Sample Economic Paper on Foreign Trade

  1. Foreign trade is an important element of any country’s economy and the economic indices by which economic performance and conditions are measured are heavily reliant of exports and imports. A self-sufficient country would be characterized by minimal importation of goods, mostly for production purposes rather than consumption. Though this would produce favourable figure for measures such as GDP, it would have negative effects on the economy. Lack of foreign trade would mean that demand for local currency would reduce since it is only useful in its country. As a result, excess supply of currency would characterise the market leading to cost push inflation. Eventually the currency will lose value and the country will enter into an economic recession.
  2. Most liberal markets are characterized by lack of or very minimal government interventions in business, leaving the forces of demand and supply to operate freely in the market. These forces work to correct excesses and shortages over time, until and equilibrium price or quantity is achieved. Once this equilibrium is achieved, prices remain relatively stable until either the price or quantity of the product is affected by other factors such as failed seasons. In these case the process repeats itself until an equilibrium is achieved once more.
  3. While it is inhumane to benefit from others’ misfortunes, economics does not follow such principles. Suppose one of two companies competing for the same market share is unable to keep up with the competition and shuts down, would the other company come to its aid or maximise on its exit? Economically, the other company would even offer to buy off the besieged company. As a result, it is indeed wrong to profit from the misfortunes of others but in business and economics, this principle is null and void.
  4. The draft shall work to favor both the owner and player and depending on the performance of either the team or the player. This is because players in his team cannot be lured to other teams since the regulations prevent the transfer of players once teams are assigned. An out of form player would however benefit from the arrangement since the draft provides him with a sort of security of tenure while in the team. At such a time the team owner would want to bring on additional players to strengthen the team or even get rid of non-performing players. The regulations however prevent this from happening and therefore the arrangement works for and against both stakeholders.
  5.  The service industry tends to work quite differently from the physical goods industry. Most service industries operate outside the scope of demand and supply principles as evidenced by the golf instructor. The doctor charges high fees for services probably to recover monies and other resources utilized during the course of the study and establishment of the health facility. The golf instructor similarly charges high fees for services rendered, not because of the input costs in course of learning the trade but simply because the clientele can afford it. Economics is all about minimizing input and keeping costs down while maximizing output and increasing revenues. The golf instructor is well aware of such principles and while most people would change doctors for high fees, most golfers do not feel the pinch of paying the instructor.