1-A) Is free trade fair? Why or why not? Discuss! 1-B) What’s the difference between Heckscher and Ohlin & new trade theory ? Which one has more implications to current international trade patterns?
2) Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as "unfair" import competition. Is such competition "unfair?" Do you think that this argument is in the best interests of (a) the unions, (b) the people they represent, and/or (c) the country as a whole?
3) Based on Case Concept
In the last few decades, the auto industry has shifted from one in which a few, large companies primarily manufactured in their domestic markets and sold in their domestic markets, to one in which a few large companies serve the world market, manufacturing around the globe to capture competitive advantages wherever they can.
3-A) Why do companies like Toyota and Nissan have large operations in the U. S. market? Why don’t American companies have a large presence in Japan?
3-B) Why BMW and Mercedes have established manufacturing operations in the U. S. market, while American companies are shifting their production to places like Mexico. Similarly, reflect on the new agreement between Toyota and Mazda whereby Mazda will produce cars at its plant in Mexico for Toyota to sell in the United States.
3-C) Use the applicable theories presented in the chapter to explain the current changes in the car industry, and in the future. Volkswagen, for example, has just committed to opening a new factory in Tennessee where wage rates are relatively low. Discuss!