TOPIC: FOR GRADE 9B iGCSE
Analyse what might happen to an economy which transformed from the close economy to an open economy.
Time Duration for submitting the Article is
April 1 to 7, 2013
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Write your opinion here in 500 Words. [20 Marks]
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Close Economy is a state in which an economy has no activity conducted with outside economy. A close economy is independent and require no help from other country which they produce goods and services on their own and have no activity on imports and exports. Their aim is to provide basic goods and services they need with only resources provided within the country. On the other hand, open economy involves trade. These include activity such as import and export. An open economy is not independent and therefore depend on other country on certain goods and services that they are unable to produce, this increases efficiency in producing goods and services as country become specialize.
ReplyDeleteEconomy that transformed from close economy to an open economy is very beneficial to economy as an economy can provide goods to the consumer that the economy itself are unable to provide by importing goods and services from abroad. Consumer will have wider range of goods and services to choose from. Consumer can also buys goods with lower prices because there is an increased competition as number of producer increases in an economy. Prices go lower because producers need to compete with other to provide a better services with a lower price so consumer will be attracted its product. This is very beneficial to the consumer as they can enjoys goods and services with lower price at an improved quality.
With open economy, we can grain from international trade. International trade is an activity that involves exchanging goods and services between countries. With international trade, country can produce goods much more efficient due to specialization in trade. This allow them to have comparative advantage and then trade with other nation which specialize in the goods they produce. With open economy, market can expand to other nation and company can gain access to customer from other nation and they can enjoy the technology they brought along and economy will then become more develop because there is an influence from others.
On the other hand, open economy brings disadvantages to the economy. With open economy there is an increase in competition and this can lead to a problem where domestic firms are unable to compete with those big international firms. This will then lead to bankruptcy to the domestic firms. Along with open economy, country will become dependent to other country. There are some unavoidable risk that the economy may face. Dangerous goods may also be imported and may cause further problem, increasing the chance of crimes.
Resources will become even scarcer because it is being used up really fast and there will be a scarcity of resources. If then a country can’t produce enough goods, then it will troubles the international trade.
Transforming from close economy to open economy is a good thing because it brings a lot of benefits to the economy. To overcome those disadvantage such as bankruptcy of domestic firms, government can apply some policy to protect them such as applying tariffs of imported goods or applying quota to the imported goods. This can help to protect domestic firm as there is a limited amount of goods imported in the economy and leave rooms for domestic firms to further expand. A country should be open economy as it brings loads of advantages. Ferdin
Economy is a wealth of resources of an area in terms of the production and consumption of goods and service, There are two kind of economy which are open and closed economy. Open economy is an economic activity which involve domestic and outside people for example like people in businesses they can do trade in goods and services which involve international community. In an open economy people can do international trade and finance, which in closed economy they cannot do it, because closed economy is self-sufficient, meaning that there is no import and export are bought in or send out. So they cannot do every exchange/trade process even they cannot do managerial exchange.
ReplyDeleteTransformed from closed economy to an open economy will bring some good and bad to many people because each people have their different opinion about this. In order to transform economy public need to be ready for the consequence that cause by this transformation which is unsecure life, this unsecure life form because international trade are held and in this trade they can also sell drugs and weapon which are prohibited in the society because with drugs they can make people life become unhealthy, also if they sell weapon freely people can kill anybody without any reason. This transformation also causing some economical problem like less demand in domestic product and less opportunity for local firms to go forward.
Less demand in domestic product are likely to be happen now because many of business from overseas are came in and people are starting to compare in terms of price, design and quality between domestic product and product from outside the country, for example a “Pen” Pen is just a little stuff which use in anywhere and every body need it so there are local company which specialize in that product, but now when the transformation of economy happen many new firms from outside the country which also specialize in that product open in that country and local citizen are starting to comparing between this two product like which one is cheaper, which one had better quality, and which one had better design. As the result local company are lost from this new competitor and start to fall in terms of their income. The effect also continues until now day’s life because many people are likely to believe international product quality than local product quality.
