This website uses cookies to ensure you have the best experience. Learn more

Macro And Micro Economics Essay

1210 words - 5 pages

Q2 (A) Explain why free international trade can be good for countries' economies; and examine the attempts to reduce trade barriers in the past decade (maximum 1,000 words)'Free trade is the ability to undertake economic transactions with people in other countries free from any restraints imposed by governments or other regulators'. (Economist, 2013)
Selected forms of FTA



Bilateral Trade

Reduces trade barriers between 2 participating nations

Singapore - China
Singapore - USA

Regional Trade Groups (may take form of preferential trade)

Reduces trade barriers between participating member states

European Union

Multilateral Agreements

Reduces trade barriers between many participating member countries

WTO (~150 member countries)

Free international trade can help countries to:Specialize and trade based upon comparative advantagesDecrease costs by capitalizing on economies of scaleEncourage efficiency in the market through increased competitionStimulate export growth etcTo better understand the practical implications of FTAs, the country case example of Singapore and its FTA with China and USA have been used:CSFTA:Singapore-China FTA was signed after eight rounds of negotiations and was concluded on September 3 in Beijing.Realized Benefits:Engine of Growth:


Benefits to Importers

Tariff Elimination

95% of Products entering China

Tariff free Importing

Rules of Origin (ROO)*

Wholly Obtained; Exclusive Product Specific Rule; Regional Value Content not less than 40% of FOB

Access to wide range of products eligible for preferential treatment

Third Party Invoicing


Originating products still qualify for preferential treatment even if the invoices for these goods were issued in third countries

* The discriminatory ROO's and tariff rates under different FTA's leads to complications in FTA and is commonly known as 'Spaghetti Bowl Effect'. It is also known as 'Noodle Effect' with respect to Asian Countries.

The above key facilitative commitments made more than 85% of Singapore exports to China at zero-tariff and thereby resulted in exports presented in graph. Key Singaporean industries that benefited include petrochemicals, processed foods and electronics/electrical products (Singapore Government, n.d.).China is currently Singapore's third largest trading partner and the third largest investment destination.Hub and Spoke Effect:A multi tier model where the hub is the country having FTAs with countries not having FTA with each other. It is an operating model where hub acts as a central point and the other countries act as the spoke.Under the Viner's model, Qs2- Qs1 represents the trade creation effect and (b+d-e) represents the welfare effect - the major benefits of being a hub (Michael G. Plummer, 2010). It is estimated that under a hub-and-spoke FTA-hub trade grows by 5.57% per year and doubles after 12.4 years. The hub countries typically have higher exports than...

Find Another Essay On Macro and Micro-Economics

Macro and Micro Environment Issues in the Fragrances Market

838 words - 3 pages The billion pound fragrances market in the United Kingdom is highly competitive and is always adapting to their environment. Despite the recession, the fragrances market have managed to boost their market value and thrive in the slowly recovering economy. To stay in business, it is imperative for marketing managers in fragrances to acknowledge issues in their macro and micro environments, such as the current economic state, the behaviour of

Macro and Micro Economic Factors that Influence Plant Activity

1366 words - 5 pages This paper will first discuss factors that describe and analyze the macro- and micro-economic factors that could directly or indirectly influence plant operations here at ABC Complete Kitchens. Next, it will explain legal considerations that our organization must be prepared for, which are also relative to obtaining credit, having reliable market conditions, and avoiding product liability Capital Investment One of the most important concerns

Economic Reform/Policy Mix, Covers macro and micro economic reforms in Australia

1710 words - 7 pages Question:What role do governments have in modern mixed economies such as Australia? Using appropriate indicators (macro economic aggregates) outline the present state of the economy. In what ways is the Commonwealth government using fiscal and monetary policies to influence the Australian economy? What are the main features of the government's micro economic policy? Why is the government concerned about microeconomic reform?Synopsis:The role of

Select an industry discuss the macro and micro environments that are currently impacting on this industry

2662 words - 11 pages (Research and Markets Adds Report: 2008 Asia - Telecoms, Mobile and Broadband in China 2008).2.0 IntroductionAlthough the China market is large, it has low penetration rates and this is good for the future growth in the cell phone industry. The increasing numbers of people have acquired more than one mobile phone. The following paragraphs will discuss about the macro and micro environments on the cell phone industry and the impact of the changing

