Dependency theory highlights that poorer nations are able to be taken advantage of, for they have the natural resources, and large populations which are used for cheap labor, but lack the ability to establish systems that benefit economic prosperity. Dependency theory is based around this system, and reinforces the idea that wealthier nations are able to take advantage of
A free market economy will be most beneficial for the following reasons; limited government, freedom of choice, and the increased quality of production. The goods and services produced will be the ones most needed, this will depend on the popularity and demand for these products. Overall this will help producers focus on providing certain goods and services thus eliminating ones that are unnecessary and using valuable resources. A free market economy means limited government involvement and the freedom of choice. This allows producers to study the demand and decide what will sell and generate the most income instead of waiting for the government to tell them what to make.
In other words, they will produce much less and charge a higher price than social optiaml lead to a high price,low average costs and high profits. Therefore, there are three methods for regulation of the natural monopoly products. First, when market price
When the market is left alone under the invisible hand it balances out both what the seller and consumer desire. There are no threats to freedoms as the seller can sell to any customer and the consumer can purchase from any seller. When the government intervenes in any means other than to protect the rules of the market, it places a sense of coercion on decisions and thus takes away economic freedom, in essence total freedom. Therefore in order to ensure the freedoms of the people the government must stay clear of interfering with market behavior. The government is only necessary in creating and enforcing the laws of the market.
The theory of comparative advantage describes by specializing in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries. However, Free trade enables countries to specialize in those goods where they have a comparative advantage. ii. The support for globalization represents free trade which promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers. iii.
For free trade it benefits includes increase countries production, improve the efficiency of resources, lead to economic development, and boost international relation. Free trade agreement can increase countries production because it enables countries to specialize in the product that they have a comparative advantage. A comparative advantage simply means the ability to produce specific product more efficiently than another product. Therefore countries can take advantages of efficiency generated from the specific products that was produced to generate more income to the countries. In addition to that, free trade also improves the efficiency of resources as countries can allocate or trade in resources with each other freely.
With higher real GDP a society can devote more resources to promoting recycling and the use of renewable resources Investment. Economic growth encourages investment and therefore encourages a virtuous cycle of economic growth. Economic policies Many government departments that form the pivot of an economic cluster, which was set
Comparative advantage is the theory that free trade between two or more countries will increase consumption and is of mutual benefit to both countries. Each country should export a good for which it has a comparative advantage over and export surplus production in exchange for goods produced in another country which has a comparative advantage for the good. This is under the assumption that there is differences in labour productivity in both countries. According to Comparative advantage even a country with a comparative disadvantage will gain from specialising in most efficient goods. According to Adam Smith (1776) Wealth of Nations, absolute advantage is the ability of a country to produce more than other countries but with less resources.
Bilateral trade deals tend to attract less attention, therefore pressure from the opposition forces is likely to be low. The GSP offers privileged entry or an extensive variety of products from 144 countries and regions into the Organization for Economic Co-operation and Development (OECD) markets. Bilateral trade agreements are easier to conclude than multilateral trade agreements. Members of the ACP (African, Caribbean, and Pacific) group of countries obtain superior admission to EU markets, and exports from the least developed countries (except for sugar, bananas and rice) are receiving almost duty- and quota-free entrance to the EU markets (IMF,
Customers pay for value, and offering prices, lower than competitors, for the same benefits or creating unique benefits for higher price, creates superior value. A company implementing a strategy for creating value, different from competitor’s strategies, has a competitive advantage. (Barney,1991), thus, giving Amazon, a strong chance against its competitors. Petaraf and Barney (2003), stated that when a company creates greater economic value, it has an advantage over its competitors. Economic value is the difference of the perceived benefits received by the customers from the company’s economic cost.