Less/Retardation for local firms to go forward are tend to happen because demand from consumer are start falling and they don’t have enough money to compete with other firms. This also effect the national income of the country because less local product are being buy, Other than that local firms are also lost in terms of technology and quality control but it also hard for them to improve it because they don’t have enough resources to build up their business again.
In contrast transformation of economy will bring a huge benefit to the public but it will also bring a huge unbeneficial for the local firms and some of the public, so actually there is no good conclusion for this because we should do exchange process between international community, maybe government should limit the amount of international firm which want to enter the country.
Most of the country in the world use open economy in their economy, open economy is an economy in which international trade takes place. In open economy export and import are permitted, open economies can consume large amount of gross domestic product. While closed economy prohibit the export and import takes place in their country like North Korea they does not trade with other country. Moreover they use their resources for themselves and do not have good relationship with other country.
ReplyDeleteOpen economy will help government to meet their goals like low unemployment is one of the government aims. Open economy permitted export and import which help people to get jobs and increase the employment which will reduce the unemployment. And government will help with open economy because they meet their goals.
Unemployment decrease and more people work and produce goods and services, when the goods and services increase it will make economic growth. Economic growth also one of the government aims, because when there is growth government will get money and it will be use to build the infrastructure in their country.
Economy growth will help increasing welfare in that country because they have enough resources so they will not fight for that. And trade helps us to have a good relationship between countries which will help each other.
Open economy increase the competition between local and multinational company, when there is competition they will sell the goods with lower prices which will attract consumer to buy. Open economy also help to lower the price of goods and services.
On the other hand closed economy does not have to worry about global economy, but when they transform from closed to open economy they will worry if the global economies fall down.
Closed economy only think about their country and use the resources for their own company, moreover they do not care about other country. This condition will change if they transform to open economy, they will produce goods and services to sell it in other country because they need money. More resources use to produce goods and services and it will create lack of resources.
Open economy will make economic growth that increases the price of goods which we call it inflation. Inflation will increase poverty because poor people cannot buy they needs and wants which is expensive and this situation increase poverty.
In conclusion closed economy does not have a good relationship with other country because they only thing for themselves and use their resources for own welfare not hole the world. This condition will make a war when the close economy lack of resources. Transforming from close to open economy will help to increase the world welfare and make a good relationship between others country. Open economy will reduce unemployment because many jobs there so people can work there. It also help to increase economic growth so the country will build the infrastructure and increase welfare. The country will not lack of resources because they trade with other country, it help country to get their needs and wants and reduce crime at that country.
An economy within the country would either be a closed economy or an open economy, it all depends on the government. An open economy would be one that allows and does free trade and international trade. This means that goods and services from all over the world can come and go into the country. The economy can trade the goods and services it produces with those which other economies from all over the world produces. An open economy country would be UK, US and France. In contrast, a closed economy restrict any forms of free or international trades. These economies are self-sufficient economies. They produces and consumes everything themselves. No goods or services of any kind can enter their country and none goes out of their country as well. North Korea is an example of a country with a closed economy system.
ReplyDeleteSo what happens when a country switched its policies from being a closed economy to an open one? China were once a closed economy. Not even internet were allowed inside China, China had its own private internet. As China opens up to the globe, many major changes has affected the Chinese economy. Now, the whole world depended on China as the number 1 manufacturing economy all of us depended on.
When an economy changes, from a closed to an open economy, goods and services from various corners of the globe entered the country. There are no perfect economy, and so, there are areas in which the Chinese economy were poor at. With the allowance of free trade, goods and services from abroad can replace the domestic products. As a result, the people of China were able to enjoy better products and services. Living standards rises in response as people have access to higher quality products. Apart from that, technology and education advancement will also enter the country. Higher technology and education will help increase the productivity of the Chinese economy itself. Production processes improve and the society became more educated, and the Chinese economy benefits as a result. In addition, as the country opens up to the world, it can start build relationships with other countries. China now has started working together with several other countries, and these relationships can help the country improve with funding supports or new projects.
