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Development of economies
1. PREPARED FOR
Nahid Ferdousi
Lecturer
Course Code: ECN-201
Course Title: Introduction to Development Economies
Department of Business Administration
PREPARED BY
Imran Hossen (Id No. 11102065)
Md. Shams Akhter (Id No.11102075)
Kaniz Fatema Kona (Id No. 111020480)
Kallal Kumar Mondal (Id No.11102069)
Ayesha Akter Shimu (Id No.11102055)
2. Economic has two trade situation
1. Free trade situation
2. Trade with tariffs
Free Trade
Free trade lifts barriers to allow for the free flow of
trade between two or more nations.Free trade opens
markets and economic opportunities.
Graphically show the free trade and trade with
tariffs
Tariffs increase the prices of imported goods. Because
of this, domestic producers are not forced to reduce
their prices from increased competition, and domestic
consumers are left paying higher prices as a result
3. Figure 1 illustrates the effects of world trade without the presence of a tariff.
4. When a tariff or other price-increasing policy is put in place, the effect is to
increase prices and limit the volume of imports. In Figure 2, price increases
from the non-tariff P* to P'. Because price has increased, more domestic
companies are willing to produce the good, so Qd moves right. This also shifts
Qw left. The overall effect is a reduction in imports, increased domestic
production and higher consumer prices.
5. Advantages of Free Trade
1.Increased Production and Efficiency:. Countries that specialize
in creating commodities where they have the comparative
advantage will increase their production, instead of focusing on
products or industries in which other countries have the
comparative advantage.
2.Consumer Satisfaction: Free trade leads to a global market,
consumers benefit from the competition and variety brought to the
market. When other countries produce some items cheaper, the
consumer purchases products for less price
3.Employment and Economic Growth: Although free trade may cause
jobs in one particular industry to wind up overseas, jobs in the
exporting and importing sides will increase. When productivity
increases in importing and exporting, wages also tend to rise.
4.Foreign Exchange Gains and Decreased Poverty: When a
country purchases a product from another country with money,
they essentially send the exporting country non-interest IOUs in
exchange for real goods. The exporting country, though, must use
the money within the country that imported the products
6. 5. Increased Export
The country with the restrictions also limits its own ability to
export. When a country removes their trade restrictions, other
countries are more willing to accept the export
6. Reducing Tariff barriers leads to trade creation: Trade
creation occurs when consumption switches from high cost
producers to low cost producers.
,
The Disadvantages of Free Trade
1.Increased Competition
When countries open their international borders to member nations in
the same free may come from other nations in the same free trade zone.
All countries within the zone would be competing with one another for
the same consumers.
2.Increased Unemployment
local consumer would benefit from the lower price of imports and they
purchased greater commodity, while domestic producers and the
employees would suffer as they loss business to lower cost. So they
decrease their production and create unemployment in this economy.
7. 3.Corporate Restructuring:
Companies in free trade zones are always in competition with one another.
This competition can al Increased National Security
The advantages of trade barriers
1.Increased National Security
One advantage to trade restrictions is that it can encourage economic independence-
--a policy known as "autarky
2.Protection of Growing Industries
Without trade restrictions, their domestic electronics industry might be crushed by
competition from abroad; trade barriers can help keep the industry safe until it
can compete on its own
3.Protection Against Other Countries
Trade barriers can also protect a country against other, nations. "Dumping" occurs
when one nation sells large amounts of its product in another country below cost,
allowing them to starve out possible competition.
4.Economic Underdevelopment
Free trade regions may also impact some regions more than others in terms
of the level of economic development. Some areas of the region may attract
a greater level of economic development than others, resulting in the
economic underdevelopment
8. current employment, which can be seen as a key advantage.
4.Promotion of Domestic Jobs
The most frequently cited advantage of trade barriers is that they help
to promote domestic employment by keeping companies from "off
shoring," or transferring domestic jobs abroad. These trade barriers do
help to preserve current employment, which can be seen as a key
advantage.
Disadvantage of protectionism
1.price increase : Consumers pay more with protectionism too.
