Globalization and Economic Plan

Running head: GLOBALIZATION
Globalization
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer to question 1.......................................................................................................................2
Answer to question 2.......................................................................................................................2
Answer to question 3.......................................................................................................................2
Reference list...................................................................................................................................2

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Answer to question 1
Economic plan: One Belt One Road
One Belt One Road is a part of universal development strategy initiated by the Chinese
government in 2013. Approximately seventy countries along with other international financial
organizations in Europe, Asia and Africa are the proposed investors for this structural
development project. Xi Jinping, the Chinese President, announced this structural initiative on
his official visit to Kazakhstan during 2013. Here, ‘Belt’ stands for the road construction and rail
transportation, while, ‘Road’ stands for sea route. The entire construction project is segregated
into North, Central and South belt, which in turn, integrates China with the Central Asia through
Nurly Zohl infrastructure program.
Objectives
This global infrastructure is subject to some following important objectives. These
objectives include:
Integrated market structure: This global initiative is aimed at developing a unified market
framework combining with both the international and domestic market. In this way, cultural
integration, capital inflows and technology will be enhanced (Voinescu and Moisoiu 2015). As
far as the database is concerned, this largest road construction has dealt with around 40% of
global GDP in 2013. Improvement of the real estate, education, construction materials and
human capital is stated as the initial objective of the belt and road construction.
Huge infrastructure investment: Infrastructure corridor is proposed to encompass
approximately sixty nations across Asia, Europe, Oceania and East Africa. The expected cost for
the initiative is projected between $4 and $8 trillion. Asian Infrastructure Investment Bank

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(AIIB) and Silk Road Fund are the principle fund providers for this international corridor work.
For instance, five central Asian countries, Kazakhstan, Tajikistan, Uzbekistan, Kyrgyzstan and
Turkmenistan have been reported to invest approximately $140 million for 261 constructions
projects under the BRI initiative.
Mitigation of infrastructure gap: According to the policymakers, this will accelerate the
economic progress of Africa, Asia Pacific countries and Central and Eastern European countries.
This initiative will definitely help in the reduction of the infrastructure gap. According to the
World Pensions Council, the Chinese government needs to invest around $900 billion per year
for the next decade to continue the infrastructure program. This estimated cost will double the
recent infrastructure expenditure gap if additional monetary support does not occur (Voinescu
and Moisoiu 2015). Referring to this impeding situation, number of Asian and the Eastern
European nations have expressed their interests in the structural investment process.
Link to the old silk road: Development of the Silk Road Economic Belt is considered as one of
the principle strategic goals of the BRI policy makers. The covering countries under BRI located
alongside the silk Road across the West Asia, Central Asia, Europe and the Middle East.
Enhancement of both soft and hard infrastructure is its principle focuses (Jinchen 2016). This
comprehensive infrastructure plan considers that the economies of member countries of AIIB
would receive significant beneficial impacts following the construction of global infrastructure.
Objectives of AIIB
The goal of the AIIB is to provide monetary assistance to enhance the infrastructural
development work in Asia. It plays a key role to mitigate the monetary gap between the existing
resources and demand of sustainable development program. All these development works of

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AIIB are aimed at improving the environmental, social and living standards of the economy. This
multilateral financial infrastructure is committed to enhance the economic condition of central
and surrounding region of Asia (Ferdinand 2016). Apart from that, the authority provides
financing and sovereign help to its member countries to achieve the sustainable goal through the
development of rural infrastructure, agriculture, transportation system, energy infrastructure,
urban infrastructure and logistic system.
Focus of the project
Since 2013, AIIB has been trying to improve the regional integration through the
promotion of the social infrastructural work. The bank has been directed to provide $40 billion as
a part of the development fund for the project work (Du and Zhang 2018). The fund investment
to the BRI project is mainly focused on the business development. It is more than a simple
money lending work. The study observes that Pakistan is proposed to receive a fund of $350
million from AIIB for the development of Karot Hydropower Project by 2030. Meanwhile, the
authority guides the project developers during the course of research and engineering work
(Swaine 2015). The insight view of the BRI is concerned about the multidimensional aspects of
the BRI project.
Structure
China owns 26% of the voting rights due to its largest contribution to the bank’s share. It
implies that China has an influencing power in the project decision work of AIIB. As of 2016,
the Chinese government has decided to allocate more than one trillion to the construction related
work. BRI is often referred as a mega infrastructure project of China (Irshad 2015). It is the
natural extension of rapid infrastructural development economy. According to a report, the

