International Trade

choose ONE of the following. Your response should be 600 words long.

1) Compare and contrast Absolute and Comparative Advantage – and discuss how each relates to gains from trade.

2) Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.

3) What might account for the dramatic increase in international trade over the past 50 years?

 

Sample Solution

The Ugandan case, unfortunately, has not been as remarkable. There exists a severe shortage of practitioners, especially in rural areas. Even though unemployment in the sector persists, professionals find these positions unattractive due to their conditions. During the period of 2010-2015, on average, 9% of these practitioners migrated out of Uganda (Omaswa et. Al.,4). More pressing is the fact that 89% of the migrants are young professionals under the age of 40. Over the course of the study, 192 professionals migrated, while only 71 returned to work or after studying abroad. These numbers could be especially worrying, and indicative of the lack of retention incentive in the country (Omaswa et. Al.,4).

Educated individuals are attracted to efficient and modern working conditions, in areas with progressive institutions and infrastructure. The absence of these exacerbates the problems associated with brain drain. Not only are less people immigrating to these countries, but their top talent is leaving with no incentive to come back.

The second area of impact is remittances —the sums of money, compensation and transfers that migrants send back to their families in their home countries. They form a large portion of the economic benefits offered by emigration. In 2017 alone, migrants had sent $466 billion back to their origin countries as remittances (World Bank). However, whether these remittances actually contribute to economic growth or not, is a separate matter altogether.

On international platforms, concerns have been raised regarding the viability of remittances as an alternative to employment within the country itself. Some argue, that even if migrants had chosen to stay back, they would be able to work and earn. This argument lays on an unsteady premise. In claiming so, we would have to assume that there are equal and sufficient opportunities present in the home countries of these migrants— the very lack of which entices people to relocate.

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