international business.. Choose one assignment

Choose 1 assignment. You will be graded on only 1 assignment.

Choice 1:

Explain the rationale and goals of international trade and investment. Describe the theories of international trade and investment.

Theory of Absolute Advantage

Example 

If the United States produces either 3 tons of rice per unit of production or 2 cars per unit of production, and Japan produces either 1 ton of rice per unit of production or 4 cars per unit of production:

• U.S. =3 tons of rice and 2 cars
• Japan = 1 ton of rice and 4 cars
• Total = 4 tons of rice and 6 cars 

If each country specialized in what it did best:

• U.S. = 6 tons of rice and 0 cars
• Japan = 0 tons of rice and 8 cars
• Total = 6 tons of rice and 8 cars 

Can you see how, theoretically, there is a net increase of 2 tons of rice and 2 cars per 2 units of production when each country specializes?

Theory of Absolute Advantage

Exercise

Suppose the U.S. can produce either 3 tons of rice or 4 cars per unit of production. The country you have chosen for class can produce either 2 tons of rice or 5 cars per unit of production. Theoretically, what are the benefits of specializing?

• U.S. = 3 tons of rice and 4 cars
• Your country = 2 tons of rice and 5 cars
• Total = ? 

Discussion question: What are the limitations of the theory of absolute advantage?

Please submit your assignment.

-Or-

Choice 2:

Your CEO thinks that it is too risky to invest in more than 2 countries and has already selected 2 other countries (the United States being one of them) besides your chosen foreign country to invest in. She bases this on the notion that with the company’s last experiences with other products, the results of dealing with many countries at once has been mixed at best. You think that she is making a critical mistake but must be diplomatic and respectful to her. In the process, you are to do the following:

1. Provide a compelling argument to your CEO that including your company’s FDI in your chosen foreign country is a promising opportunity.
2. Explain relative internalization advantages in the process.
3. Explain the realities and benefits of FDI in your chosen foreign country from a free market view. 

3-6 Pages long