Module Code & Module Title

CC6001KP Advanced Database Systems Development

Assessment Weightage & Type

20% Individual Coursework

Year and Semester

2019-20 Autumn 4th Semester

Student Name: Prasiddha Pradhan

London Met ID: 18030163
College ID: NP01BA4A180084
Assignment Due Date: 3/march/2020
Assignment Submission Date: 3/march/2020
Word Count (Where Required): 1966

I confirm that I understand my coursework needs to be submitted online via Google Classroom under the
relevant module page before the deadline in order for my assignment to be accepted and marked. I am
fully aware that late submissions will be treated as non-submission and a marks of zero will be awarded.
 “Opening up free trade does hurt people in import-competing industries in the
short run. But in the long run, when people and resources can move between
industries, everybody ends up gaining from trade.” Do you agree or disagree?
Explain.
So before starting on the report for free trade we need to explain and understand what is free
trade? How can it be helpful? What is the importance of it in the business world? And what can
be the drawback of it. The term free trade is based upon Adams Smiths argument that the
division of work among nations leads to noteworthy proficiency, specialization and increase in
production. Free trade or which can be also known as laissez-faire is defined as a policy in which
the government does not impose or discriminate by applying taxes, tariffs or any other subsidies
on import and export [ CITATION bri \l 1033 ]. But in reality in any case the government with free
trade policies approaches despite everything force a few measures to control imports and exports.
The idea of free trade is both cherished and loathed. Few people think that it makes everybody
rich and advances improvement in more poorer countries. Others think that it increases disparity
and gives organizations more power [ CITATION ecn \l 1033 ].

To officially start the report first the question given to us was weather to agree or disagree to the
following statement. Opening up free trade does hurt people in import competing industries in
the short run but in the long run everybody ends up gaining from free trade. Before I give my
prospective about the statement firstly I would like to explain why opening up free trade would
harm people from import competing industries. Free trade can have a negative effect on the
working conditions of the country resulting in low pay and having abusive women and child
labor. By having little to no laws producers from another country can make knock offs of the
products, patents, and branding. There can also be less revenue openings in free trade which in
result make very difficult to small business organization and it also increases risk of currency
manipulation by lowering prices through monetary policy. Free trade can also leave a country
vulnerable, if a country becomes dependent on another country it tends to be liable to political
pressure and denied access to the products if the agreement is unexpectedly cut off [ CITATION
Cra18 \l 1033 ].

Even though free trade has its own negative effective on the economy and people may tend to
agree that there should be some kind of trade restrictions from my opinion I completely agree
that in the long run everybody can be benefitted from free trade. There are many advantages of
free trade in long term effects which helps to increase prosperity for many countries and citizens
of all the participating countries and many industries as well [ CITATION mer18 \l 1033 ]. Free
trade in the long run helps to open up new markets to support industries and drive forward the
advancement of the middle class. While many people believe that having taxes and tariffs helps
to secure employments there is also the possibility to raise the cost of products for consumers
and slow progression of innovation that could harm the economy [ CITATION Ric18 \l 1033 ].

Free trade in the long run helps consumers and business organization to improve access to a
more extensive scope of technologies, services and innovation. By having the benefits of free
trade countries can also have the benefits of foreign investment. When a country removes a
certain rule or in another words a barrier other countries or more so a company can invest
willingly in other countries or other industries, by having the opportunity of foreign investment
there can be new ventures, openings and partnership in result creates satisfying associations with
different governments [ CITATION fut \l 1033 ]. It also improves productivity and development.
Free trade works with other market procedures to move laborers and resources, as a result which
helps in increase of wages, and making new openings which creates more employment
opportunities [ CITATION dfa \l 1033 ]. Free trade in the long run offers consumers access to a more
significant level of ability, for example when a organization or multiple companies are operating
in worldwide affairs they can have more access to information. This information allows them to
make increasingly compelling procedures that will in the long run help them to save money since
they can reduce the expenses [ CITATION con19 \l 1033 ]. One of the most important things in a
trade agreement is employment safety, this outcome is particularly important when employees
work in a specified industry for example mining, assembling and oil business. At the point when
workers can remain safe on work they can be more productive as a result earning more profit and
helping every association to improve its primary concern [ CITATION con19 \l 1033 ]. If people
keeps using free trade, the long run effects can be very useful in the effective distribution of
resources for example countries like Brazil, Russia, Canada, Indonesia and Columbia are very
rich in water resources and can of little value for them but countries like Bahrain, Jordan,
Kuwait, Malta and Yemen which lack water resources is very priceless to them. With the help of
free trade these type of resources can be delivered to countries which can be very valuable to
them [ CITATION Mar06 \l 1033 ]. In United States of America product they produce are less
expensive and have better quality because they import parts and crude materials which in fact
helps to lower the cost of the product and improve the quality [ CITATION JEF16 \l 1033 ].

