1.

Evalúe los fundamentos requeridos para que este producto cumpla con el modelo
de Teoría de Ventajas absolutas. Desarrolle los supuestos necesarios
Para indicar que mi producto de exportación tiene ventaja absoluta, en primer
lugar debería estar dentro de un comercio donde no existan aranceles e
impuestos, es decir un mercado de libre comercio; el no arancel o impuesto hace
que mi producto de exportación reduzca sus costos por ende es más productivo.
Además mi empresa tendría que especializarse en la producción de papa
deshidratada; siendo este mi producto estrella, es decir mi comercio con el exterior
solo sería vendiendo únicamente papa deshidratada debido a que soy más
eficiente, gracias a que requiero menor cantidad de trabajo para producir papa
deshidratada que otro países.

2. Desarrolle el Diamante de Porter para esta empresa, especifique cada uno de sus
componentes. Usted puede utilizar información de una determinada empresa del
rubro. (4puntos)
 3. Evaluate the level of foreign exchange in Bolivia (Foreign exchange as a
percentage of GDP), analyzing the components of the Balance of Payments of that
country for the last two years. (4 points)

The components of the Balance of Payments

 Current and Capital Account :

In 2017.- The Balance of Payments presented a need for financing of 6,3 percent of the
GDP (in its current and capital accounts) and effective financing of 7,3 percent of GDP in
the financial account .
On the other hand, The Trade Balance presented a deficit of $855 million as of December
of this management, slightly less than the 2016 management. This result is due to the fact
that exports presented an increase greater than imports. So, almost 50 percent of the
accumulated deficit occurred in the first quarter, to reverse in the subsequent quarters.

In 2018.- This year the current account represented 4,9 percent of Bolivia’s GDP. The
decrease in the current account deficit as a proportion of GDP is mainly explained by the
improvement in the terms of trade that led to a major rebound in exports greater than
imports, as well as the result of the Primary Income that reflected lower reinvested profits
in the mining sector, due to a lower price of some minerals. On the other hand, Secondary
Income contributed positively to the current account, basically for family remittances
received.

 Financial Account:
In 2017. - The financial account presented a net emission of liabilities higher than that
recorded in the past management. To the fourth quarter of 2017, in the case of Direct
Investment positions the economy of Bolivia as the country in emit a net of foreign
investment liabilities. This result is explained by an increase of net flows of direct
investment liabilities ($389 million) and a slight contraction in Direct Investment assets ($9
million).

In 2018.- The financial account presented a net emission of liabilities of $2,944 million,
higher than in 2017 ($2,603 million), also a reduction in reserve assets, to lower liabilities
in portfolio investment and other investment. The Net Direct Investment in Bolivia reached
$344 million in 2018, a result that positions the Bolivian economy as a net recipient of
foreign investment.
4. ¿What strategic alliance alternatives does Bigpapa have with companies that
belong to the Comunidad Andina? Support your response and use your knowledge
of Economic Integration. (4 points)

The alliance strategies that Bigpapa could have:

Common Market.-
According to the economic integration, in this case, there is a free movement of the
production’s factors, I will talk about the labor factor. So the migration and human mobility
will be a strategy with which Bigpapa could get the facilitation of increase to its employees
if in the future Bigpapa would have to require it. Also the countries that belong to the
Comunidad Andina, not all them have the same currency, this also implies the exchange
rate of each country to our currency, for example the change of the Sol with the currency
of Ecuador (the dollar being its national currency ) or in this case that Bigpapa will have
export trade with Bolivia, taking into account that the Sol actually equals 2.03 Bolivianos,
therefore we can infer that there will be a group of people interested in migrating from the
country or immigrating to another country, depending on the requirement and wage
compensation of work.
Actually there are regulations that cover the ease of mobilization between the countries
that belong to the Comunidad Andina:
 Decision 709: Modification of the Decision 504.
 Decision 583: Andean Social Security Instrument.
 Decision 550: Andean Council of Identification and Marital Status.
 Decision 548: Andean Cooperation Mechanism on Consular Assistance and
Protection and Migration Issues.
 Decision 545: Andean Labor Migration Instrument.
 Decision 526: Airport entry windows for nationals and foreigners residing in the
Member Countries.
 Decision 504: Creation of the Andean Passport.
 Decision 503: Recognition of national identity documents.
 Decision 502: Binational Border Assistance Centers.
 Decision 501: Border Integration Zones.
 Decision 439: General Framework of Principles and Standards for the
Liberalization of Trade in Services.
  Decision 398: International Passenger Transportation.
 Decision 397: Andean Migration Card.
 Resolution 527: Modification of the Content and Format of the Andean Migration
Card.
 Resolution 1546: Regulation of Decision 548 Andean Mechanism for Cooperation
in Consular Assistance and Protection and Migration Issues.

Free trade area and Customs Union:

Trade and Customs Facilitation. - This strategy will allow us to facilitate trade because, as
we saw in class, the customs union talks about countries adopting a common tariff. So in
the Comunidad Andina this is called NANDINA Common Nomenclature, it is about to the
existence of common regulations for the determination of customs duties and taxes. It is
also important to mention that this measure of economic integration helps both importers,
exporters or producers in the countries that belong to the Comunidad Andina because, for
example: Bigpapa produces and exports dehydrated potatoes, for production needs inputs
that may be needed It is convenient to import it because it has lower costs, so Decision
617 will also protect the free movement of goods, it was said making use of borders, ports
and / or airports.

5. Explain whether there is a creation or diversion of international trade for this type of
export, consider the issues developed in the previous lessons and support your
response. (4 points)

Since economic integration mutually agrees on equality between tariffs. So, I will guess
that some companies will be more efficient than others, that is, they have a lower labor
requirement because they have a better technological factor. According to Dominick
Salvatore (1992) one of the effects of the growth of the technological factor could be
labor-saving by nature, so it will be saving in capital that is invested to pay workers with
that factor.

Taking into account the growth of the technological factor, there will also be companies
from other countries that will not have this factor, in this case, for example, Bolivia does
not have the same technological resources as Bigpapa, so Bolivia will decide to
replace its national production of dehydrated potatoes with Import of my production.
For Bolivia it will also be beneficial because it will have a long-term growth biased to its
import good, this means that Bolivia's terms of trade will be positive. Finally,
 consumers in Bolivia will be able to acquire the import product, giving rise to the
income and substitution effect.

Banco Central de Bolivia. (2018). Reporte de Balanza de Pagos y Posición de Inversión

Internacional. Recuperado de
https://www.bcb.gob.bo/webdocs/publicacionesbcb/2018/05/52/Bop_2017.pdf
Banco Central de Bolivia. (2019). Reporte de Balanza de Pagos y Posición de Inversión
Internacional. Recuperado de
https://www.bcb.gob.bo/webdocs/publicacionesbcb/2019/07/17/Bop_2018.pdf
Comunidad Andina. Ámbitos de Acción. Recuperado de http://www.comunidadandina.org/
Krugman, P.& Obstfeld, M. (2006). Economía Internacional: Teoría y Política (7ª ed.).
Madrid, España: Pearson Educación.
Salvatore, D. (2007). Economía Internacional (9ª ed.). España, Mexico: Limusa