Economic Reform/Policy Mix, Covers macro and micro economic reforms in Australia

1450 words - 6 pages QUESTİON 1the role of the government in a market economy,calls upon the government to perform five functions. These functions are:1. Providing the economy with a legal structure: This is the first and most important function a government should provide and without it an economy may collapse. This function requires the government to ensure property rights, provide enforcement of contract. In order to perform this function, the government

Durkheim Is Dead! Macro vs. Micro Beliefs

1064 words - 4 pages I have grouped the sociologists in Durkheim is Dead into three groups: macro to micro, micro and macro, and micro to macro. I did not place any one of the individuals into just the macro or just the micro categories. Each one fell into a group that I considered to be in-between. In the macro to micro category, each sociological theory concentrated on one major problem of society and then went on to explain what would have to be

Micro-Organizational Behavior

2548 words - 10 pages . DefinitionB. Effects of micro-organizational behaviorC. Decision making within micro-organizational behaviorII. Micro-Organizational Behavior vs. Macro-Organizational BehaviorA. Difference between micro and macro organizational behaviorB. What does micro-organizational behavior change?C. What does macro-organizational behavior change?II. Dynamics of Micro-Organizational BehaviorA. What are the dynamics of micro-organizational behavior?B. Leadership

The Three Social Paradigms

685 words - 3 pages The three sociology paradigms are Symbolic Interaction Theory, Structure – Function Theory, Conflict Theory. Paradigms are a models or frameworks for observation and understanding which shapes both what we see and how we understand it. Meaning that these three theories are how we understand sociology. These three theories work on macro or micro level. Micro level or local level meaning the research population typically is an individual in


985 words - 4 pages quickly as any finical, physical, or market risk factor.(Investing Answers). There are two different kinds of political risk macro and micro (Investopedia, Political Risk). “Macro risk refers to adverse actions that will affect all foreign firms, such as expropriation or insurrection, where as micro risk refers to adverse actions that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against

Market Demand of goods

1613 words - 6 pages function which price of the goods product, price of related goods and customer expectation. In conclusion according to these articles we can analyses and find information about demand, supply, market in action and the concept of elasticity.Analysis1.0The Market EconomyThere are two branches of economics, micro economics and macro economics, micro economics is the branch of economics that studies decision making by single individual, household, firm

Microcredit: A Lifeline for the Poor

2326 words - 9 pages India, "Micro Credit is defined as provision of thrift, credit and other financial services and products of very small amount to the poor in rural, semi-urban and urban areas for enabling them to raise their income levels and improve living standards."Many bankers, economists, and governmental officials assume that the informal commercial credit market works efficiently, satisfies demand, and helps the poor. Widespread use of informal finance

Similar Essays

An Analysis Of The Key Macro And Micro Economics Factors Which Impact On The Current Uk Housing Market

3233 words - 13 pages An analysis of the key macro and micro economics factors which impact on the current UK housing marketIntroductionThis paper explores the current situation in the UK housing market. Fundamentally, the paper argues that the current situation in the housing market is a legacy of the way in which the housing market developed over the early 2000s into the 2007 and 2008 financial crisis. As the fall out from this crisis has taken two or three years

The Micro And Macro Environment Essay

1011 words - 5 pages Environmental factors in marketing are classified into two (2) groups the macro and the micro environment. According to the investopedia Macro environment is the conditions that exist in the economy as a whole, rather than in a particular sector or region. In general, the macro environment will include tends in gross domestic product (GDP), inflation, employment, spending and monetary and fiscal policy. The macro environment is closely linked to

Coca Cola's Micro And Macro Environment

3409 words - 14 pages an organization operates. There is not much that companies can do to control these powerful forces therefore it is very much of importance for marketers to understand these factors and forces so that they can devise an optimal marketing strategy to handle these conditions.According to Kotler(1984) ," The macro environment consist of the larger societal forces that affect micro - environment (internal)."These forces are ,EconomicNirmalya Kumar(2004

A Comparison Of Micro And Macro Songs

1479 words - 6 pages Band. In the following examination, both songs demonstrate the diverse principles of the sociological perspective on a macro and micro level, respectively. In the song “Prayer of the Refugee” by Rise Against, the listener is given a conflict theory on a macro level basis with overarching themes of globalization and the struggle of two very different socioeconomic groups. The chorus reflects their repeated reference to industrialized western