Managing Global Trade
1. Comment on the statement that “exporting maximizes the benefits of selling from countries with weak currencies”. As our book states most middle/low income countries are benefiting most from exporting their goods to higher income countries.
This maximizes their profits as it opens up their goods to countries that in the past they were unable to reach. Additionally by exporting to higher income countries, the country with the weaker economy is able to benefit from the media (advertising) of the country it is exporting to. What I mean by this is that in most cases the exporting country is introducing a “unique” item that is not found in the market they are exporting to.
This now makes that product the “it” product of the moment which in turn creates a sensationalized buzz for that product normally through media exposure. With regards to the case study during the worst financial crisis in Argentina three young entrepreneurs founded a luxury tea business.
They were able to sell this unique product to up-market outlets and trendy stores with over 75 percent of the output sold in overseas markets such as the United States, United Kingdom, Europe, and Asia. This is a fine example “exporting maximizing the benefits of selling from countries with weak currencies”.
2. Based on the information provided, what is your advice to the government of Rwanda to increase exports? I would advise them to first of all re-invest in their countries infrastructure, and I say this for two reasons by shoring up their infrastructure they can prevent things like “blackouts” from happening, and not rely so heavily on other countries to get their goods out to their foreign vendors.
It’s a two-fold approach by building up their infrastructure creating and possibly maintaining a strong airport to get their goods out via air instead of by sea, and shoring up their electrical issues they would not only save money in the long run put open themselves up to other possibilities to further stimulate their economy. Things such as tourism come to mind when I say this. Doing these few things alone would go along way in bringing Rwanda out of shadows and into greatness.