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Assignment 6

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Assignment 6

  1. 1. Running head: ASSIGNMENT 6 1 Assignment #6 Steven C. Vogel American Military University Professor Jodi Bouvin April 21, 2011
  2. 2. Assignment #6 2 The focus of this paper will apply the Classical Theory brought largely by Adam Smith, as it applies to Canada and Botswana (Ajami, 2006). Adam Smith contended that each nation should focus on resources and talent that the country possesses. The country should produce products and services that are most readily available and develop trade with countries that need their resources and are able to provide products and services the country does not have. At the end of the narrative portion, I have included a table that compares the two nations in light of factors such as Gross National Income (GNI), literacy, per capita economic indicators and others. Botswana is a third world nation about the size of Texas, which is landlocked on the continent of Africa. The fact that Botswana is landlocked contributes to its complication and higher expense for exports. South Africa controls much of the ports and has agreements with five other African nations to ship goods. The country is rich in mining, which supplies 40% of the nation’s gross domestic product (GDP) (Background note: Canada, 2010). Diamond mining has contributed to the unprecedented growth for the nation until the recent downturn of the world economy in 2009. Additionally, the country produces a large amount of beef for itself and other nations. Unfortunately, a large segment of the population relies on sustenance farming due to poor land and agricultural technology. Trading is done primarily with South Africa, European Union and the United States. Botswana has wisely applied the Classical Theory by capitalizing off of the gem quality diamond mining as a major export. The country instituted a flat tax of 17%, following the lead of other nations that have instituted it and prospered. Botswana is still plagued with a low life expectancy and struggles with antiquated medical beliefs such as ridding yourself of AIDS by having sex with a virgin. These beliefs continue the spread of AIDS and other associated illnesses with the disease.
  3. 3. Assignment #6 3 Botswana has a fairly stable government and governmental system. Corruption is no where near levels found in neighboring countries. The nation exports more goods than it imports. Due to poor farming practices, the country is required to import a large amount of food. When comparing the GNI and GNI per capita rates of Canada and Botswana, it is evident that the standard of living for Botswana has a large gap to eliminate. This gap casts Botswana into a third world nation status. Canada falls in the category of a first world nation status due to its high standard of living and GNI. “The United States and Canada share the world's largest and most comprehensive trading relationship, which supports millions of jobs in each country” (“Background note: canada.” 2011). The free trade agreements between the country allow an expedited process to clear goods transferred between the two countries. This climate contributes to the two countries success in reducing the price of goods. Canada has a high literacy rate which opens the door to providing any amount of services to export. The country is also rich in petroleum resources, timber and fish. Canada is the largest provider of oil (20%) and natural gas (18%) to the United States (“Background note: canada” 2011). Canada is wise in following the Classical Theory and utilizing its resources to export. With the United States reluctant to tap their own oil resources while letting other countries drill off of their own coasts, Canada takes advantage and provides a commodity the United States is unwilling to gather. Border agreements with the United States allow for a peaceful coexistence and sharing of natural resources found in fresh water lakes and rivers. Canada is capable of producing much of their needs, but requires a large amount of agricultural imports due to their colder climate.
  4. 4. Assignment #6 4 Canada also has to maintain a higher revenue source for the added costs of heating homes and businesses. Both countries appear to be utilizing the Classical Theory in their countries. Diamond exports for Botswana and petroleum products for Canada are plentiful and utilized as an export to bring money into the country. Botswana must develop internal resources by continuing to increase their literacy rates and life expectancy. Botswana could follow India as a shining example of creating an intangible resource with knowledge and exporting services and technology that higher education affords. Botswana Canada REFERENCE Population 2.06 Million 33.7 Million Botswana (“Background note: botswana.” 2011) Canada (“Background note: canada.” 2011) GNI $5.25 Billion $682 Billion ("Gross nationa l income," 2011) GNI per capita $3202 $20, 790 ("Gross nationa l income," 2011) Annual Export Levels 5.127 B 383.6B (2010) Canada ("Industr y canada," 2011) Botswana ("Background note: botswana," 2011) Life Expectancy 58.5 77.7 M 82.5 F U.S. State Department (Canada) (“Background note: canada.” 2010) Botswana ("Background note: botswana," 2011) Literacy rates 84.8% 99% ("Background note: botswana," 2011) (Botswana) U.S. State Department (Canada) (“Background note: canada.” 2010)
  5. 5. Assignment #6 5 Energy Consumption Rates 1073 Kgoe 8473 kgoe Canada (2005) ("Energy and resources," 2011) Botswana (2005) (“Energy and resources,” 2011) GDP Growth Rates .9 (2006) 1.7 (2006) Source: ("List of countries, " 2011) Imports 3.931 B 406.4 B U.S. State Department (Botswana) ("Background note: botswana," 2011) Canada ("Economy of canada," 2011)
  6. 6. Assignment #6 6 References Ajami, R., Cool, K., Goddard, G. (2006), International business: Theory and Practice, Armonk, NY: M. E. Sharp, Inc. Back ground not e: bot swana . (2011, April 18). Retrieved from http://ww w.s tate. go v/r /pa/e i/b gn/1830. ht m Background note: Canada. (2010, September 1). Retrieved from http://www.state.gov/r/pa/ei/bgn/2089.htm Econom y of canada . (2011, April 19). Retrieved from http://en. w ik iped ia .or g/ w ik i/ Eco no m y_o f_Ca nada Energy and resources — energy consum pt ion: t ot al energy consum pt ion per capit a – bot swana. (2011, April 23). Retrieved from http://earthtrends.wri.org/searchable_db/results.php?years=2005- 2005&variable_ID=351&theme=6&cID=25&ccID= Energy and resources — energy consum pt ion: t ot al energy consum pt ion per capit a - canada. (2011, April 23). Retrieved from http://eart htre nds. wr i.or g/s earc hab le_db /res ults.p hp? years=2005 - 2005&variable_I D=351& t he me=6&cI D=33 &ccI D G ross nat ional incom e. (2011). Retrieved from http://ww w. nat io nmaste r.co m/ grap h/eco_ gro_ na t_ inc - economy- gross- na t io na l- inco me
  7. 7. Assignment #6 7 Gross national income (per capita). (2011). Retrieved from http://www.nationmaster.com/graph/eco_gro_nat_inc_percap-gross-national- income-per-capita Indust ry canada. (2011, April 18). Retrieved from http://ww w. ic. gc.ca/e ic/ s ite/c is - s ic. ns f/e ng/ h_00030. ht ml List of count ries by gdp (real) per capit a growt h rat e. (2011, January 6). Retrieved from http://en. w ik iped ia .or g/ w ik i/ List_o f_ co untr ies_b y_ GDP_ (rea l) _growth_rate_per_cap ita