International Trade Simulation
November 4tn, 2012
International Trade Simulation
In order to take the next step in economic success Rodamia will need to analyze the advantages and limitations of international trade. Rodamia has the benefit of having the largest land mass compared to our neighbors. As a country we rely on three main areas for economic stability. These areas are agriculture (corn, wheat, and cotton), services, and industry. Neighboring countries Alfazia, Uthania, and Suntize vary in size and economic stature. Alfazia mainly relies on the strength of agriculture, while Suntize is a hot bed for tourist attractions, finally ...view middle of the document...
While neither of these countries hold an absolute advantage the ability to trade and allow more domestic products to be purchase and sold holds benefits to all those involved.
Through this international trade all countries involved will be able to focus on the production of goods being traded. This focus on increased production would be normally what the country is most efficient at. If Rodamia opens international trade with Uthania in the form of cheese and corn both countries would benefit in the form of more of these goods. While trading these they could then have more resources and separate them between other sections they currently do not have a trade agreement with. Another option Rodamia could pursue is that of a free trade agreement. On January 1, 1994 an agreement was reached between the United States, Canada, and Mexico to remove most barriers and investments between the three ("USDA", 2012). If Rodamia were to create a similar agreement with the neighboring countries it is possible to stimulate more trade and economic growth between the countries. With stimulation from trade the is also the possibility for other determining factors. Political issues can either be strengthened and become tenuous with trade.
The comes to the limitations or disadvantages that arise when other individuals take advantage of other participants. Further investigation found that Suntize engaged in illegal dumping practices in Rodamia. This type of act can create tension between the countries and can harm future international trade between the countries and even have fines levied for this. With the prices being much lower, other countries involved such as Rodamia, Uthania, and Alfazia are at a disadvantage because of the unfair dumping in price. On the other end of the spectrum consumers at the final end of the product will reap the reward of lower priced merchandise and might not mind too much compared to the government. Rodamia must use quotas and tariffs to recoup some of the loses from the dumping. With this type of implementation the exchange rate between countries could affected as the agreement might have all countries be susceptible to these quotas and tariffs. This type of measure can set the exchange rate, and according to "Investopedia" (2012), "Exchange rate controls set the exchange rate of a nation's currency above the market rate. This makes the...