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ECS3702: INTERNATIONAL TRADE
ASSIGNMENT 02
Question 1
Development is the goal of every economy and trade holds the key that boosts absolute gain in
the country’s advancement. There is a consensus on the advocate for trade as an essential device
in every county’s development. Trade trade enhances development as well as reduces poverty
by fostering growth by way of generating better opportunities for commerce and investment.
On the upside, it widens the productivity of the base via development of the private sector.
This is because of the advantages that trade brings to a developing country such as South
Africa.
Poverty reduction and trade: There is a link between trade, development, and poverty.
Poverty is significantly reduced when continuous development is sustained over longer periods
while trade is strongly linked to development. Developed countries are invariably integrated
with global economy; especially the export-kind of development that played important role in
its successful trade strategy.
Increased competition and improvement of local firms as a result of trade: Trade motivates
competition by assisting developing countries to economize the cost of inputs, to obtain
monetary assistance through investments, to expand the value-added of their products and
ascend the global value chain. Since trade makes easy diversification of exports by giving
, Answer prepared by Rangah : 0618441387 (Call or whatsapp for assistance and or
tutorials:
developing countries an entry to newly- opened markets and recent materials that can start new
production, the nature of products produced also improves.
Employment creation and trade: South Africa is reeling from the grip of high youth
unemployment which has crippled the much expansion of economic activity. Unemployment
represents underutilisation of resources and improving utilisation of these resources will solve
some of the problems South Africa is facing. Trade generates opportunities for employment by
encouraging the economic sectors to create stable jobs that result to higher incomes, therefore:
improving livelihoods.
Better international relations: The ongoing Russia and Ukraine war has shown how an
interruption to trade can have ripple effects that reach to all economies South Africa included.
It is therefore crucial that nations realise the importance of symbiotic relationships which
support mutuality and win-win collaborations. Trade can make this possible. Trade makes
stronger relations between nations by assembling people for exchanges of mutual benefits that
contributes to peace and stability.
QUESTION 2
Absolute advantage exist when a country can produce more of a good with the same quantity
of resources than the other country. According to this theory, a country should specialize in the
production of a good which it has absolute advantage, ie, which it can produce more than the
other country.
Comparative advantage exist when a country can produce a commodity at a cheaper cost than
the other country. It exist when it takes a country a lesser opportunity cost to produce a
commodity than the other country.
Given the following table about the production possibilities of two countries:
Lesotho South Africa
Shoes (ton/hr) 3 7
Blankets (ton/hr) 8 4
tutorials:
ECS3702: INTERNATIONAL TRADE
ASSIGNMENT 02
Question 1
Development is the goal of every economy and trade holds the key that boosts absolute gain in
the country’s advancement. There is a consensus on the advocate for trade as an essential device
in every county’s development. Trade trade enhances development as well as reduces poverty
by fostering growth by way of generating better opportunities for commerce and investment.
On the upside, it widens the productivity of the base via development of the private sector.
This is because of the advantages that trade brings to a developing country such as South
Africa.
Poverty reduction and trade: There is a link between trade, development, and poverty.
Poverty is significantly reduced when continuous development is sustained over longer periods
while trade is strongly linked to development. Developed countries are invariably integrated
with global economy; especially the export-kind of development that played important role in
its successful trade strategy.
Increased competition and improvement of local firms as a result of trade: Trade motivates
competition by assisting developing countries to economize the cost of inputs, to obtain
monetary assistance through investments, to expand the value-added of their products and
ascend the global value chain. Since trade makes easy diversification of exports by giving
, Answer prepared by Rangah : 0618441387 (Call or whatsapp for assistance and or
tutorials:
developing countries an entry to newly- opened markets and recent materials that can start new
production, the nature of products produced also improves.
Employment creation and trade: South Africa is reeling from the grip of high youth
unemployment which has crippled the much expansion of economic activity. Unemployment
represents underutilisation of resources and improving utilisation of these resources will solve
some of the problems South Africa is facing. Trade generates opportunities for employment by
encouraging the economic sectors to create stable jobs that result to higher incomes, therefore:
improving livelihoods.
Better international relations: The ongoing Russia and Ukraine war has shown how an
interruption to trade can have ripple effects that reach to all economies South Africa included.
It is therefore crucial that nations realise the importance of symbiotic relationships which
support mutuality and win-win collaborations. Trade can make this possible. Trade makes
stronger relations between nations by assembling people for exchanges of mutual benefits that
contributes to peace and stability.
QUESTION 2
Absolute advantage exist when a country can produce more of a good with the same quantity
of resources than the other country. According to this theory, a country should specialize in the
production of a good which it has absolute advantage, ie, which it can produce more than the
other country.
Comparative advantage exist when a country can produce a commodity at a cheaper cost than
the other country. It exist when it takes a country a lesser opportunity cost to produce a
commodity than the other country.
Given the following table about the production possibilities of two countries:
Lesotho South Africa
Shoes (ton/hr) 3 7
Blankets (ton/hr) 8 4
