I. Introduction This report introduction some economics about the world economy including free trade, exchange rate, balance of payment, NIC and LDC and so on. In this report i will analyze 14 elements to make a clear explanation about world economy. II. Text 1.Explain free trade including the theory of absolute advantage and comparative advantage Free trade had the original intention that goods and services could be exchanged freely between countries with no barriers to this exchange. Trans-Pacific Partnership Agreement, or TPP, as it’s more commonly know. 12 countries like America, Japan, Australian and so on, they reach on agreement about TPP on 5th of October in 2015. Between TPP members, the products and service price will decrease and logistics speed will increase. Add the 12 countries which accounts for 40% of the global economy. The TPP will reduce or decrease tariff on 18000 categories of products. Absolute advantage is said to occur when one country can produce a good or service to a pre-determined quality with less resources than another country. The benefit or advantage of an economy to be able to produce a commodity at a lesser opportunity cost than other entities is referred to as comparative advantage in international trade theory. In 1970s, manufacture industry take up large proportion in UK, its manufacture industry has absolute advantage. However, its industry began transfer to overseas from 1980s. Particularly manufacture industry, UK environment become very bad duo to much manufacture industry, so UK government decide close some domestic factory and invest Financial industry. Financial industry rose sharply base on this opportunity. Financial industry don’t have to cause polluti...
