Disater happens unintentionally. When it make loss, it also creat trade barrier unawares. As we all know tariff protect national bussiness from the foreign competitors. To some degrees, disaters and other uninterntionally events act the same role.
When Hurricane Sandy came, lots of foreign bussiness were influenced by transporting goods or dilivering late. When the Fuel Prices have been going up and up, the transportation costs increased. When Somalian Pirates appeared, goods on shiping decreased.
This kind of event shrinks the export but less import even when countries have more comparative advantage. Obviously, this kind of event reduce the countries' comparative advantage.For instance, Somalian Pirates reduce the transportation costs of foreign goods.
Monday, December 17, 2012
Monday, December 10, 2012
Three Big problem
According to the fact about Three Big (GM, Ford and Chrysler) which on pages 78-79, we know that year 2008 and year 2009 are hard year for the U.S auto industry. In this blog, I am going to focus on
some causes and how to aid.
The book told us that the cost of GM to health care per vehicle is about $1500 in 2008. In contrast, Toyota cost around $200 per vehicle. Definitely, it made the labor cost a lot of differences. That made Three Big has less comparative advantage on their labor cost and on their goods.
According to Stolper-Samuelson theorem(on page 78), their goods costs more foreign competitors.
So we have to say, the cost of health care take a port of responsibility to the thing which affects comparative advantage.
However, the experience of Ford also told us the U.S business can compete with countries who offer national healthcare. "As for Ford, its market share increased and the firm returned to profitability at the end of 2009."(Globalization Drives Changes for U.S. Automakers) In 2009, Ford put its new product, New Fiesta, into the market. The new Fiesta has a very low mpg and a low price but a high level of safety factor and a good looking. It changed the profile of U.S. vehicles which all cost fuel too much. That means innovation, technology and other comparative advantages also can make U.S. business compete with foreign business which got national policy advantage.
In addition, loan to auto resource business, increasing the tariffs of auto industry, reducing the tax of auto industry, encouraging the auto innovation and developing new auto technology and encouraging create new manufactory in low labor cost countries (encouraging means rewarding ) can also make U.S. auto industry more competitive.
some causes and how to aid.
The book told us that the cost of GM to health care per vehicle is about $1500 in 2008. In contrast, Toyota cost around $200 per vehicle. Definitely, it made the labor cost a lot of differences. That made Three Big has less comparative advantage on their labor cost and on their goods.
According to Stolper-Samuelson theorem(on page 78), their goods costs more foreign competitors.
So we have to say, the cost of health care take a port of responsibility to the thing which affects comparative advantage.
However, the experience of Ford also told us the U.S business can compete with countries who offer national healthcare. "As for Ford, its market share increased and the firm returned to profitability at the end of 2009."(Globalization Drives Changes for U.S. Automakers) In 2009, Ford put its new product, New Fiesta, into the market. The new Fiesta has a very low mpg and a low price but a high level of safety factor and a good looking. It changed the profile of U.S. vehicles which all cost fuel too much. That means innovation, technology and other comparative advantages also can make U.S. business compete with foreign business which got national policy advantage.
In addition, loan to auto resource business, increasing the tariffs of auto industry, reducing the tax of auto industry, encouraging the auto innovation and developing new auto technology and encouraging create new manufactory in low labor cost countries (encouraging means rewarding ) can also make U.S. auto industry more competitive.
Saturday, December 1, 2012
Hello and Welcome
Hello, I am Wayne Hu. Welcome to my blog. This blog is connected with my globe economic environment class. Therefore, I will talk all the things about globe economic environment in this blog~
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