Background Information

Assume that you have been hired by an International Organization to be consulted on various issues that the country Motherland faces. For this exercise, assume that Motherland is a small agricultural economy.

Part A. Assume that the biggest trading partner of Motherland is the United States. Unlike Motherland, the United States is a large industrial country. What type of trade model can best explain the trade between Motherland and the United States?

Part B. Motherland imports electronics from the United States. The government of Motherland is considering to impose quotas on these electronics imports coming from the United States. Would you recommend it? Explain your answer. In your explanation, distinguish the effect on the consumers of electronics, the domestic producers of electronics and the government.

Part C. The government of Motherland wants to jump start industrial production. Over time the main objective is to convert this agricultural economy into an industrial nation. On the basis of the experiences of Argentina and Singapore, what policies would you suggest? What policies should be avoided?