worldwide social relations and interactions such that distant events acquire very localized impacts and vice versa”.
6 Pages(1500 words)Essay
Hence we are faced with either a process or a strategy, and they are not the same. Trade, investment, finance and labour are the important elements of world economy. Globalisation is the expansion of these economic activities across
4 Pages(1000 words)Essay
Marketing Goods & Services
Two types of goods commonly result from a production system: services and products. Generally, products are physical goods, such as a personal computer, and services are abstract or nonphysical.
6 Pages(1500 words)Essay
Orwell's 1984 paper
mplicit references or allusions to the main players in the Communist reform .For example in the Animal Farm the reference to Manor farm depicted Russia and the Title of the Animal Farm implicitly referred to Russia. In his book 1984 where he takes his criticism a step further
3 Pages(750 words)Essay
Economic Globalisation and Developing Nations
Similar to the rules of survival for the animal kingdom, the methods for financial survival are not "good" or "bad" per se. Arguably, differing methods for pursuing the accumulation of material goods differ according to how societies were/are able to adapt.
7 Pages(1750 words)Essay
Economic Globalisation
Few global economic ideologies or phenomenon have instigated as much controversy as has globalisation. Proponents perceive of it as a blueprint for the globalisation of capital whose benefits, among others, include the transfer of business interests and foreign direct investment to the Lesser Developed Countries of the South (LDC), thereby propelling their economic development and industrialisation.
8 Pages(2000 words)Essay
Globalisation (Microfinance and Economic Development)
The term microfinance and microcredit have been the topic of discussion today among the development practitioners and academicians. The year 2005 was proclaimed as the year of
3 Pages(750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Globalisation Transationals and Economic Policy for FREE!
logo footer
Contact us:
Contact Us Now
FREE Mobile Apps:
  • StudentShare App Store
  • StudentShare Google play
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • Miscellaneous
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us