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    Managerial Economics Essay Trade Can Make Everyone Better Off. Name-Jay Jhaveri ROLL NO - BD21071

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    Jay Jhaveri
    The document discusses how international trade affects different parties. While economic theory suggests that trade makes all parties better off, in reality some parties can be disadvantaged. For example, when low-cost imports flood a market, local producers may be unable to compete and go out of business, hurting the domestic industry and workers. The document also argues that countries should specialize and trade in areas where they have a comparative advantage, rather than importing goods they could produce themselves. An example given is how cheap dairy imports from New Zealand could hurt India's large but inefficient milk industry. So trade does not always benefit all parties equally in practice.

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    Managerial Economics Essay Trade Can Make Everyone Better Off. Name-Jay Jhaveri ROLL NO - BD21071

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    Jay Jhaveri
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    The document discusses how international trade affects different parties. While economic theory suggests that trade makes all parties better off, in reality some parties can be disadvantaged. For example, when low-cost imports flood a market, local producers may be unable to compete and go out of business, hurting the domestic industry and workers. The document also argues that countries should specialize and trade in areas where they have a comparative advantage, rather than importing goods they could produce themselves. An example given is how cheap dairy imports from New Zealand could hurt India's large but inefficient milk industry. So trade does not always benefit all parties equally in practice.

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    BD21071_EconomicsEssay

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    The document discusses how international trade affects different parties. While economic theory suggests that trade makes all parties better off, in reality some parties can be disadvantaged. For example, when low-cost imports flood a market, local producers may be unable to compete and go out of business, hurting the domestic industry and workers. The document also argues that countries should specialize and trade in areas where they have a comparative advantage, rather than importing goods they could produce themselves. An example given is how cheap dairy imports from New Zealand could hurt India's large but inefficient milk industry. So trade does not always benefit all parties equally in practice.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    47 views2 pages

    Managerial Economics Essay Trade Can Make Everyone Better Off. Name-Jay Jhaveri ROLL NO - BD21071

    Uploaded by

    Jay Jhaveri
    The document discusses how international trade affects different parties. While economic theory suggests that trade makes all parties better off, in reality some parties can be disadvantaged. For example, when low-cost imports flood a market, local producers may be unable to compete and go out of business, hurting the domestic industry and workers. The document also argues that countries should specialize and trade in areas where they have a comparative advantage, rather than importing goods they could produce themselves. An example given is how cheap dairy imports from New Zealand could hurt India's large but inefficient milk industry. So trade does not always benefit all parties equally in practice.

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    MANAGERIAL ECONOMICS ESSAY

    TRADE CAN MAKE EVERYONE BETTER OFF.


    NAME- JAY JHAVERI
    ROLL NO- BD21071

    “Economics is the study of production, distribution and consumption of goods and services” and it
    studies how individual and firms make choices to allocate limited resources in order to generate a
    maximum return. One of the major components while doing transactions is Trade and Mankiw’s
    principle suggests that Trade can make everyone better off.

    The principle is given keeping in mind the bigger picture but there are nuances and instances where
    the principle does not stand true. There have been changes in the society and thinking of various
    parties involved in the trade. No longer countries think about increasing the scope of the business or
    to try and make the available benefits bigger but try to capture competitor’s market share. They are
    in constant tries to shun away the competition and capture their markets even if it is at the cost of
    their own product.

    Earlier trade happened with a purpose of getting a product or service in which a country has
    specialized in and trying to provide a product which the producer has core competence in and wants
    the world to experience that level of product. Nowadays the purpose of trade has changed and it is
    only seen as a source of income. Several countries which have the resources to produce almost
    everything from a pin to piano utilize them in their full potential and try and gain maximum benefit
    out of it as the imports are very less

    Some production superpowers like China follow the similar tactics and try to dump their Chinese
    made products in a country. With production capacity that are very strong and utilized to their full
    potential, they have been able to successfully produce products which are very low in cost. Due to
    these, the countries which they enter, they reach to every nook and corner and make the presence
    so strong that after a certain point of time, it is almost impossible for the vendors to use other
    products as they are costly in comparison to the Chinese products.

    The major problem in the above scenario is that due to the dump of products in the market at a very
    low price, the local products’ sales get affected so much that eventually that company shuts down
    the business due to stiff competition. People lose their jobs and suffer a major financial crisis due to
    the same. A significant example of this is the handloom workers who used to make their own
    clothes. With the availability of cheap machines and products, that industry as a whole has suffered
    a lot and has set them up. Another example of same is the electronics market where the duplicating
    of products is done and then supplied in the market at a very low price and eventually leads to the
    question of survival of that particular company.

    It is very imperative that Trade should act as medium of exchange of products which a country highly
    specializes in. A trade whenever done, it is always beneficial to one party and slightly
    disadvantageous to other which is technically something which is always true. There are instances
    where the country does not require the type of product they are supplying and end up importing a
    huge number of products. This problem has an impact on the economy as a whole and a country
    suffers major financial crisis due to the same. This is a vicious cycle which goes on and on.

    A very basic instance from our daily lives can also be seen wherein we trade something when it is
    beneficial to us more than the other person. We often do not give out or trade in products which
    would be better use to us. This is a classical case of trade that whenever a trade happens, the party
    whose product is required more, would benefit rather than someone who does not require on a
    needful basis.

    Following the principle that trade can make everyone better off, it would not be a problem for any
    country to deal in the product which they specialize in, but this is not always true. An example of this
    would be the scenario of the New Zealand dairy products flowing in India. This is one of the reasons
    why India withdrew from the RCEP policy.

    India happens to be the largest producer of the milk in the world. But the amount of milk it produces
    is not enough to cater to the huge population base it has. So even today, the average cost of milk in
    India per liter lies between 40 to 55 Rs. The industry is growing at very slow rate. The alternative to
    this is to get supply of milk and other dairy products from New Zealand which would bring down the
    cost of milk to meagre 15-20 Rs. In the process, it would harm the production capacity of Indian mil
    producers and people would easily turn to cheaper brands leading to eventual loss in the market
    share of the company which would make it difficult for them to survive in the long run, This is a
    classical example of Trade is an option but technically it would make only a single party better off
    and harm others’ progress in the process.

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