CHAPTER I: THEORETICAL BACKGROUND Export is a vital part in international trade which has been going for thousands of years. That a country has any product to export means there is at least one other country to import that product. Then international trade happens; in other words, international trade is the exchange of goods and services which may be tangible and intangible across national boundaries for maximizing their economic profits. It creates opportunities for countries to be involved in the international division of labor, economic development and enrichment for themselves. In many trade-dependent countries, export turnover occupies a large percentage in GDP.
Export is a function of international trade in which the goods produced in a country will be sent to another country for future sale or trade. Therefore, by selling of such goods and services it will increase the producing nation gross output. Export also one of the oldest form of economic grow, and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies. Another process involve in international trade is import, import is a process good or services brought from another country to another. Together with exports, imports also are the backbone of international trade.
Those factors would affected production process to increase more output and economic growth rate also increase. However, keep increasing investment would exceed the marginal product point, the point of the depreciation of growth. Due a country has the limit of factors such as limited land, limited resources and materials, lack of skilled labor, etc. Saving is the main factor for the accumulation of capital and for investment as well in neoclassical production function. Its theory considers saving as a constant fraction of income: S=sY (5) Where S=saving; Y as income and s is saving
It is really important to think that globalization creates the circumstances for development and economical growth but also leads to a number of disadvantages. Below there will be listed clearly the most important pros and contras of globalization. Advantages of Globalization: One of the most important effects of globalization is the inward investment. Many TNCs decide to invest in less developed countries by building a new company or even a factory. ' ' The integration of the workforce in developing countries into global system of production is already raising living standards, improving working conditions and creating more jobs in those countries. '
Exports can improve a country’s position in the balance of trade (Barrett, 1990). When a country exports, they gain access to foreign exchange resources. Additionally, exports enable a county to sell the excess production capacity. This will enhance the economy and will promote global expansion for the local businesses. Exports will also potentially bring stability to otherwise fluctuating market demands.
Nations engage in international trade because they benefit from doing so and the gains from trade arise because trade allows countries to specialise their production in a way that allocates all resources to their most productive use. Trade plays an important role in achieving this allocation because it frees each and every country’s residents from having to consume goods in the same time combination in which the domestic economy can produce them. China’s growing presence in Africa has increasingly become a topic for debate in the international system and among economists as well as policy analysts. China’s presence in Africa and its relations with African countries is primarily driven by economic interests and practical political considerations,
The leading industries in the country are based on agriculture, and more specifically grain milling, beer production, and sugarcane crushing, and the fabrication of consumer goods, with the service sector being the main driver of economic growth. However, Foreign Direct Investment in the Kenyan economy is a relatively low share compared to neighboring countries. According to S. M. Omanwa (2015), “in 2010 only $185 million of foreign direct investments were placed in Kenya, compared to $433 million and $817 million in Tanzania and Uganda respectively.” This is despite the abolition of strong protectionist tendencies followed by the government since 2002, in an effort to increase the investment inflows. Kenya is a member of the EAC (East African Community) which is a regional intergovernmental organization whose other members are the Republic of Burundi, Rwanda, and the United Republic of Tanzania. Since 2010, within this organization the countries have established a common market, an area where the removal of all barriers (such as tariffs), a common external policy and free capital movement allow for trade to flow
The best example to understand the importance of international trade/ business can be seen in China, previously China was a closed economy but after its foreign investment policy, it has made tremendous growth in terms of its economy. Thus, it cannot be denied that international business is very much required for any country’s development and prosperity. Conclusion This paper analyzed the case ‘The Global Financial Crisis and Protectionism’. While doing so, this paper pointed out why calls for protectionism are greater during sharp economic contractions. It then tried to explain why the increase in protectionist measure even during the sharp contraction of 2008-2009 was fairly modest.
Chapter 2 ECONOMIC ANALYSIS This chapter centred on the economic situation in Kenya as higher growth rate when it comes to microeconomic stability and credible policies. The company try to determine and understand the economic ideas by analysing how effective will be the company to increase the investment, decrease the poverty and improving shared success. I. INTRODUCTION Kenya has one of the opened for investments in the world, and has a lot of dilemma that the country is facing off. The company put up a business in Kenya for us to help Kenyatta people to lessen poverty, enjoy and experience the things which they deserve to have better life.
For example, increasing the quantity of land available through land reclamation would promote economic growth, however the difficulty of increasing natural factors and its rather minor effect is cost ineffective. Thus countries often focus on improving the quality of the natural factors, for example through fertilization of land, improving agricultural methods, or better planning of land usage. Encouraging population growth or replacing strict immigration laws and requirements with laxer substitutes may induce an increase in human capital, however such an increase may cause economic problems such as a rise in unemployment, rise in crime rates, etc. Consequently, nations tend to emphasize on improving the quality of the workforce or human capital through improving health care, education, vocational training and unemployment re-training, and provision of fresh water and sanitation. Capital is defined as any form of good or utility that is used to preform economic activity; physical capital focuses on things such as machinery, factory buildings, shops, offices, motor vehicles, while social capital are schools, roads, hospitals, and houses.