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member countries of AIIB are expected to generate trade volume of $3 trillion and 18 lakh jobs
after the completion of the BRI project.
Answer to question 2
Competitiveness theory
Competitiveness theory illustrates the comparative aspects of the policy frameworks. In
general, policymakers formulate the business strategy after evaluating both micro and macro
aspects related to the strategies. Different strategies are assigned with different objectives.
Nonetheless, competitiveness theory cannot be explained by a definite approach. The factors
involved in the competitive strategy and acceptability of the approach in the society are the key
determining factors of the success of the competitiveness theory (Chursin and Makarov 2015). It
has been observed the regressive impacts of the intensive competition get ignored while
developing the strategies for the competitors. This results in the loss of economic welfare of the
society. Applicability and the pragmatic approach need to be determined wisely to highlight the
importance of the competitive strategy in order to gain a sustainable development work. The
concept of the competitiveness theory has been evolving since the initiation of the tradition trade
mechanism.
Case model
The current study attains to examine the competitive strategies of eBay. The Management
of eBay generally sets up business strategies evaluating the return of the investment and
profitability of the business. The company mainly operates through retail and auction business on
the online platform (Chursin, Vlasov and Makarov 2016). In the context of the competitiveness
theory, Porter’s analysis plays a key role in determining the company’s competitive

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advantageous position in the market. E-commerce business is the principle foundation of eBay.
This model helps the company to develop an intensive growth strategy which assists the
company to expand its commercial business across the world. The penetrate target markets are
the generic market strategy of this online retailers (Siudek and Zawojska 2014). The continuous
success in the online retailing sector has helped the company to capitalize online trading business
across the world. eBay’s other strategic objectives consider mission and vision statement. The
collaborative action of these two statements supports the company to keep a strong position
against the global competitors, like Amazon, Bonaza and Rakuten. For instance, most of the
company’s management decisions are driven by customer support service and functions of its
subsidiaries, such that, kijiji and StubHub.
Recommendations
Technical improvement: Competitive advantageous position is usually driven by the
advancement of the technological foundations (Yurynets, Bayda and Petruch 2015). Internal
development guarantees the sustainable growth of the company. Moreover, use of advanced
technology assures the optimum usage of the available economic resources.
Adoption of intensive growth strategy: According to the market analysts, effective generic
competitive strategy helps the company to adopt an intensive business development strategy.
Realization of the market demand is the driving force for the online marketplace (Patterson
2015). The evolving risk related to the rapid growth of competitors including, eCrater, Ruby
Lane and eBid can be nullified with the support of intensive development work.
Cost-leaders strategy: eBay is proposed to follow a cost leadership strategy using the cost-
minimization theory. In this way, the company is advised to maintain a low price strategy

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making the high profit margin. According to the economic theory, generic competitive strategy
lowers the company’s fixed and variable spending for online auction trading platform. eBay is
expected to take the leading position among other global competitors due to the cost leadership
mechanism, provided with the prevailing market price structure.
Application of the theory to the case model
In the context of eBay’s online business structure, the cost leadership structure has been
observed as an essential market strategy for the company. The continuous exercise of low pricing
strategy results in the reduction of the profit margins. The management incorporates cutting-edge
technologies to enhance the economies of scale (Dechezleprêtre and Sato 2017). Henceforth, the
company needs advanced online technology to reduce the operating cost related to the logistic
work. This further empowers the company with more business power as it can attract more
consumers and sellers offering low product prices in the online business platform. In this way,
eBay has been reported to maintain an effective competitive strategy exhibiting a standard
balance sheet outcome over the last couple of years.
Answer to question 3
Concept of trade protection
Trade protection is defined as a way to encourage the exports by imposing levy on the
imports. This turns the import goods expensive following the position of tax. The core of
objective of trade restriction is to protect domestic industries from global industries. It has been
noticed that domestic firms experience increasing returns of scale under trade barriers (Draper
2017). Trade barrier offers infant industries ample opportunity to improve the production
technique as per the global market demand. As domestic firms get a chance to grow, the

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investment in the human capital and new production capability. Altogether, it reduces the unfair
trade practice of the foreign developed countries with the developing countries. Trade
protectionism promotes price dumping strategy in the of the domestic producers. In this way,
domestic goods are charged at excessively less as compared to the foreign products.
Embargoes case
In the view of trade embargoes, ‘America’s first’ policy has been illustrated as an
example of embargoes case. The policy has been developed on the unilateralism and nationalism
structure. The importance of the policy was initially realized by the USA government during
World War II. This policy put trade restrictions on some specific countries owing to enhance the
market demand for the domestic goods. Recently, the USA president has imposed a serious trade
restriction on the Chinese products on the account of China’s unfair trade practice (Lew-
Williams 2014). This has put all the BRIC countries into a jeopardized trade condition. In the
light of trade analysts, trade unilateralism impedes the economic growth as it is impossible to
follow uniform trade laws all over the countries. Therefore, increasing tariff rate for Chinese
economy will inevitable lower the pace of global trade flows between the USA and the Asian
countries.
Importance of the case
It is believed that the USA economy rules over the world economy. The economy is used
to hold the controlling power of the international trade system. The global trade growth is
expected to catch the faster pace if the USA economy grows (Irwin 2017). However, the current
situation suggests that the Chinese economy, the greatest competitor of the USA economy, gives
significant impact on the international trade. America’s first policy has two main objectives. One