However by opening up to the globe and allowing foreign goods and services to enter the country, it may cause the people to prefer imports rather than domestic products. As more people buy imports rather than domestic products, domestic firms may start to suffer as their income flows are reduced, some may even be forced to close down due to bankruptcy. Aside from that, opening the gate to free trade also allows foreigners to enter the country and bring their culture along with them. And as more and more people bring different cultures into the country, the country itself may start lose its original culture. If the country cannot protect themselves from foreign influences, it may actually lose its original principles and culture ways. Moreover, free trades creates conflicts, both social conflicts and crimes. Anyone can enter the country when it opens the doors to free trade, even criminals in disguise. These criminals will the commit and increase crimes, from black markets and smugglings to murders. Social security will be affected and reduced. The different cultures entering the country may also create conflicts as different cultures may go against each other. Problems and acts of rebellions rise as a result.
Therefore, as a country shifts from a closed economy to an open one, changes will occur. Some are positive changes, such as technology and education advancements and higher product qualities. Whereas some are negative changes, such as culture conflicts and increased competition for domestic firms.
A closed economy, also called autarky, is defined as an economy with no activities conducted with other economies or countries outside the national border. There are no activities of exporting and importing goods or services in a closed economy. Meanwhile, an open economy is the opposite of this. In this type of economy, people and businesses may do trading in goods and services that they produce, including those in the international community. Technology transfers, managerial exchange and all other kinds of goods and services are some forms of trade that are possible to occur.
ReplyDeleteIt is true that going open as an economy, consumers are allowed to choose the best products that are not only produced domestically, but also coming from international producers. The range of goods and services one can purchase is made even larger by making your economy an open one.
Aside from that, an open economy gives the advantages which include expansion in markets and bigger customer bases. Global interaction allows companies to collect customers even from other nations and eventually earn more money from it. In the international community, there are more businesses forming an even bigger competition, and those firms will try to set their products’ prices lower than the others’ to win more consumers. It will benefit consumers as they will need less money to afford the products offered.
However, transforming from a closed economy into an open economy may create a fall in the amount of supply which is important to satisfy the needs and wants of domestic consumers, as some of the products would be sold to the outside countries. We may refer to the country Thailand which mainly specializes in rice production, and its excessive exporting in order to increase capital and profit creates a lack of supply back for the domestic consumers. Another disadvantage of being an open economy is that it creates low interest rates and subsidies. As international trade builds up the productive capacity in an economy, trade may deteriorate that its economic welfare starts to decline. Poverty would then grow causing more people living with inadequate ability to satisfy their basic needs.
Furthermore, a closed economy is self-reliable, meaning that it needs only to be aware of its own problems and not the problems in the global economy. A closed economy is also independent from other economies, therefore, it does not have to fear the possibilities of incoming interference and coercion. Companies from all over the world building the global economy trade goods and services to earn profit, but when it is suffering, a closed economy or region will not be affected, unlike all the other economies participating in it.
To sum it up, changing into an open economy might help it to expand markets and all, but in fact, there would be much less trouble coming from the international world if you keep your economy closed. Then a closed economy would be able to focus more on supplying enough and sufficient goods and services for its own population of consumers, and caring for the troubles of its own such as reducing the number of poverty and unemployment rather than bustling self by trying to figure out what would work or earn much in other regions or countries and what to trade. As a fun fact, World Bank declared that Brazil is officially the world’s most closed economy by the amount of its imports, as a proportion of GDP, which is the least among all countries in the world, making it revealed why Brazil is so expensive.
