Question

AGBU440-01 Agricultural Policy

Using the theory of trade you have learned, why do nations trae? Describe the resource endowments between stages, regions, countries that enable trade.

Watch on Youtube the video, "Trumo vs. Friedman," and describe the differences between free trade and protectionism.

Answer 1

Countries trade with each other when ,on their own ,they do not have the resource ,or capacity to satisfy their own needs and wants..By developing and exploiting their domestic scarce resources ,countries can produce the surplus and trade this for resources they need .The countries abundunt raw material agricultural mainly can export the agro products and trade with a capitalised country to gain other specialised resources.Similarly a high human resource country can produce Labour intensive products .Resources endowment is commonly understood as the amount of land ,Labour ,capital and entrepreurship that a country possesses and can explore for manufacturing.The resoucse endowment that facilitate trade can be conducive soils,ideal weather conditions and sparse populations for example CUBA and Brazil primarily grew lucrative products such as cotton ,coffee and sugar but lack capita intensive facility .Similarly US and Canada have developed their human resources through education and boosted productivity.. The difference between free trade and protectionism are as: In free trade government do not discriminate against imports or exports using tariff. Where as protectionism favours high tariff to support local industry .

Price is determined by the demand and supply in free trade .Whereas in protectionism there is controlled pricing strategy of the government.free trade favours globalisation where as protectionism is basically restrictions globalisation.