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objective is to band the Chinese products and other objective is to devalue the Chinese currency
in the international economy. Trade war between China and the USA is an evolving challenge
for the trade policymakers.
Define responsible factors- economics, political or government
The study observes that embargoes in many cases has produced successful outcome in
recovering the economic crisis. The European Reconstruction Plan of Marshall and the USA
policy initiative during the great depression of the 1930s and 2008 respectively, have considered
as successful attempts of embargo policies of the government. The economy has successfully
revived its growth from the bottom to the peak position as a positive effect of the trade
protectionism policy (Yurynets, Bayda and Petruch 2015). In the light of the America’s first
policy, the USA government is trying to accumulate more domestic jobs coupled with lower
bank rate and devalued currency system. It can further two economies lead to the political
confrontation due to the presence of multilateralism framework.
How embargo works
Embargo can affect the country both politically and economically. Most common practice
of embargo is the import substitution policy. From the political aspect, allied economies impose
trade restriction jointly against another economy. embargo policy works to optimize the
economic prosperity of the nation (Irwin 2017). This enhances the currency inflows and
improves the trade balance sheet. The improvement in the net takings contributes significant
amount to the country’s GDP growth. In addition to that, it crates proper trade environment for
the unilateral trade system. The government designs special subsidy policy for the exporters.
This encourages the producers to recruit more employees in the production process, which in

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turn, improves the real wage of the of the economy. In general, the president of the USA holds
the principal power to impose embargoes during serious economic situation (Cohen 2019). The
embargo act usually follows the Trading with the Enemy Act during the enactment of the policy.
Types/ embargoes of embargoes
According to the researchers, the embargoes can be of several types. In the light of trade
embargo, import or export goods and services can be completely banned from another country or
more than one country. This narrows down the business aspect of the entire trade economy. In
this regard, the government plays the significant role to makes the embargo policy into effect.
For example, most of the countries prohibits trade of military equipment for the sake of country’s
security. Recently, the USA government has stopped trading of electronic goods with China. On
the contrary, the Chinese government has also planned to stop importing American goods. It is
obvious that trade embargo enhances the trade volume of one economy lowering the net takings
of another economy (Heer 2018). The other type of embargo is found in the media sector. Under
embargo system, information can not be disclosed to other before a specific time. In case of
product innovation, the developer often claims for intellectual property right. This is also another
type of embargo. This implies that no one will be eligible to manufacture those goods and
services without getting permissions from the owners.
Outcome
On a concluding note it can be said that embargo is the extreme trade policy to end up the
trade relationship with another country. Trade protection is the ultimate objective of the embargo
policy. According to the several studies, domestic producers expect robust growth under trade
restriction mechanism. As trade restriction on the imported goods in terms of tariff raises the

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price of the import goods, the domestic buyers prefer to buy national product rather than that of
the import goods. Meanwhile, the recent adoption of the America’s trade policy against China is
considered as a part of the strategic embargo policy. In terms of the negative impacts, this trade
restriction will surely deteriorate the trade relation between two world’s largest economies, The
USA and China.

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Reference list
Chursin, A. and Makarov, Y., 2015. Management of competitiveness. Springer.
Chursin, A., Vlasov, Y. and Makarov, Y., 2016. Innovation as a basis for
competitiveness. Theory and practice (Book), pp.1-336.
Cohen, S.D., 2019. Fundamentals of US foreign trade policy: economics, politics, laws, and
issues. Routledge.
Dechezleprêtre, A. and Sato, M., 2017. The impacts of environmental regulations on
competitiveness. Review of Environmental Economics and Policy, 11(2), pp.183-206.
Draper, T., 2017. American business and public policy: The politics of foreign trade. Routledge.
Du, J. and Zhang, Y., 2018. Does one belt one road initiative promote Chinese overseas direct
investment?. China Economic Review, 47, pp.189-205.
Ferdinand, P., 2016. Westward ho—the China dream and ‘one belt, one road’: Chinese foreign
policy under Xi Jinping. International Affairs, 92(4), pp.941-957.
Heer, D., 2018. Immigration in America's future: Social science findings and the policy debate.
Routledge.
Irshad, M.S., 2015. One belt and one road: dose China-Pakistan economic corridor benefit for
Pakistan's economy?. Journal of Economics and Sustainable Development, 6(24).
Irwin, D.A., 2017. The false promise of protectionism: Why Trump's trade policy could
backfire. Foreign Aff., 96, p.45.

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Irwin, D.A., 2017. Clashing over commerce: A history of US trade policy. University of Chicago
Press.
Jinchen, T., 2016. One belt and one road’: connecting China and the world. Global
Infrastructure Initiative website.
Lew-Williams, B., 2014. Before restriction became exclusion: America’s experiment in
diplomatic immigration control. Pacific Historical Review, 83(1), pp.24-56.
Patterson, G., 2015. Discrimination in International Trade, The Policy Issues: 1945-1965.
Princeton University Press.
Siudek, T. and Zawojska, A., 2014. Competitiveness in the economic concepts, theories and
empirical research. Acta Scientiarum Polonorum. Oeconomia, 13(1).
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