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Economists today think that factor endowments matter, but that there are also other important influences on trade patterns Baldwin, Recent research finds that episodes of trade opening are followed by adjustment not only across industries, but within them as well. The increase in competition coming from foreign firms puts pressure on profits, forcing less efficient firms to contract and making room for more efficient firms.
Expansion and new entry bring with them better technologies and new product varieties. Likely the most important is that trade enables greater selection across different types of goods say refrigerators. This explains why there is a lot of intra-industry trade for example, countries that export household refrigerators may import industrial coolers , which is something that the factor endowment approach does not encompass.
There are clear efficiency benefits from trade that results in more products—not only more of the same products, but greater product variety. An even greater benefit may be the more efficient investment spending that results from firms having access to a wider variety and quality of intermediate and capital inputs think industrial optical lenses rather than cars.
By enhancing overall investment and facilitating innovation, trade can bring sustained higher growth. Indeed, economic models used to assess the impact of trade typically neglect influences involving technology transfer and pro-competitive forces such as the expansion of product varieties.
That is because these influences are difficult to model, and results that do incorporate them are subject to greater uncertainty. Where this has been done, however, researchers have concluded that the benefits of trade reforms—such as reducing tariffs and other nontariff barriers to trade—are much larger than suggested by conventional models. Trade contributes to global efficiency. When a country opens up to trade, capital and labor shift toward industries in which they are used more efficiently.
That movement provides society a higher level of economic welfare. However, these effects are only part of the story. Trade also brings dislocation to those firms and industries that cannot cut it. Firms that face difficult adjustment because of more efficient foreign producers often lobby against trade. So do their workers. They often seek barriers such as import taxes called tariffs and quotas to raise the price or limit the availability of imports. Processors may try to restrict the exportation of raw materials to depress artificially the price of their own inputs.
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By contrast, the benefits of trade are spread diffusely and its beneficiaries often do not recognize how trade benefits them. As a result, opponents are often quite effective in discussions about trade. Reforms since World War II have substantially reduced government-imposed trade barriers. But policies to protect domestic industries vary.
Tariffs are much higher in certain sectors such as agriculture and clothing and among certain country groups such as less developed countries than in others. Many countries have substantial barriers to trade in services in areas such as transportation, communications, and, often, the financial sector, while others have policies that welcome foreign competition.
Moreover, trade barriers affect some countries more than others. Now in its third edition, this completely updated classic has been expanded to included all new advice on e-mail and the e-writing world, plus a fresh point of view on political correctness. This is a great introductory read for anyone who wants a broad overview on business writing, as well as a refresher course on effective communications.
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Feeds from social networking services such as Facebook and Twitter provide a snapshot of events happening around the world from the viewpoint of first-hand witnesses, and blogs and citizen news sources offer analytical perspectives from the ground faster than print or television can provide. Paul Mason, economics editor on BBC2's Newsnight , uses these tools to get an angle on what's happening and what's important.
None the less, such tools are still only one element of the news-gathering process. This may mean that large organisations appear to break stories days after they've appeared on Twitter. They're trained to see what they want to see. If you only rely on Twitter or Facebook, you might end up howling with the wolves. Indeed, in , American TV networks found themselves in a very public mess when they reported the "Twitter line" on the story of a killing spree by Major Nidal Malik Hasan at Fort Hood US army base — that the killer had terrorist links.
The details turned out to be false. Eudes's caution does not mean he discounts the value of the tools the web offers its army of citizen journalists; Le Monde was one of the organisations, along with the Guardian , that worked with Julian Assange to publish the WikiLeaks cables last year.