Impact of Subsidies in Wind Energy on International Trade

Running head: INTERNATIONAL TRADE
INTERNATIONAL TRADE
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Wind energy industry......................................................................................................................4
Significance of subsidy in wind energy...........................................................................................9
Positive impacts of subsidy in wind energy industry....................................................................10
Subsidies in Wind energy industry................................................................................................15
Conclusion and Recommendation.................................................................................................16
Reference list.................................................................................................................................17

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Executive Summary
The study is about the improvement in the wind energy and the policies that the
developed economies are implementing in order to implement the policies that will increase the
improvement in the windmill. The development of the windmill and wind energy is going to
increase the resource distribution. It has been seen that most of the developed nations has
initiated some form of renewable energy. Countries like India and Australia are increasing their
investment on the renewable energies and they are improving their energy efficient resources
that will definitely allow the economies to improve their production.
The study is mainly aiming to identify the importance of the subsidies that are given in
wind energy. Most of the developed nations are highlighting the importance in the investment in
the wind energy. The developed economy is going to increase the importance of the investment
in the wind and other renewable resources. During the time of 2018-2019, the Australian
economy is going to invest heavily in wind energy as they are going to install more than 10
gigawats in wind and solar energy, and if they can maintain the rate of investment in the solar
energy then Australia will reach about 53% of total renewable energy. It is important from the
perspective of countries like Australia, China because of the fact that non-renewable resources
are decreasing and it is important to find the alternative source of energy. Now renewable
energies in the form of wind and solar energy are helping in the development and channelization
of resources that will definitely allow these economies to increase the development of
investment. Positive aspects of subsidizing wind energy are that through the improvement in the
investment in the economy the cost of manufacturing will decrease. On the other hand, the
negative aspects are that installation of this kind of project is costly and it will require incentives
of both private and government.

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Introduction
Introduction of international trade is definitely going to increase the resource utilization
and channelization of the resources in an effective way. The study will be going to analyze the
impact of international trade on provision of subsidies in wind energy. This is important in the
sense that in the modern world of business, most of companies are considering the fact of
comparative advantage and terms of trade. The study will be looking to identify the pros and
cons of subsidies in wind energy by identifying the comparative advantages that each company
in wind energy manufacturing units is having. The main aim of this study is to highlight the
international business and most developed nations is actually considering the renewable energies
that are widely in demand as they are a big part of international trade. The main agenda of this
study is to incorporate the effect of GDP on the wind energy industry. This is significant in the
sense that it will analyze the terms of trade for the countries like Australia, China and India.
Moreover, the study will also consider the terms of trade for these countries regarding the
policies that is taken by the government regarding the subsidies in the industries.
This is important in the sense that through the incorporation of better development of the
renewable energy in the economy further investment can come up from foreign countries in the
sector of wind energy. It has been seen that through the innovation in investment in the
renewable energy, industry will actually increase the social benefit for the consumption of wind
energy. This is important in the sense that through the improvisation of better investment, the
companies doing business in the wind energy industry will be able to supply the economy by
indulging in the development of energy industry. Most of the government in the developed
nations likes Australia, China and India are looking to increase the development of investment.
The implementation of government policy will be crucial in the sense that it will definitely allow

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the indulgence in the incorporation of better policies so that they can increase the supply of wind
energy
Discussion
Wind energy industry
Taking the effect of the subsidies in wind energy, economies in the form of better
improvement in the economy that will allow the economy to incorporate the effective business
policies. Impact of the global occurrence is going to indulge the development of the resource in
the economy especially the wind energy. The re-emergence of China and India into the global
economy is the most important economic event in the sense that due to improvement in the
situation the demand of skills and potentiality in the Australian market is increasing and will
continue for next 15 years. The Rapid growth of the population in India and China will increase
the demand for mineral and energy commodities that Australia is having huge supply (Baker and
Sovacool, 2017). The immediate effect of rapid growth of population in India and China on the
Australian economy is the improvement in the terms of trade.
Figure 1: Australian terms of trade

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(Source: Treasury.gov.au, 2012)
The above figure is showing the level of the terms of trade that is happening within the
Australian economy is facing from 1969-70 until 2019-2020. The rapid increase in the terms of
trade through the development of rapid growth in the population in China and India is pushing
the Australian real exchange rate to high margin (Bento and Fontes, 2015).
Figure 2: GDP growth of big economies
(Source: Treasury.gov.au, 2012)
The above diagram is showing the growth of the GDP in the countries like Australia,
Japan, South Korea, Malaysia, China and India have been shown during the period of 1964-
2009. During this period, Japan got the highest level of the GDP growth. Through the
incorporation of the Wind energy countries like Japan, Australia has been getting high benefits
from the growth of the economy. Both South Korea and Japan are growing by huge margin by