Reference no: EM132007893
Discussion 1- 100 words reply
New York were to be cut off from the rest of the country and/or world life for myself and my family would change some but not as drastically as other parts of the United States. For example, I would still have access to textbooks that are published in New York City, but I would not be able to purchase bananas and other tropically grown fruit. I could still enjoy Stewart's® ice cream but I could no longer drive a Dodge vehicle. My house would still have electricity and running water but I may not have access to the same pharmaceutical medications. There are some goods such as dairy and wood furniture that would remain relatively inexpensive but the price of some items, such as petroleum for oil and gas, would skyrocket due to the limited supply New York has to offer. Other natural resources could be harvested however we would be limited with electronics due to the lack of plastic manufacturing in New York.
While there are a few examples of countries that were cut off from trade with the rest of the world, most of them involve war and isolation to starve resources. I would like to discuss how the world became smaller with the advancement of travel and how faster trade helped grow all economies. Even early oceanic shipping helped new territories produce new goods that weren't native to that land while simultaneously providing new resources for the exploratory parties. There are no examples of a country being better off without trade (economically speaking). There is always another country that is better at producing a specific good than you and your country will have an asset in producing something that the other country will want in turn (comparative advantage).
Discussion 2-100 words reply
In case if a state cuts off its ties with the country and the rest of the world, then it is expected to face a number of challenges. For instance, the economic growth of a country is dependent on availability of labor force and cheap capital inputs. It is assumed that the state would suffer from scarcity of labor force and the exhaustion of natural resources (Mankiw, 2018). Labor shortages usually provide the firms with the option to look abroad but since the state has cut off its ties with the rest of the world, there is no possibility of migration of labor force.
Due to the shortage of labor force, the state will not be able to manufacture the products in excess quantity and thus raise the price of the products. It would be difficult for the local customers to purchase goods that are highly priced (Kovzik& Johnson, 2016). This would further contribute to the inflationary pressure. In order to meet the growing demand of the customers, the available resources would be over-utilized and this would, in turn, lead to shortage of the resources. The manufacturers would fail to maintain the quality of products due to scarcity of quality resources (Kovzik& Johnson, 2016). The economy is expected to experience huge crisis thereby forcing the local people to move out of the state. In fact, the issue of shortage of capital would also affect the level of production of goods and the companies would not be able to manufacture the products as per demand. This would result in a demand-supply gap and inflation in the economy.
The countries that have more or less cut off with the rest of the world are considered as closed economy. The researchers have indicated the fact that completely closed economies do not exist but as a proportion of GDP, Brazil is considered as the most closed economy in the world (Stinespring& Kench, 2013). The closed economies are considered to suffer as they face the scarcity of raw materials such as coal, oil and natural gas. The local people in Brazil are expected to focus on agriculture in order to produce food for themselves. In case if the country suffers from adverse conditions such as excessive rainfall, it is likely to have a direct impact on the economy. On the other hand, the countries that adopts the open economy have the scope to import raw materials from other countries (Fike&Gwartney, 2015). Moreover, they can also participate in the process of comparative advantage where the countries specializing in particular products can export their products in order to compete in the international market.
International trade takes place between majority of the developed and the developing nations so that they are able to earn high revenue in the international market (Fike&Gwartney, 2015). Countries following open economy involve the market economy that are free from trade barriers. The quality of life led by individuals in the countries with open economy are also different from that in the closed economy as they have the scope to consume the goods and services in excess and at reasonable rates (Madsen, 2013). The local people have the opportunity to work using the technology and resources that are available internationally. Hence, they are able to develop their skills by working in a country that follows open economy.