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Economic Structure, Trade & Investment Analysis (Economic Structure…

- - - - Agriculture, forestry, mining, fishing
    - - Manufacturing activities
    - - Service and related industries:
        banking, commerce, retail, tourism, engineering, medical, hospitality
  - - - Singapore: dominant service sector
      - China: dominant service & industry sector
- - - - E.g. developing countries adopt specific strategies to encourage exports or prevent imports
      - E.g. developed countries more open trade
  - - - continuous trade imbalance is a cause for concern
        
        Can cause government intervention
        thru Fiscal & Monetary Policies
- - - - Position of finances of the government
        OR
        use of gov spending to influence the economy
      - can be a:
        Balanced Budget
        Budget surplus
        Budget deficit
    - - vary amongst countries
      - Attract investors
        
        lower tax rates
        
        double tax (avoidance) treaties
        
        bilateral economic agreement that aims to avoid or limit double taxation
      - Deter investors
        
        impose restrictions
        
        additional taxes on repatriation of profits
        
        E.g. foreign owned countries to pay 10% tax on repatriated profits in China
  - - - Stimulates growth or achieve stability in the economy in terms of MONEY SUPPLY
        
        influenced by
        
        Contractionary Policy
        
        Raise Interest rates
        
        Expansionary Policy
        
        Lower interest rates
    - - Income levels not equal with prices:
        purchasing power dec.
        
        Prices of input inc.
        ->inc wages
      - Continuous inflation will...
        
        Devaluate currency
        
        MNC's profits repatriated lower
    - - affect profitability
        
        borrowing in country with HIGH interest
        = high cost of operations and low profit
        
        Depositing in foreign country with HIGH interest
        = higher returns