The long term effects of free trade can also be beneficial in the sector of training and vocational
education especially for developing countries. By having proper training and education people
can have the skills to fulfill the needs of the private segment, skills like in cooking, mechanics,
construction, accounting etc which can be very useful for the economic growth in the long run
[ CITATION Chr16 \l 1033 ] . In the long run free trade can also help the environment, it is assumed
that free trade degrades the environment but it is not the case rather by having open trade policies
technologies which helps to improve the environment can be widely and cheaply diffused
[ CITATION ifr \l 1033 ].

Now we are going to explain about the comparative advantage of international trade theory and
its impact in free trade. Comparative advantage theory is about countries which is able to
produce or create a product at a lower cost than another country [ CITATION 1320 \l 1033 ] .
Comparative advantage plays a very important role in international trade and structures why free
trade is valuable to nations. Comparative advantage shows that regardless of whether a country
appreciates a dominance in the creation of goods, trade can be still gainful to both trading parties
[ CITATION cor3 \l 1033 ]. For instance let us say that Italy has a comparative advantage in cheese
due to climate and suitable land for cows. South Korea has a comparative advantage in
technology because they have many labors. If there is an opening of trade between South Korea
and Italy, Italian cheese makers will have high cheese prices and increase its production. Many
Italian cheese will be sold in Korea. Italian consumers will see inexpensive technology products
from Korea. Cheese is excess in Italy and trade allows to move into an area where cheese is
expensive and scare in supply, the same goes to South Korea as well. A country that has
practical experience in their comparative advantage in free trade is able to understand that higher
output gains by exporting the good in which they appreciate a comparative advantage and import
goods in which they endure a near drawback.

And now we are going to describe on how Heckscher Ohlin model impacts free trade in short
term and long term. The Heckscher Ohlin model otherwise also known as the H-O model is a
hypothesis in where international trade recommends that countries export those goods which are
in plenitude and which they can create effectively [ CITATION wal \l 1033 ] . According to the
Heckscher Ohlin model while many people are occupied with an import competing industry
loses in the short run, that won’t be the situation in the long run effect because there is move in
factors of production from import contending industry that endured losses to the export industry
that picked up benefits. Moreover, it is realized that when many factors of production for
example like land, capital and labor are being utilized in an import contending industry there will
be gains and losses in both export industries and import industries in the long run. For instance
agricultural imports results in unexpected losses for many people engaged in agriculture like
workers and land owners, but laborers may gain and land owners may lose in the long run
effect[ CITATION ISH \l 1033 ]. This model also explains how a country should trade when assets
are imbalance throughout the world. So with access of free trade countries can adjust to capital
merchandising, which would not be conceivable if every nation just sold products internally.

Secondly, traditional theory models accept that there are no market failures. All the more
explicitly they expect that the market is omnipotent and functions perfectly in perfect
competition market. But in reality this is not the case and it is impossible for these premise to be
fulfilled. All of the things considered increase of benefits will come from trade even if there are
many failures in the market[ CITATION ISH \l 1033 ].

The theory based on David Ricardo’s concept of comparative advantage was very popular in the
West and shaped the reason for development of the GATT/WTO. Mercantilism which was very
dominated at the eighteenth century was now commonly dismissed by Western economists
today. However, there are number of countries especially in some Asian countries and countries
in the Far East have sought after neo mercantilism model in which they try to develop aggressive
expansion of exports, combined with an exceptionally decrease of import barriers. These
countries try to develop powerful export industries by protecting their local industries from
foreign competitions but they often include currency manupulations. The achievement of certain
nations seeking after a neo mercantilist strategy doesn’t invalidate the law of comparative
advantage. In fact, the reason these nations are successful is they focus on industries where they
can create a comparative advantage. For example Japan was very successful with its neo
mercantilist methodology until the 1990s, However Japans economy has been stagnating and
many economists believe that Japan should change its way to deal domestic demand as opposed
to concentrating on export markets[ CITATION Wil20 \l 1033 ].
 CONCLUSION
The above statement has shown that many countries can be benefited in production and trade by
their comparative advantage. Obviously this should be done in an adaptable and not in an
unbending way, considering the innovative speed impacts of various ventures [ CITATION Jul20 \l
1033 ]. Today many economists believes that law of comparative advantage to be one of the key
standards of economics. However, they are few significant provisos to the law of comparative
advantage that are often overlooked. Secondly Ricardo and other economists based their theories
in trade didn’t think about trade in factor of productions. The ramification of trade in factors of
productions will happen totally in a shorter timespan than would occur under trade in goods
only[ CITATION Wil20 \l 1033 ].It is to be noted that Heckscher Ohlin model recommends free trade
and no government interference are not themselves adequate to give important incentives to
producers so they completely utilize the accessible assets and produce and exchange according to
comparative advantage. Developing countries cannot depend only on market powers and an
adjustment in the example of specialization to quicken demand for labor thus engrossing
unemployment[ CITATION Jul20 \l 1033 ]. Free trade does have its own demerits and harm many
import competing industries resulting to political issues, manipulation and unfair working
conditions but in the long run free trade helps industries and drive advancement of some certain
countries through innovation, technologies, services and other factors. Therefore I believe with
my statement that everybody will gain from free trade in the long run.

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