Trade Liberalization Case Study

Hong et. al (2008) Added that by entering into trade liberalization agreements, exporting industries could increase their marketing expenditure to the exporting country as they had lower tax rates to pay. Fosu (1990) found that trade agreements enabled the home country to concentrate investment on the sectors that had a higher competitive advantage. Trade liberalization has is known to bring benefits to the financial sector as well. By increasing exports, a nation is able to accumulate additional foreign exchange (Kemal et al 2002), promote additional saving and investment (Todaro, 2000) which may lead to an additional growth of exports thus creating a virtuous cycle.

A country can attract foreign direct investment by devaluing the currency because foreign direct investment will benefit from the weakness of the currency of the host country. The depreciation of the national currency against the Malaysian Ringgit foreign investors will increase foreign direct investment inflows. The exchange rate is one of the most important factors that affect trade between the countries. If the exchange rate rises, banks are relatively more favorable to the exporter, the exporter will be aware to changes in exchange rates. Statutory corporate tax rate is used as a proxy for the effects of fiscal policy to all new investors, ignoring tax holidays, accelerated depreciation and other incentives that reduce the effects of the statutory rate.

Also, China freed the yuan from a dollar peg, letting it float within a tightly managed band. Also conservative Hu-Wen Administration began to reverse some of Deng Xiaoping's reforms in 2005. It shows that the government adopted more egalitarian and populist policies. It increased subsidies and control over the health care sector, halted privatization, and adopted a loose monetary policy, which led to the formation of a U.S.-style property bubble in which property prices tripled. The privileged state sector was the primary recipient of government investment, which under the new administration, promoted the rise of large "national champions" which could compete with large foreign corporations.

Trading company must be profitable. Not only that, all the businesses produce lots of product and because of employment rate is higher, economics growth rapidly. To prevent saving money in a bank, the central bank conducts a monetary policy and low interest rate encourage people to spend more money. Fiscal policy is conducted too. As was When Government expenditure cut for trying to stop stagflation that causes of economic down turn in stagflation, it is important to stimulate the supply side for that company have to create a new effective machine and reduce cost of manufacturing then aggregate demand of other countries will up.

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.

The change of economic policies have gained a significantly improvement in government planning and interest in foreign investment was greatly increased, especially in special economic zones with taxes and regulations exempted in which they became one of the key factors to push the growth of the national economy in China in early 1990s. In 2000s, structural change and globalization meant large-scale privatization continued, Chinese government reduced trade barriers and tariffs with foreign countries in order to increase international trade and more foreign investment in China. Furthermore, China became the member of World Trade Organisation in December 2011 and the economic system consisted of more than 50% of GDP contributed by private sector in 4 years time, first time to surpass Japan, which was the largest economy in Asia by

Countries like China, japan and Taiwan has improved their efficiency in production and are able to reduce the price of the product, and India being country with huge consumer base and high Demand has become their prime market. Also the goods produced by Indian manufacturer are being exported to neighbouring countries like Bangladesh; Srilanka, Nepal has made India to focus in Asian countries for their trade. Conclusion India has always followed a development model for its International trade since the liberalization in 1990s.The services sector in India has shown a tremendous growth which can be attributed to ever increasing IT sector in India. Manufacturing sector on the other hand has grown in comparatively slower pace. The overall performance of the Indian manufacturing sector has widespread implications for various aspects of the economy; employment, being one of the chief areas of impact.

Poverty - is a huge problem in the world. Countries all over the world are trying to decrease poverty rate. Between 1981-2004, China took off more than 600 million people out of poverty (China Poverty Reduction, 2010). China’s poverty overall has gone down because of government investments into an economy, which resulted in rapid growth and urbanization. Chinese government implemented series of social programs in order to sustain rapid economic growth.

Introductions International trade refers to a country trade goods and services to another country. International trade open up the world potential market to increase producer sales quantity and increase competition on foreign country. apart from these, international trade will create job opportunity and hence reduced unemployment rate as well as positive balance of payment. however, it might bring negative effects to a country as well, therefore, government play an important role in implementing trade restriction on imported goods in order to prevent imported goods destroy the domestic market or at certain extend, monopolize the market. 94 words A ) Discuss the forms of restriction on international trade.

Multinational corporations had brought numerous opportunity to developing country such as job opportunity, increasing guarantee at employment rate. It is benefited for developing country to improve the economy. According to Management development in international companies in China (Stephen T.K. Li, 1999), China is obtained 10% average annual by multinational companies and foreign companies create over 8 million job opportunity to China people, most importantly, China had a low employment rate before multinational companies enter into China. Consequently, the international companies are benefited to developing economy to developing