2FQ2 Profit Software

International Business Finance and Economics of Globalisation

Format the assignment with 1.5 line spacing and size 12 point Arial font

You must clearly acknowledge all sources using Harvard referencing system including the textbook. The textbook called International Economics 7th edition by J Gerber, published in 2017 by Pearson.

Use reliable resources such as journals, journals peer-reviewed, government sites, textbooks and reliable websites or so.

You should be familiar with materials covered until week 7 to answer this assignment. You may also use library resources and other online articles to support your answers

Week 1: Introduction to the world economy

In this session we discussed:

1. Trade, capital flows and migration

2. Trade-to-GDP ratio and its significance  

3. First wave of globalization and what factors are different today

4. Trade and Economic growth

5. Important International Institutions since World War II

Week 2: Theory of comparative advantage

In this session we discussed:

1. Absolute advantage

2. Gains from Trade

3. Comparative advantage

4. Comparative vs Competitive advantage

5. International Trade and Economic Restructuring

Week 3: Factor endowments and trade

In this session we discussed:

1. The Heckscher-Ohlin Trade Model

2. Trade and Income Distribution

3. The Product Cycle Model

4. Intra-firm trade and OLI theory

5. International migration

6. International Trade, Wages and Jobs

Week 4: Modern trade theories

In this session we discussed:

1. Intra-industry Trade

2. Economies of Scale – Internal vs. External

3. Transportation costs and Trade

4. Trade and External economies of Scale

5. Industrial Policy

Week 5: Trade barriers: Tariffs and quotas

In this session we discussed:

1. Consumer and Producer surplus

2. Impact of Tariffs, especially on Resource Allocation and Income Distribution

3. Tariffs imposed by a large country

4. Rates of Protection

5. Impact of Quotas

6. Other forms of Protection

Week 6: Trade policy

In this session we discussed:

1.Trends in tariff rates - Across sectors and over time

2.Costs of protectionism

3.Common reasons behind protectionist policies such as revenue generation, job protection, infant-industry protection among others

4.Politics of protection in the U.S.

Week 7: Labour and environmental standards

In this session we discussed:

1. Income, Development Indicators and Standards

2. Trade and labour standards

3. Child labour

4. Trade and Environment

5. Alternatives to Trade measures

Rubrics:

Highly developed skills in expression and presentation of ideas. Fluent writing style. No major grammatical and spelling errors. All references, including recent literature, cited and used accurately.

Excellent use of knowledge gained and awareness of deeper and more subtle aspects of economic issues and theories. There is clear evidence of researched/read more widely beyond the core materials.

Provides well-argued and articulated statements with supporting evidence. Evidence of originality and independent thought. Has highly developed analytical skills & consistently demonstrates high levels of critical analysis. Demonstrates ability to reflect on conclusions and their implications.

Question 2 (10 marks, 600 words)

Suppose you work for an US Software company. You have been asked to write a report on possible countries that might be suitable for outsourcing software development. To help you write your report, your team has collected data on labour productivity and average salary of software developers for ten candidate countries.[footnoteRef:1] The data is summarized in the table below. [1: All numbers provided in this question are hypothetical. Data for U.S.A. is provided for comparison. ]

	Country Name	Average Annual Salary (in US dollars)	Labour Productivity
1	Brazil	6,100	61
2	Canada	48,000	85
3	China	28,000	65
4	Egypt	6,000	30
5	India	11,500	62
6	Philippines	10,000	67
7	Poland	23,000	81
8	Romania	12,600	80
9	Taiwan	23,400	84
10	Ukraine	12,800	75
11	U.S.A.	90,000	97

The average salary of software developers in all countries have been converted into US dollars. Labour productivity is measured on a scale of 0-100 with 0 being the worst and 100 being the highest.

(a) Assuming labour costs and labour productivity are equally important in the profitability of a software development company, write a brief report highlighting the strengths and weaknesses of the ten candidate countries for outsourcing. Your report should include your top three and bottom three picks as a destination for outsourcing software development of your company.

(10 marks, 600 words)