International Business

This article discusses the subject of International Business, covering topics such as the factors of endowment, political economy of international trade, and the role of the IMF in promoting global economic stability. It also provides insights into the trade patterns of countries such as Australia, China, Singapore, Japan, India, and Vietnam. The article includes references to scholarly articles and research studies.

Running head: INTERNATIONAL BUSINESS
International Business
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International trade
Australia has plenty of natural resources. Galiani, Schofield, and Torrens (2014) point out
that Australia has strong mining industry making it among the world-leading whereby it is the
top producer of gold, iron, aluminum, zinc, coal, and lead, etc. It also produces mineral
commodities due to the mineral endowment. Australia has available rain-fed land. It also has
grazing lands and savannas which are valuable resources, where its sheep, beef, and wool
industries are dependent on the broad savannah.
China has a long pillar of textile industry with a high export market that is concentrated.
It also has the advantage of human capital, which contributes to the cheap labor that produces
quality, competitive goods that are cheap. China also has a superior market with a domestic
market that absorbs most of its products. China has an extended experience in farming through
intensive cultivation; the country also boasts of a range of modern industry in its industrial sector
(Liu, & Huang, 2016).
Singapore has a multisectoral enterprise with its enhanced role in the movement of goods,
money, people, and information. Singapore has been able to take advantage of its labor force
with their workers being ranked among the top in the world (Galiani, Schofield & Torrens,
2014). Japan has a temperate climate with abundant rainfall which favors their agriculture. With
the labor-abundant economy, Japan has a broad base for its domestic economy as the large local
market enables them to have low products costs and operate at maximum scale. Japan also has
revolutionized its technology to be capable of advancing in its automotive industry.

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India’s largest export is petroleum products, and it has a high consumption rate that
surpasses production. Galiani, Schofield, and Torrens (2014) point out that India is the most top
consumer of oil produce at number four with a large oil refining capacity at number six
worldwide. India exports manufactured jewelry, diamonds and it is rich in skill in export sectors
like textiles, mining, and plantations. Vietnam has a land abundance that is extensively put into
the growth of rice. The rice is a source of exportto tnam. Textiles and clothing industry has been
one of Vietnam’s primary exports. Vietnam also has a large population that translates to
sufficient labor force who are paid low wages. Vietnam actively specializes in Tourism industry.
The factors of the endowment to a large extent reflect our trade patterns. The element of
endowment describes different scenarios like land availability defines the availability of natural
resources, abundant labor defines workforce, and capital defines the quality of production and
infrastructure. Countries with unskilled labor are most likely to produce products that have a low
cost of the workforce while nations with plenty natural resources in most cases export them.
Countries with skilled labor as noted by Galiani, Schofield, and Torrens (2014) produces more
than those with unskilled labor. Skilled labor force produces quality complex products that are
readily traded internationally. Natural resources if put to proper use can be exported, e.g.,
minerals, which means more value while if not put into proper use, then the value is
insignificant.
Political economy of International Trade
The Australian government has enacted restrictions on export or supply of goods to
Democratic People’s Republic of Korea (DPRK). Through the enactment, it prohibits the direct

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and indirect supply of certain goods like petroleum products, food, medicine, and arms, etc.
Exporters who meet exporting appropriate conditions have to apply for sanctions permit or be
granted a permit by the Minister. Armstrong (2015) asserts that sanctions can increase the cost to
a country’s citizens and businesses since the sanctioned countries are not in a position to
purchase their products which results to economic loss caused by production loss and
unemployment.
Australia has been engaging in free trade agreements with various countries like China,
Chile, Singapore and New Zealand. It is worse off than it would have been without the Australia-
United States free trade agreement since data shows that the agreement caused diversion of trade
cost sources that are low causing a reduction of trade between the two by $53 billion
(Armstrong, 2015). Bilateral trade agreements are most likely issues to do with politics and low
on trade issues. Most of the trade agreements don’t benefit Australian consumers but forge a
diplomatic relationship.
In 2015, the Australian government effected changes to foreign investment framework.
The primary objectives were: to put in place severe consequences to foreign investors who
breach investment rules, to regulate agriculture and real estate foreign investment in a better way,
and lastly to put in application fees deterring their taxpayers funding cost on Australia foreign
investment. With the announcement of the reforms, there was a perception of the changes
providing better compliance, better service delivery, and better certainty. It has been evident that
there have not been notable changes and the state objectives have not been achieved. Armstrong
(2015) denotes that foreign investors are deterred by several foreign investment regulations at the
same time, they fear that the foreign investment policies are hurdles to their investments plans. In

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Australian citizens perceive that effort is not put by the government to regulate foreign
investment. The Australian government has had five critical rejections of imports due to claims
of doing it on the national interest grounds.
Through intergovernmental agreements, lower tariff barriers have resulted, and more
moderate tariffs mean cheap consumer goods whereby the protectionism benefits specific few
industries on the Australian citizen's expense. Through free trade agreements and imposing
sanctions, trade is affected negatively due to such barriers that are driven both politically and
economically.
Foreign Exchange, the IMF and the International Economic Environment
Importance of IMF
IMF’s primary mission is to ensure that there is an international monetary system that is
steady and also that there is an exchange rate systems and system of international payments that
enable member countries and its citizens transact with the other. IMF keep a watch on member
countries as pointed out by Van Der Veer and De Jong (2013) for example, through their formal
surveillance where it monitors policies, provides advice for them to adopt and promote policies
that promote economic growth, improve living standards and lower financial crises exposure. It
offers loans to member countries and capacity development to assist them to build advanced
economic institutions and enhance citizen’s abilities. The organization issues Special Drawing
Rights (SDR) which is an international reserve asset that complements their member country’s
certified reserves.
Channels IMF use to raise the strong global economy

