Another aspect of new trade theory is that it doesn't really matter what countries specialise in, the important thing is to pursue specialisation and this enables companies to benefit fromeconomies of scalewhich outweigh most other factors. Sometimes, countries may specialise in particular industries for no over-riding reason - it may just be a historical accident. But, that specialisation enables improved efficiency. For high value-added products, multinationals often split the production process into a global production system. For example, Apple designs their computers in the US but contract the production to Asian factories. Trade enables a product to have multiple country sources. With car production, the productive process is often even more global with engines, tyres, design and marketing all potentially coming from different countries.

5. Service sector trade

Trade tends to conjure images of physical goods import bananas, export cars. But, increasingly the service sector economy means more trade is of invisibles - services, such as insurance, IT services and banking. Even in making this website, I sometimes outsource IT services to developers in other countries. It may be for jobs as small as $50. Furthermore, I may export a revision guide for 7.49 to countries all around the world. A global economy with modern communications enables many micro trades, which wouldn't have been as possible in a pre-internet age.

6. Global growth and economic development

International trade has been an important factor in promopting economic growth. This growth has led to a reduction in absolute poverty levels - especially in south east Asia which has seen high rates of growth since the 1980s.

Source: St Louis Fed -GDP For World

Problems arising from free trade

Given the importance of free trade to an economy, it is unsurprising that people are concerned about the potential negative impacts.

• Infant industry argument. The fear is that 'free trade' can cause countries to specialise in primary products - goods which have volatile prices and low-income elasticity of demand. To develop, economies may need to restrict imports and diversify the economy. This isn't an argument against trade per se, but an awareness trade may need to be 'managed' rather than just rely on free markets. See more atInfant Industry Argument.
• Trade can lead to cultural homogenisation. Some fear trade gives an advantage to multinational brands and this can negatively impact local produce and traditions. Supporters argue that if local products are good, they should be able to create niche than global brands cannot.
• Displacement effects. Free trade can cause uncompetitive domestic industries to close down, leading to structural unemployment. The problem with free trade is that there are many winners, but the losers do not gain any compensation. However, free-market economists may counter that some degree ofcreative destructionis inevitable in an economy and we can't turn back to a static closed economy. On the upside, if the uncompetitive firms close down, ultimately new jobs will be created in different industries

Another aspect of new trade theory is that it doesn't really matter what countries specialise in, the important thing is to pursue specialisation and this enables companies to benefit fromeconomies of scalewhich outweigh most other factors. Sometimes, countries may specialise in particular industries for no over-riding reason - it may just be a historical accident. But, that specialisation enables improved efficiency. For high value-added products, multinationals often split the production process into a global production system. For example, Apple designs their computers in the US but contract the production to Asian factories. Trade enables a product to have multiple country sources. With car production, the productive process is often even more global with engines, tyres, design and marketing all potentially coming from different countries.

5. Service sector trade

Trade tends to conjure images of physical goods import bananas, export cars. But, increasingly the service sector economy means more trade is of invisibles - services, such as insurance, IT services and banking. Even in making this website, I sometimes outsource IT services to developers in other countries. It may be for jobs as small as $50. Furthermore, I may export a revision guide for 7.49 to countries all around the world. A global economy with modern communications enables many micro trades, which wouldn't have been as possible in a pre-internet age.

6. Global growth and economic development

International trade has been an important factor in promopting economic growth. This growth has led to a reduction in absolute poverty levels - especially in south east Asia which has seen high rates of growth since the 1980s.

Source: St Louis Fed -GDP For World

Problems arising from free trade

Given the importance of free trade to an economy, it is unsurprising that people are concerned about the potential negative impacts.

