This assignment will assess the following learning outcomes:
1. An understanding of a variety of international environmental effects on business.
2. An analysis of the impact of uncertainty on international business behaviour.
3. Demonstrate independent learning in preparation for assignment
International Business
The data shown below reflect the growth of world merchandise trade (exports) for the period 1870-2007. Critically analyse the facts and respond to the four (4) tasks enumerated below:
The rapid growth of world trade over the last century reflects, at least in part, the fact that nations have become more interrelated as they attempted to gain the benefits of free trade. The table below compares the relative growth of world trade and world output from 1870 to 2007. It shows that the growth rate of world merchandise trade (exports) has exceeded the growth of world output (GDP) in four of the five periods. The post-Second World War period (1950-73) saw an unprecedented growth of world trade which far outstripped the growth of world production (Wall, S. & Ress, B., 2010).
Growth in world GDP and merchandise trade 1870-2007 (average annual % change)
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1870-1900
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1900-13
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1913-50
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1950-73
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1973-2007
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GDP
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2.9
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2.5
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2.0
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5.1
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3.0
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Trade (exports)
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3.8
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4.3
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0.6
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8.2
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5.1
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Given the information above:
1. Discuss the two types of trade flow that underlie the recorded growth in world trade.
2. Select one type of trade flow and apply it to the country of your choice that is currently involved in world merchandise trade.
3. Provide the country's 5-year net export figure (2010-2015):
a. Evaluate its performance based on the given data and discuss whether the balance of trade is a "favourable" surplus (exports exceed imports) or an "unfavourable" deficit (imports exceed exports) to the domestic producers and domestic consumers.
b. Examine its effect on the country's gross domestic product (GDP). Show the actual relationship, with figures and chart.
4. Determine the measure/s to sustain a positive net export or method/s to restrict the level of imports that when left unabated will lead to realising a negative net export.
(Note: the method may be against the essence of free trade, in this case, come up with justification/s for the use of such a method).