Globalization EQ: How does globalization encourage economic interdependence? Comparative Advantage • Which country can make a good cheaper. • In the following example, who has the comparative advantage? Comparative Advantage Minimum Wage – United States $7.25 – China $2.00 Regulations on Producers – United States EPA, OSHA, many more – China Few if any Corporate Taxes – United States 35-39% – China 25% Small Business Taxes – United States 15-34% – China 20% Favorable v. Unfavorable Balance of Trade Imports v. Exports United States Balance of Trade Imports Exports – China 296,402 65,576 – France 34,034 26,522 – Japan 95,949 51,179 – Mexico 176,537 128,997 – EU 281,319 220,776 Protective Tariffs Based on what we have learned about Comparative Advantages and prices other countries can charge while still making a profit, why does the U.S. Government have to place Protective Tariffs on imports? Exchange Rate What the U.S. Dollar is worth compared to currency of other countries. $1 = – Chinese Yuan $6.82 – Mexican Peso $12.32 – Euro $0.75 – Canadian Dollar $1.00 – Japanese Yen $91.99 – British Pound $0.66 What do these exchange rates mean for American tourists to these countries or American companies who sell goods to these countries? Price Comparison Price Comparison Types of Countries Developed Developing Undeveloped World Map International Organizations EU NAFTA WTO IMF World Bank For each one, determine what it stands for and tell what it does and why it was formed.
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