Term Paper: Buying Local Products

Pages: 9 (2601 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] The exporters are usually successful in securing permanent protection (Hess, 2009).

Coming back to reciprocity dispute means supporting open and free trade. It means essentially that America is a broad minded market which invites importing than other states. The aim of the reciprocity is to keep in touch with exterior markets (Hess, 2009).

Whilst application many nations will counter this action meanwhile greater security is attained. There are a number of problems with reciprocity, for example slapping new tariffs on states that can't fulfill the equal access requirement would counter which results in American exporters being shutoff due to antagonism due to entry of an outside competitor. In any case otherwise, the main line of attack is to stonewall the imports downright as well as excessive government grants, which usually results in below quality products. From all arguments, the benefits of global trades can be shortened as (Hess, 2009):

Due to specialization, product gain is achieved as well as trade broadens the size of a market. The outputs are amazing at amazingly lower costs. According to comparative advantage, a nation should sell products which is being produced in excessive quantities meanwhile importing that is deficient in. even in case where it can't produce much products (it's at a disadvantage).

Elevating productivity

Elevating consumption level from global trade with free trade

Beneficial to customers with less prices and more variety of products

Free trade sinks deep teeth into local business and monopolies

Absolute advantage occurs in a case when a nation has a certain monopoly on a particular product manufacture and exports it more than other nations

Other benefits / gains

The price of products in the global markets

Taking the local monopolies to cleaners

Technology voids (one nation remains ahead of the competition due to superior technology)

Although the global trade is beneficial for all, countries should confine the trade Protectionism. But trading has multiple advantages as well. There isn't a country which can produce all sorts of products. Countries are interdependent on each other. The primary focus of a trade is to fulfill each other needs by producing a product in excess and exporting it while importing necessary products in return maintaining friendly ties (Hess, 2009).

Globalization is not a new concept by any means which influences both first world and third world countries for that matter. Its definition varies by the way. Globalization means a rise in trading activities, particularly free trade which is supposed to take place for some years. Free trade propels the developing countries into prosperity. The main question here is if whether globalization is prone to shape winners and losers causing instability in a world. United Nations Development Program (an agency of United Nations) states that poverty is increasing steadily in third world countries in its reports (Shuman, 1998).

According to the UNDP report released in 1999, the agency compared the ratio of salary of people living in richest countries to poverty stricken people living in third world countries. The ratio is:

30:1 in 1960

60:1 in 1990

72:1 in 1997

According to the report, poverty is winning in poor states while rich people are getting rich.

Some myths exists pertaining comparative advantage as well as free trade which nations should tackle aptly so as to address the future growth of its population:

Free trade is beneficial for rich countries as of yet •

Trade takes out the poor states to cleaners

Offshore entry is nuclear hazardous to local monopolies as well as competition

Importing is damaging while exporting is beneficial (Levy-Yeyati and Sturzenegger, 2005).

The supply and demand concept dictates the value of a currency; it can't however give a reasonable explanation as to why a high demand for the currency impacts the local economy of a nation. For example, when the American dollar was in hot demand, America's financial securities, for instance bonds and treasury notes and credit loan industries, sprang into action; their interest had been sky-high. In the 70's, a free market system was founded based on floating exchange rates (Levy-Yeyati and Sturzenegger, 2005).

The idea was to rectify the trade deficiencies and provide stability to economic atmosphere. The other intention was to permit better exchange rates to shape up the interest rates, salaries, and monetary assets. For some nations, exchange rates corrections takes just a few minutes while in other nations it takes days. Currency exchange rates are questionable. If fair exchange rates existed, that would result in same amount of time to work with currency trading. Due to this unfairness, proponents of local buying argue in favor of protectionism and local buying (Levy-Yeyati and Sturzenegger, 2005).

The opponents argue that exchange rates are decided is different in comparison to other financial products. It's their ability to trend, for instance the value of dollar has altered many times with respect to other currencies. Japanese Yen was seen appreciating by 26% against dollar back in 1993 to 1995. After that, it has continuously depreciated against dollar by 40%. Such relative fluctuations have severe impacts on asset values, inflation and competitiveness (Levy-Yeyati and Sturzenegger, 2005).

The government has come to terms with free trade as its beneficial for customers, clients that need imported products, exporting traders have more exposure and lastly the economy can become flexible propelling better economies of sales. In any case otherwise, the industries which didn't see foreign competition coming are driven into the ground. In financial marketplaces, the rises and falls in currency values have severe consequences as it invites or fends off foreign investment and global speculation. The currency marketplaces have a flaw in itself as forward prices never predict the trend of a currency (Levy-Yeyati and Sturzenegger, 2005).

Any foreign exchange market is manipulated by the demand and supply concept which government overlooks. Meanwhile the rest of the nation overlooks their banks and the government overlooks its population's interest. As the concept of supply and demand dictates, when a demand for a product elevates then its price also increases keeping in view its importance. A nation's currency is said to be strong when its demand rises. Its price also rises with respect to other nation's currency; hence a nation's currency is resilient (Levy-Yeyati and Sturzenegger, 2005). Therefore, in light of the aforementioned arguments, this paper positions itself against local buying.

References

Forge, A. (2013). Frugavore: How to Grow Organic, Buy Local, Waste Nothing, and Eat Well Skyhorse Publishing, Inc.

Hess, D.J. (2009). Localist Movements in a Global Economy: Sustainability, Justice, and Urban Development in the United States MIT Press.

Irwin, D.A. (2011). Peddling Protectionism: Smoot-Hawley and the Great Depression. Princeton University Press.… [END OF PREVIEW]

Buying or Not Buying Local Good Research Paper


Product Piracy Is a Huge Problem Term Paper


Buy Canadian Policy Thesis


Marketing Product Description There Are Two Ways Research Paper


Buying Behavior of Organizations Research Paper


View 1,000+ other related papers  >>

Cite This Term Paper:

APA Format

Buying Local Products.  (2014, June 9).  Retrieved August 17, 2019, from https://www.essaytown.com/subjects/paper/buying-local-products/8678582

MLA Format

"Buying Local Products."  9 June 2014.  Web.  17 August 2019. <https://www.essaytown.com/subjects/paper/buying-local-products/8678582>.

Chicago Format

"Buying Local Products."  Essaytown.com.  June 9, 2014.  Accessed August 17, 2019.
https://www.essaytown.com/subjects/paper/buying-local-products/8678582.