Without a system of competitive pricing, domestic companies are free
to raise their prices without raising the quality of their goods.
2.Import decreases: trade protectionism limits consumer access to
foreign goods and non-domestic companies that offer unique products
and services are also subject to the aforementioned restrictions
3.foreign business communication decreases: . Businesses face unfair
restrictions while their domestic competitors are offered financial
boons, and consumers end up paying higher prices for a limited variety
of products that aren't always worth their cost
9. Protectionism and Free Trade
Protectionism is the government practice of restricting imports and exports between
one country and another. Tariffs are sometimes placed on imports or exports, raising the
price for doing such things. In contrast, free trade removes such restrictions.
2(i) Protectionism Benefits
The aims of protectionism are to preserve jobs. By increasing the cost of importing,
businesses are encouraged to produce products within the country where the products
will be sold.
2(ii) Free Trade Benefits
Free trade allows businesses to trade more frequently, resulting in a greater exchange of
goods and services. Businesses also can save money by finding cheaper labor.
3(i) Protectionism Consequences
Free trade advocates argue that protectionism leads to higher prices because
workers at home are not necessarily willing to work for lower wages.
3(ii) Free Trade Consequences
Free trade often leads to a loss of jobs through outsourcing. Also, businesses often
attempt to influence the leaders of foreign countries in order to behave in the best
interests of international businesses, which cause foreign leaders to focus less on
the best interests of their own people.
The Difference Between Free Trade and
Protectionism
10. Protectionism
Tariff: Tariff is a tax on imports and is used to restrict imports
and raise revenue for the government.
Quotas: A quota is a limitation in value or in physical terms,
imposed on import and export of certain goods for a certain
period of time. This category includes global quotas in respect
to specific countries, seasonal quotas, and so-called "voluntary"
export restraints.
Licenses
A license is granted to a business by the government, and
allows the business to import a certain type of good into the
country. For example, there could be a restriction on imported
cheese, and licenses would be granted to certain companies
allowing them to act as importers. This creates a restriction on
competition, and increases prices faced by consumers
11. Non-tariff barriers
Non-tariff barriers to trade (NTBs) are trade barriers that restrict
imports but are not in the usual form of a tariff. Some common
examples of NTB's are anti-dumping measures and countervailing
duties, which, although called non-tariff barriers, have the effect of
tariffs once they are enacted
Bangladesh - tariff rate
Tariff rate, most favored nation, weighted mean, primary products
(%) in Bangladesh was 8.79 as of 2008. Its highest value over the past
19 years was 55.48 in 1994, while its lowest value was 7.40 in 2007.
Source: World Bank staff estimates using the World Integrated Trade
Solution system, based on data from United Nations Conference on
Trade and Development's Trade Analysis and Information System
(TRAINS) database and the World Trade Organization’s (WTO)
Integrated Data Base (IDB) and Consolidated Tariff Schedules (CTS)
database.
12. Why trade and tariff benefited for
Bangladesh?
The benefits of tariffs are uneven. Because a tariff is a tax, the
government will see increased revenue as imports enter the domestic
market. Domestic industries also benefit from a reduction in
competition, since import prices are artificially inflated. If the price of
steel is inflated due to tariffs, individual consumers pay more for
products using steel, and businesses pay more for steel that they use
to make goods. In short, tariffs and trade barriers tend to be pro-
producer and anti-consumer.
In the short run, higher prices for goods can reduce consumption by
individual consumers and by businesses. During this time period,
businesses will profit and the government will see an increase in
revenue from duties. In the long term, businesses may see a decline in
efficiency due to a lack of competition, and may also see a reduction
in profits due to the emergence of substitutes for their products. For
the government, the long-term effect of subsidies is an increase in the
demand for public services, since increased prices, especially in
foodstuffs, leave less disposable income.
13. Conclusion
we support the tariff Because Tariff is beneficiaries in
developing country like Bangladesh. When we impose
tariff then the price increase foreign product .local
people do not purchase huge foreign product and also
local product demand increases .developing country
industry expand and unemployment reduce in the
country Government is benefited for the tariff and
developing country competition with developed
country