'Economics of Competitive Advantage Essay\r'

'A globalized parsimoniousness in its theory entails opening up of the local economy of a certain awkward towards externalization, creating a â€Å"borderless world economy”. Thus, ideally, it should pave the elan for frugal interdependence and promote economical equitable play amongst participate countries. Globalization shall surely publish an economy towards the world market due to increase amount of global trade and commutings in products and run and by encouraging application for an open-economy.\r\nGlobalization has enforce too many changes on the external pecuniary policies. On the different hand, international monetary has in earnest influenced trade and investment policies, finance, tourism and many other aspects that atomic number 18 coincided with the modernity imposed by globalization. Moreover, open-economy principles dupe profoundly discovered exchange rate policies on the macro level. Thus, international economic migration has increased pic towar ds international financial changes and commercial flows. (Frieden, p. 1)\r\nMoreover, according to Betts and Kehoe (2004), the amount real exchange rate movements are believed to be influenced by inter-country movements with regards to the relative prices of their traded goods within countries. Also, the capital title of international trade widely influences the trade prices of goods and services. Thus, it overly turns out that changes or fluctuation in the on currency will decrease the buying powerfulness of a particular currency if compared to other currencies that be possessed of less amount of fluctuations in their market.\r\nIn addition, the untouchable market competitors in this case, are those who are believed to ready severe economic relations with participating countries, and so they carry an edge towards their trade practices. Nevertheless, they don’t act to stabilize world exchange rates, quite an they only work to provide balance of trades and multi-lat eral interaction amongst participating nations. There are several factors that affect the bilateral rate movements which have signifi fuelt economic effects.\r\nAccording to the Reserve Bank of Australia Bulletin (RBAB) (1998, p. 2) These are: (1) divergences between export and import and aggregated trade-weighted exchange rates; (2) role of US dollar as currency for international trade; (3) longer-term pricing of goodness exports in terms of other major currencies; and (4) splendour of bilateral rates vis-a vis competitor countries with relatively small-scale direct trade. These changes however, the depreciation or appreciation can create effects on international competitiveness.\r\nMoreover, apart from purely economic reasons of rate fluctuations, the political typeface behind changes in the market activity is in like manner significant. This political-economic aspect is important most especially amongst exploitation nations. The emergence of developing countries and the c ontinuing influence of strong countries amongst less empowered countries create domestic and international political pressures that are integral to the competitiveness of the participating countries (Freiden, p. 12)\r\nThus, economically speaking, exchange rate fluctuations have impacts on the country’s competitiveness. Stability or non-stability of their currency has adverse effects on the currency’s buying and trading power. On the political aspect, excluding the changes and fluctuations in the currency rates, powerful groups and powerful consumers affect international economic integration. And thus the openness of world economy therefore pushes more politicized movements and political pressures in the economic arena.\r\n'