Closed economies are Countries which unlikely to do a selling or buying to and from outside or other countries (don't export and import goods). In contrast, the Opened economies are Countries which do export and import goods to fulfil their needs and wants. In Close economy governments are the one who control all the export and import and they will make it as low as it could because of close economy are the one who want to increase/boost the domestic product. in the other hand open economy are those who want to satisfy what consumers want.
ReplyDeleteThere are several Advantages of being open from close economy. in open economy the relation of those countries are good because of the export and import stuff that they have done. also the flexibility of the economic because they can trade with multiple country. then it also means that for new economy it can boost their growth. then it also means it can increase the output of the country which is the producer. then it means GDP increase. if GDP increase it means that 3 govt aims has achieved. if recession occur it will be easier to handle for those free market country. by being open economic it also means that poverty can be reduced, because of if we are open we need more production or increase productivity which needed labor. if the labor not enough it needs to employ poor people and it means that poor people get work and if the get work they will get pay and it will make them better and stand on poverty line(not below the poverty line).
If there are advantage there should be disadvantage. the disadvantages are the goods and services are depend on the producers(other country). it also means the price is depend on the curs of other country too. the risk of smuggler(weapons or humans) are more than closed economic, because of open economy also having less role in controlling the trading of its population. the closed economy "sometimes" are stronger when in recession, because they are not depend on each other not like open economy which depend on other economy. which means that if others are in recession this economic can stay strong. being open economic also can make inflation because of the different prices of every country.
In conclusion that there are several advantages and disadvantages of being open economic, such as they can achieve 2 economies aims and 3 economies objectives which means it is good and it also means that if this keep going it will boost the growth. But in the other hand it means also abandon the other objective which inflation and inflation is one of the problems that govt need to solve. if inflation occur it will make people will buy less and make GDP of other countries less. But even tough inflation is a big problem if the inflation controlled by increasing in the wages/salary of their employees it will make the inflation less power. - Antony John Gerald
Open economic countries are countries in which there are ecnonomic activities in domestic and outside the country or international. Economic activities like where people invest like buying properties in different countries, multi-national companies operate in different countries example like mcdonald’s fast food restaurant. International trade such as import where a country buy goods from other country, not only goods but technology, services as well, like japan selling electronic devices in Indonesia. Close economic countries, where the country is some kind of isolated, like North Korea, the country is refusing goods comes from outside most people in the country are less social to the outer world of their country. North Korea are rated as the most closed country in the world, however close economic have very low economic activity domestic and international, these are caused because of several reasons, like no multi-national company is in there, no import or export activities, foreigners are rarely investing in the country as its sometimes restricted or not allowed by the government.
ReplyDeleteOpen economic countries have more advantages compared to close economic countries as there are more freedom, people in the country can have access to outer world so the knowledge can be better and the people there will become more socialize to international and globalization world. The countries can have stronger bond because of teamwork and international trade, people in the country can have better services and more variety of resources rather than close economic countries. Close economic country have also advantages. As the people in the country didn’t get influenced by the outer world, the culture of the country remains there and may last eternally, local businesses in the country have low chance to get bankrupt as the businesses compete locally rather than internationally.
Open economy have disadvantages, where the activity of economy ccan cause crimes where people getting goods in countries without permission from government , so there is not tax. This activity is called smuggling and happens in almost all countries in the world, these also can be called as black market. The culture of a country will start to blur or fading, as people are more attracted to foreign culture. The local businesses cannot compete and will close due to insufficient fund to continue developing or processing. Close economy however have more disadvantages, the people there cannot socialize well and have less knowledge about international world. The people there sometimes are considered as owned by the government so they have low amount of rights. The government sometimes concentrate it’s GDP for something like in North Korea almost all the income are used for millitary development, so the income are not used to improve public services.
The government of the countries all around the world should consider to have an open economy system, as it’s better than close system. Close economic country such as China has already open themself to the world, now china is the world 2nd leading economic development in th world after United States. Open economic system can strengthen bond between countries and each disadvantages can be solved with help and support from others, but as close cannot. This can be considered by the government