International Business Free trade agreement between two fictitious countries
I don’t know how to handle this Economics question and need guidance.
Grading is based on the clarity of the thesis statement, reasoned support of the argument, and inclusion of material from course readings and lectures.
Course readings/material from following books up to chapter 8.
Frieden, Jeffry A. 2006. Global Capitalism: Its Fall and Rise in the Twentieth Century. W.W. Norton. ISBN 0393058085 • Frieden, Jeffry A., David A. Lake and J. Lawrence Broz. 2017. International Political Economy: Perspectives on Global Power and Wealth. 6th ed. W.W. Norton. ISBN-13: 978-0393603880. THIS EDITION ONLY
Scenario: You are the senior trade policy adviser to the president of “Freedonia.” The president is considering signing a free trade treaty with the neighboring country of “Utopia.” Your task is to assess the potential economic and political effects of this treaty. You recognize that the two countries are quite different economically. Your country has lots of capital (machinery) and skilled workers in comparison to Utopia, but very little farmland. By contrast, Utopia’s economy has less capital and fewer skilled workers in comparison to Freedonia, but lots of farmland.
If the president decides to sign the treaty, it goes to Freedonia’s Congress for approval. Freedonia has a bicameral legislature, with a House of Representatives and a Senate, and the trade treaty must pass both houses. In the House, there are more representatives that defend the interests of capitalists and skilled workers than representatives that defend the interests of farmers. In the Senate, by contrast, senators from farming states are in the majority.
1. Would a free trade agreement with Utopia be good or bad for Freedonia as a whole? Why?
2. With free trade, what types of products would Freedonia export to Utopia and what types of products would Utopia export to Freedonia? Why?