International trade between two countries

International trade between two countries

Trade Analysis: You are required at the end of the semester to submit a final project in which you will analyze international trade between two developed countries. This project has several parts, which are interrelated. The specific topics that you should investigate are listed below. You will perform research on these required topics and provide your analysis. It will primarily encompass subject matter from the latter half of the course but will require understanding of the material from the first half. Be sure to document your research sources properly—do not merely copy tables or material from other sources and present the material as your own. Your mentor has the option of running any of your assignments through originality­ checking software. Also, Wikipedia is not an acceptable research source. You will be penalized for using it. While you are free to use any official source for the data required (as long as it is an official site), potential data sources for the information required include, but are not limited to, the following (please cite the sources used in the project):

International trade between two countries


● For international trade between two countries: ●

For FX rates:

● For an analysis of trading contrasted with competitiveness: Compiling Your Final Project Follow the 7 steps listed below to compile your analysis of international trade between two developed countries. Pay close attention to the “requirements and points to consider” given within each step since your work will be judged on how completely and insightfully you answer each of them. You will also be Copyright © 2014 by Thomas Edison State College. All rights reserved. judged on spelling, grammar, and the overall presentation of your final project based on the instructions and information given here. Your final project should contain the following:

● Title page with your name, date, course code, and name of your mentor.

A brief introduction (50­100 words) to your analysis.

● The main body of your analysis (i.e., your answers to the questions in steps 1­6, below).

● Conclusions (your answer to the question in step 7, below).

● A reference section citing all sources quoted. There is no particular style of referencing that you are required to follow, but whichever one you use, you must be consistent. Steps for Compiling Your Final Project

1. Select two developed countries that have significant international trade with each other. Step 1 Requirements and Points to Consider: You can select any countries you wish but, clearly, more developed countries will have more and better data.

2. For each economy, obtain the following data for the past 10 years (monthly numbers would be ideal, quarterly numbers are required at a minimum): a. Give data on their trade patterns.

Step 2a Requirements and Points to Consider: You should list the value of total imports and exports, and specifically total imports and exports to and from each other. The data should be in the same currency for both countries. Breakdowns could include durables versus non­durables, or specific products. You should be consistent in your analysis here, and all of your analysis to follow should draw heavily on these particular numbers. b. Give data on their total level of imports and exports, with specific detail on their trading with the other country you selected in step 1 above.

Step 2b Requirements and Points to Consider: Your response should include the amount of trade with the other country. Are they running a deficit or surplus with each other? Is there a trend that can be seen? c. Give data on their imported and exported products, with specific detail on the products imported and exported from and to the country selected in step 1.

Step 2c Requirements and Points to Consider: What specific products are traded with each other? There will likely be several products that dominate the accounts, and you should note this. d. Give information on their trading regulations, tariffs, and import quota, with specific emphasis on these aspects as they relate to the other country selected in step 1.

Step 2d Requirements and Points to Consider: You should obtain and describe summary information on major international trade agreements and quotas. This can take many forms. e. Give data on their exchange rate history, with specific data on the exchange rate between Copyright © 2014 by Thomas Edison State College. All rights reserved. the two countries.

Step 2e Requirements and Points to Consider: You should calculate the historical exchange rate between the two countries. You should then convert the quoted exchange rates, which will likely have the USD or the EURO as the base currency, to a direct terms quote (the price of one unit of the other country’s currency in LC prices) relative to each other. One country’s quote will be the inverse of the other’s. Your coursework shows you how to do this. f. Present this information in table form at the end of the project. Step 2f Requirements and Points to Consider: The data should be in table format. An attached Excel spreadsheet would be the most likely type of submission. 3. Describe the trends in each variable above. Contrast the trends between the two countries. What patterns do you see? Write 1 to 2 paragraphs (100­200 words per paragraph) per variable.

Step 3 Requirements and Points to Consider: Your analysis should include, at a minimum: a. All the values required, as well as percentage changes from quarter to quarter or year over year. This should be done for all major trading categories. b. Same analysis as in (a), but showing the value of the trade deficit or surplus with each other. You should also describe the degree of openness of each economy (openness = (exports + imports)/GDP expressed as a percent). How big is this number? The bigger, the more important trade is to their economy. c. A description of the trends in the major trading product categories, showing year over year or quarter over quarter. 4. What has been each country’s approach to international trade?

Step 4 Requirements and Points to Consider: You should describe each country’s approach to trade. Is it relatively open or closed? What trade agreements have been enacted, modified, or canceled in the last 10 years? Has the country been relatively protectionist (numerous or high trade quotas or tariffs) or open (few or low trade quotas or tariffs)? If protectionist, has it been concentrated in a few products or many? You should describe this in terms of products affected. If possible, you should correlate the degree of openness or protectionism with trade numbers. 5. In what products does each country have a comparative advantage? How is this shown in the data obtained above?

Step 5 Requirements and Points to Consider: You should describe the products in which each country has a comparative advantage. This should be consistent with the value/volume of exports in this product. A product in which the country has a comparative advantage should be visible in exports. A possible exception to this is that the country’s demand for this product may exceed its own production, in which case even though there is a comparative advantage, the product may in fact be an import. 6. What strengths and weaknesses do you see? Write 1 to 3 paragraphs of analysis total (100­200 words per paragraph).

Step 6 Requirements and Points to Consider: You should describe what you see as the Copyright © 2014 by Thomas Edison State College. All rights reserved. strengths and weaknesses. Where is the country’s comparative advantage, and is the country’s trade policy consistent with its comparative advantage? If not, why not? 7. What conclusions can you draw from your analysis? Write a minimum of 3 paragraphs (300 words).

Step 7 Requirements and Points to Consider: Is the comparative advantage long term or short term? For example, do they have a natural resource that is being depleted? Are the country’s trade policies conducive to long­term growth or are they prohibitive? You should, in this section, summarize the analysis you have presented in the preceding parts of your project.


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