• Infant industry argument. The fear is that 'free trade' can cause countries to specialise in primary products - goods which have volatile prices and low-income elasticity of demand. To develop, economies may need to restrict imports and diversify the economy. This isn't an argument against trade per se, but an awareness trade may need to be 'managed' rather than just rely on free markets. See more atInfant Industry Argument.
• Trade can lead to cultural homogenisation. Some fear trade gives an advantage to multinational brands and this can negatively impact local produce and traditions. Supporters argue that if local products are good, they should be able to create niche than global brands cannot.
• Displacement effects. Free trade can cause uncompetitive domestic industries to close down, leading to structural unemployment. The problem with free trade is that there are many winners, but the losers do not gain any compensation. However, free-market economists may counter that some degree ofcreative destructionis inevitable in an economy and we can't turn back to a static closed economy. On the upside, if the uncompetitive firms close down, ultimately new jobs will be created in different industries

Another aspect of new trade theory is that it doesn't really matter what countries specialise in, the important thing is to pursue specialisation and this enables companies to benefit fromeconomies of scalewhich outweigh most other factors. Sometimes, countries may specialise in particular industries for no over-riding reason - it may just be a historical accident. But, that specialisation enables improved efficiency. For high value-added products, multinationals often split the production process into a global production system. For example, Apple designs their computers in the US but contract the production to Asian factories. Trade enables a product to have multiple country sources. With car production, the productive process is often even more global with engines, tyres, design and marketing all potentially coming from different countries.

5. Service sector trade

Trade tends to conjure images of physical goods import bananas, export cars. But, increasingly the service sector economy means more trade is of invisibles - services, such as insurance, IT services and banking. Even in making this website, I sometimes outsource IT services to developers in other countries. It may be for jobs as small as $50. Furthermore, I may export a revision guide for 7.49 to countries all around the world. A global economy with modern communications enables many micro trades, which wouldn't have been as possible in a pre-internet age.

6. Global growth and economic development

International trade has been an important factor in promopting economic growth. This growth has led to a reduction in absolute poverty levels - especially in south east Asia which has seen high rates of growth since the 1980s.

Source: St Louis Fed -GDP For World

Problems arising from free trade

Given the importance of free trade to an economy, it is unsurprising that people are concerned about the potential negative impacts.

• Infant industry argument. The fear is that 'free trade' can cause countries to specialise in primary products - goods which have volatile prices and low-income elasticity of demand. To develop, economies may need to restrict imports and diversify the economy. This isn't an argument against trade per se, but an awareness trade may need to be 'managed' rather than just rely on free markets. See more atInfant Industry Argument.
• Trade can lead to cultural homogenisation. Some fear trade gives an advantage to multinational brands and this can negatively impact local produce and traditions. Supporters argue that if local products are good, they should be able to create niche than global brands cannot.
• Displacement effects. Free trade can cause uncompetitive domestic industries to close down, leading to structural unemployment. The problem with free trade is that there are many winners, but the losers do not gain any compensation. However, free-market economists may counter that some degree ofcreative destructionis inevitable in an economy and we can't turn back to a static closed economy. On the upside, if the uncompetitive firms close down, ultimately new jobs will be created in different industries

Question 21

1. A state of affairs when a creature is able and enthusiastic________ to take up a job and gets employed, it is_____________

2. A situation when people are engaged in jobs but they do not get these jobs according to their capabilities, efficiency and qualifications, it is.

3. A situation when the workers are _____________willing to work under any conditions and at any wage rate but they fail to get employment, it is

4. A temporary unemployment ______________which exists during the period of the assignment of labor from one livelihood to alternative is ____________________

5. When more workers are engaged in a work than actually required to work, it is____________

6. Who developed the Classical______________ Theory of Income and Employment_______

7. "The supply generates its own demand"__________. This is the celebrated law of____________

8. The book General Theory of Employment, Interest and Money was written by----

9. Keynesian theory of engagement is grounded on the impression of------------.

10. The speculation which is commenced autonomously of the level of proceeds is known as----

11. The mechanisms _________of combined demand is/ are___________

12. Determination equilibrium____________ of an economy can be studied by_________