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Select either intellectual property rights or agriculture as the topic you will analyze based on the case study reading from this unit's studies, Stalemate at the WTO: TRIPS, Agricultural Subsidies, and the Doha Round.
Explain the rationale for selecting your topic.
Identify a microeconomic concept and analyze how it may apply to your selection.
Identify a macroeconomic concept and analyze how it may apply to your selection.
The topic that has been selected for the analysis is “Agricultural Subsidies”. The reason behind the selection of this topic is that I consider it more important than the Intellectual Property Rights. Agricultural Subsidies in comparison to the Intellectual Property Rights relates directly to the individuals at the ground level of the economy. Therefore, I believe discussing this area would be more logical.
As stated in the case, the tariffs on the agricultural produce helps the countries protect their farmers from the external forces. Moreover, for developing countries, where the produce within the country is low, the reduced tariffs attract more international sellers which provide enough food for the population (Daemmrich, 2011).
WTO has ensured that countries around the world agree on Agricultural tariffs imposed any particular country and consult them in case they are not ready to accept such charges. As per the case, WTO has taken various actions that have ensured that the Agricultural produce is taken good care by the respective countries along with a proper management of international trade.
The macroeconomic concept I have selected for this case is Inflation. Inflation refers to rise in the prices of the products and services of a country due to various reasons. Inflation is considered good, but only if it is moving up with an appreciable rate. Inflation can worsen the life of common people if the income of the people is not moving up parallel to the inflation (Bruno and Easterly, 1998). Rise in inflation to a greater amount - in comparison to the rise in individual income – makes agricultural products unaffordable to the population. In such circumstances, it becomes imperative that the government of that particular country reduce the tariffs imposed on the international importers of agricultural products and bring in cheap produce to feed the masses. Moreover, the second action is to impose high tariffs on agricultural produce that are being exported out of the country. This discourages the agricultural products from going outside the country and in this manner; prices of produces can be brought to normal or to an affordable level (Ruttan, 1979).
The microeconomic concept I have selected for this case is demand. Demand refers to the desire of the individuals to have certain products added with the ability to pay for that product (Cowell, 2006). The demand for certain products or services rise or fall based on the changing taste habits of the population or change in the trend. As per the agricultural products are concerned, the change in the demand can be only observed for the produces that are not essential items. The demand for certain agricultural products can be managed by either increasing the price – imposing higher taxes – or reducing the price – by providing subsidies (Tilman et al, 2011). The management of demand of certain agricultural products becomes necessary when the government wants population to orient towards the produce that are abundant in the economy so that the government does not have to purchase the less essential agricultural produce from the international market.
Overall, it can be stated that the concept of inflation and demand are interrelated to most extent and both have greater impact on the agricultural produces.
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Daemmrich, A. A. (2011). Stalemate at the WTO: TRIPS, Agricultural Subsidies, and the Doha Round. Harvard Business School BGIE Unit Case, (711-043).
Bruno, M., & Easterly, W. (1998). Inflation crises and long-run growth. Journal of Monetary Economics, 41(1), 3-26.
Ruttan, V. W. (1979). Inflation and productivity. American Journal of Agricultural Economics, 61(5), 896-902.
Tilman, D., Balzer, C., Hill, J., & Befort, B. L. (2011). Global food demand and the sustainable intensification of agriculture. Proceedings of the National Academy of Sciences, 108(50), 20260-20264.
Cowell, F. A. (2006). Microeconomics: principles and analysis. OUP Catalogue.
Bruno, M., & Easterly, W. (1998). Inflation crises and long-run growth. Journal of Monetary Economics, 41(1), 3-26.
Ruttan, V. W. (1979). Inflation and productivity. American Journal of Agricultural Economics, 61(5), 896-902.
Tilman, D., Balzer, C., Hill, J., & Befort, B. L. (2011). Global food demand and the sustainable intensification of agriculture. Proceedings of the National Academy of Sciences, 108(50), 20260-20264.
Cowell, F. A. (2006). Microeconomics: principles and analysis. OUP Catalogue.
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