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IMF provides policy advice where it advises its members on achieving economic stability
to prevent crises. The organization observers countries financial sectors for them to be able to
detect risks that enable crises prevention.It provides financing to in countries that are troubled
with issues such as drought and health issues like Ebola. Lending by providing financial
assistance to governments and enhance accountability while spending. It shares knowledge with
members to revolutionize their institutions and economic policies. The IMF has been critical in
the establishment of financial institutions like nation’s central banks and training staff (Sarangi,
2012).
Where IMF gets its money
Through the quota system IMF’s primary source of financing, each member country is
allotted a quota, based on its size in the global economy. When a member joins, it pays one quota
of its quota in the form of currencies that are widely accepted, and the remaining three quarters
settled in the country’s currencies. It also gets money via multilateral borrowing where its able
to enhance its resources. IMF supplements its resources through bilateral borrowing. The
organization also receives money through debt relief and concessional lending. When
concessional lending is carried out to nations that have low-income, the cash is resourced by
contributions from IMF and the member countries and not through the quota subscription
system.
Promotion of Global Economic Stability by IMF
Global economic stability is supported to evade financial crises, economic crises, and
inflation. IMF assists by providing surveillance as every member accept to be subjected to

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financial and economic policies to international community scrutiny. The global inspection is
carried out in the regions, countries and at the global level. It works with members and various
agencies to fill data gaps for stability. The global economic stability is supported through lending
whereby it comes in by providing financial assistance to streamline macroeconomic problems,
lower disruption to the global and local economy by providing policy program support. It offers
technical assistance in creating and implementing economic policies that are comprehensive.
Macroeconomic Frameworks by IMF
The organization carries out training to the state officials. This enables the state officials
to be in a position to examine economic developments, forecast and model tools and create and
implement financial and macroeconomic policies that are comprehensive. IMF has a Financial
Programming and Policies course that was launched online in international languages in English,
Spanish, French, and Russia. The various courses in the macroeconomic framework training
include Fiscal Policy, Financial Sector Policies, Macroeconomic Statistics, Monetary Exchange
rates, Specialized Fiscal Courses and General Macroeconomic Analysis, etc.

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References
Armstrong, S. (2015). The economic impact of the Australia–US free trade
agreement. Australian Journal Of International Affairs, 69(5), 513-537.
doi:10.1080/10357718.2015.1048777
Birchler, K., Limpach, S., & Michaelowa, K. (2016). Aid Modalities Matter: The Impact of
Different World Bank and IMF Programs on Democratization in Developing
Countries. International Studies Quarterly, 60(3), 427-439. doi:10.1093/isq/sqw014
Bojnec, Š., & Fertő, I. (2018). Globalization and Outward Foreign Direct Investment. Emerging
Markets Finance & Trade, 54(1), 88-99. doi:10.1080/1540496X.2016.1234372
Diaz, J., & Zirkel, S. (2012). Globalization, Psychology, and Social Issues Research:An
Introduction and Conceptual Framework. Journal Of Social Issues, 68(3), 439-453.
doi:10.1111/j.1540-4560.2012.01757.x
Galiani, S., Schofield, N., & Torrens, G. (2014). Factor Endowments, Democracy, and Trade
Policy Divergence. Journal Of Public Economic Theory, 16(1), 119-156.
doi:10.1111/jpet.12057
Liu, C. Y., & Huang, X. (2016). The Rise of Urban Entrepreneurs in China: Capital Endowments
and Entry Dynamics. Growth & Change, 47(1), 32-52. doi:10.1111/grow.12117
Oladimeji, M. S., Ebodaghe, A. T., & Shobayo, P. B. (2017). Effect Of Globalization On Small
And Medium Enterprises (Smes) Performance In Nigeria. International Journal Of
Entrepreneurial Knowledge, 51(2), 56-65. doi:10.1515/ijek-2017-0011

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Round, K., & Shanahan, M. P. (2012). From Protection to Competition: The Politics of Trade
Practices Reform in Australia and the Trade Practices Act 1965. Australian Journal Of
Politics & History, 58(4), 497-511. doi:10.1111/j.1467-8497.2012.01649.x
Sarangi, U. (2012). Role of IMF and World Bank in Global Macroeconomic Stability. Journal
Of International Economics (0976-0792), 3(1), 31-43.
Sly, N. (2012). International Productivity Differences, Trade and the Distributions of Factor
Endowments. Review Of International Economics, 20(4), 740-757. doi:10.1111/j.1467-
9396.2012.01050.x
Van Der Veer, K. M., & De Jong, E. (2013). IMF-Supported Programmes: Stimulating Capital to
Non-defaulting Countries. World Economy, 36(4), 375-395. doi:10.1111/twec.12044
Vogiatzoglou, K. (2016). Ease of Doing Business and FDI Inflows in ASEAN. Journal Of
Southeast Asian Economies, 33(3), 343-363. doi:10.1355/ae33-3d