Global Tade and the South African Market
MBL916Q - Economics and the Global Business Environment
GROUP ASSIGNMENT 2
by
Group PTA0714A
Name
Surname
Student No
Percentage
Lonell
Swatton
78268834
100%
Johann Everd Arthur
Koch
78353386
100%
Marelize
Potgieter
71572619
100%
Jan Harm Thomas
Schutte
71572597
100%
Johan Hendrik
Swart
78338301
100%
Gideon Petrus
Coetzee
78318920
100%
Fihliwe Prudence
Mhlabane
78304385
100%
Malwandla
Siweya
78328454
100%
Date of submission:
2014-09-11
TABLE OF CONTENTS
1. Question 1
The Author concerned about the US trade deficit with China. Which is better for a country a trade deficit or a trade surplus?
Mankind has always had an attitude that more is better. The person/tribe/country that had more land/money/armies was the stronger and more powerful entity; more was good! This ethos was echoed in the words of Sir Thomas Smith: ‘We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.’ (Braudel, 1979) The world has always believed that trade surplus means you have more of what the rest of the world wants, and in turn that means you are the stronger country. Unfortunately, it is no longer that simple; modern civilization has progressed to a giant chess board where global strategies are involved to determine true strength.
Thus the debate begins between trade deficit and trade surplus. The question now is which theory is correct?
Participating in a global market results in the entire trade industry running in balance, in order for someone to buy something someone else has to sell it. This market format creates the inevitable scenario whereby countries or entities are identified that are the most productive and encourages further production to take place in those areas. (Alessandria, 2007) A good example is China; they have become adept at producing most of the world’s goods at a very low cost. Globally money tends to flow towards
GROUP ASSIGNMENT 2
by
Group PTA0714A
Name
Surname
Student No
Percentage
Lonell
Swatton
78268834
100%
Johann Everd Arthur
Koch
78353386
100%
Marelize
Potgieter
71572619
100%
Jan Harm Thomas
Schutte
71572597
100%
Johan Hendrik
Swart
78338301
100%
Gideon Petrus
Coetzee
78318920
100%
Fihliwe Prudence
Mhlabane
78304385
100%
Malwandla
Siweya
78328454
100%
Date of submission:
2014-09-11
TABLE OF CONTENTS
1. Question 1
The Author concerned about the US trade deficit with China. Which is better for a country a trade deficit or a trade surplus?
Mankind has always had an attitude that more is better. The person/tribe/country that had more land/money/armies was the stronger and more powerful entity; more was good! This ethos was echoed in the words of Sir Thomas Smith: ‘We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.’ (Braudel, 1979) The world has always believed that trade surplus means you have more of what the rest of the world wants, and in turn that means you are the stronger country. Unfortunately, it is no longer that simple; modern civilization has progressed to a giant chess board where global strategies are involved to determine true strength.
Thus the debate begins between trade deficit and trade surplus. The question now is which theory is correct?
Participating in a global market results in the entire trade industry running in balance, in order for someone to buy something someone else has to sell it. This market format creates the inevitable scenario whereby countries or entities are identified that are the most productive and encourages further production to take place in those areas. (Alessandria, 2007) A good example is China; they have become adept at producing most of the world’s goods at a very low cost. Globally money tends to flow towards
References: Alessandria, G., 2007. Philadelphia Fed. [Online] Available at: www.philadelphiafed.org Amadeo, K., 2010. Beyond the Great Recession - What Happened and How to Prosper. s.l.:World Money Watch. Braudel, F., 1979. Civilization and Capitalism 15th-18th Century. s.l.:University of California Press. Case, F. O., 2014. Principles of Economics. 11th ed. Essex: Pearson. Complexity, O. o. E., 2014. Learn More About Trade in South Africa. [Online] Available at: http://atlas.media.mit.edu/profile/country/zaf/ D Bier, I. O., 2011. Forbes. [Online] Available at: http://www.forbes.com/sites/realspin/2011/09/18/two-cheers-for-a-big-u-s-trade-deficit/ Economic Policy Institute, 2012. The China Toll. [Online] Available at: http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost Ensor, 2014. Business Day. [Online] Available at: http://www.bdlive.co.za/business/trade/2014/03/12/bilateral-trade-with-china-on-the-i... Friedman, M., 1978. Free Trade: Producer vs Consumer. s.l.:Kansas State University. Hill, C. W., 2012. International Business: Competing in the Global Marketplace. New York: McGraw-Hill/Irwin. Hill, C. W., 2012. International Business: Competing in the Global Marketplace. 1st ed. New York: McGraw-Hill/Irwin. International Monetary Fund, 2012. International Financial Statistics CD-ROM, Washington: International Monetary Fund. Kaplan, M., 2010. Social Media Blogs. Tourism Management, 53(6), pp. 171-181. Krugman, P., 2009. Chinese New Year. [Online] Available at: http://www.nytimes.com/2010/01/01/opinion/01krugman.html?_r=0 Maswanganyi, N., 2014. BD Live. [Online] Available at: http://www.bdlive.co.za/economy/2014/04/01/weaker-rand-starting-to-benefit-exports Mohr, P. & Fourie, L., 2008. Economics for South African Students. 4th ed. Pretoria: Van Schaik. OpenStax, 2013. Openstax. [Online] Available at: http://cnx.org/contents/290ff999-28a3-46ec-b85d-ca56628c384b@5 Pettinger, T., 2011. Economics Help. [Online] Available at: http://www.economicshelp.org/blog/2671/economics/factors-affecting-economic-growth/ Roodt, D., 2012. Be careful what you wish for. Efficient Advise Insight, January. Roodt, D., 2013 Saville, 2014. Mail & Guardian. [Online] Available at: http://mg.co.za/print/2014-03-07-00-why-a-weak-rand-wont-save-us United States Census Buro, 2014. Top Trading Partners - May 2014. [Online] Available at: http://www.census.gov/foreign-trade/statistics/highlights/top/top1405yr.html#imports