Category: Economics
Causes of unfavorable terms of trade in developing countries
Production and exportation of similar products by developing countries. This leads to excess supply on the world market hence low export prices as compared to ... Read More
Income (Monetary) terms of trade (T.O.T)
Income (Monetary) T.O.T. This refers to the ratio of value of exports to the price index of imports. It shows how much a country can ... Read More
Terms of trade
Terms of trade refer to the rate at which the goods of one country are exchanged for the goods of another country. OR. Terms of ... Read More
Merits (Advantages /Arguments) for Protectionism
It encourages the exploitation and utilization of domestic idle resources. This is because protectionism against imports increases aggregate demand for the locally produced commodities. This ... Read More
Demerits (Disadvantages/ Arguments against) Protectionism
It leads to technological unemployment. This is true if the protected industries use capital intensive techniques of production which in the long run replaces labour ... Read More
Specific tax.
Specific tax. This is the tax imposed on commodities basing on their quantities or units imported for example a tax of 500/= imposed on each ... Read More
Advalorem tax.
Advalorem tax is the tax imposed on commodities basing on their monetary value. For example 30% of the value of the imported commodity as a ... Read More
Protectionism in international trade
Protectionism in international trade refers to the measures employed by the government (country) to regulate international trade. Read More
Different forms/Tools /Instruments of Protectionism (Trade barriers)
Tariffs. A tariff refers to the tax imposed on imports (import tariff) or exports (exports tariff) of the country. If the country wants to reduce ... Read More
Tools (Instruments) of the Commercial policy
Tariffs Quotas Exchange rate policy Trade agreements Economic integration Dumping State trading Export credit Read More
Beggar -my-neighbor
Beggar -my-neighbor policy refers to the measure adopted by the country to improve on its economic conditions but with adverse effects on economies of its ... Read More
Objectives of the commercial policy
To encourage exports and discourage imports in order to achieve favourable balance of payment position. To increase foreign exchange earnings in form of increased revenue ... Read More
Demerits (Disadvantages/Arguments against/Negative role) of international trade
Dumping problem. International trade encourages dumping which retards the development of local infant industries in the countries where the commodities are dumped. Note. Dumping refers ... Read More
Commercial policy
This refers to the set of rules and measures adopted by the country for the conduct and regulation of its foreign and domestic trade in ... Read More
Brain drain
Brain drain refers to the massive movement of skilled labour from one country to another especially from developing, to developed countries. Read More
The Principle (Theory) of Absolute advantage
The Principle (Theory) of Absolute advantage This theory was advanced by Adam Smith. It states that given two countries producing two commodities using similar resources, ... Read More
Advantages/Positive role/Arguments for international trade
It encourages the exploitation and utilization of idle resources like land labour in the country through the vent for surplus theory. This is because the ... Read More
The Principle (Theory) of Comparative advantage explained
The Principle (Theory) of Comparative advantage This principal states that given two countries producing two commodities using similar resources, a country should specialize in the ... Read More
Multi -lateral trade
Multi -lateral trade is trade among many countries, Read More
Invisible international trade
Invisible international trade refers to the exchange of services between countries for example tourism, electricity. Read More
Visible international trade
Visible international trade refers to the exchange of goods between countries. Read More
International trade
International trade refers to the exchange of commodities between residents of one country and those of other countries. Read More
Why do countries carry out international trade?
Differences in natural resource endowments. Different countries have different natural resource endowments in form of minerals, forests etc. Therefore there is need for counties to ... Read More
Economic Chapter 12: Economics of unemployment
Definition of unemployment Unemployment refers to the failure of member of the labour force to obtain the job at the ruling wage rate despite his ... Read More
General causes of unemployment in developing countries
Rapid growth of population. The fact that population grows faster the rat rate at which employment is created; many people remain unemployed. Existence of the ... Read More
Policies (Measures) being used to reduce unemployment in Uganda
Educational reforms. The education system is being revised to suit the man power requirements of the country. More emphasis is being put on vocational education ... Read More
Possible solutions to the manpower problems in developing countries
Education reforms. The education system should be made practical and relevant. Vocational subjects should be emphasized to encourage job creators. There is need to train ... Read More
Policy measures to reduce rural-urban migration
Rural industrialization. Industries can be set it its rural areas in order to create employment opportunities in the rural areas and discourage people from ... Read More
Causes of manpower problems in developing countries
Poor education system. The education system tends to train job seekers rather than job creators (makers) that is, theoretical subjects are emphasized at the expense ... Read More
Consequences of rural urban migration
Open-Urban unemployment. In most cases those who go to towns in search for jobs fail to get them. They end up on streets still ... Read More
Causes of rural urban migration
The wage-gap between the urban and rural areas. People move to towns in search for higher wage earning opportunities. Availability of jobs in towns. People ... Read More
Types of Trade unions
Closed shop Trade Unions (Monopoly unions). These are trade unions which require employers to employ only the workers who are members of the trade union ... Read More
Criticisms (Limitations) of the marginal productivity theory of wages (Labour)
It assumes no government intervention yet governments especially in developing countries, being the major employers interfere in the labour markets by fixing the wages paid ... Read More
Theories of wage determination
(a) Subsistence theory of wages (Iron law of wages). According to this theory, workers are given a wage which is just enough to enable them ... Read More
Assumptions of the Marginal productivity theory of wages (labour)
Perfect competition in the labour market. Homogenous units of labour employed. There is no government intervention in the labour market. Employers know the marginal product ... Read More
Advantages of piece rate system of wages
Output of the firm can easily be increased. This is because workers aim at maximizing their income and therefore they devote much of their time ... Read More
Disadvantages of time Rate System
It requires a lot of supervision to see how the work is being done. This is costly to the management. It promotes work inefficiency among ... Read More
Piece rate wage system.
Piece rate system. This is where the worker is paid according to the amount of work done in a given time. For example sales persons ... Read More
Advantages of time rate wage system
It is easy to understand and calculate by both parties that is the employer and the employees for example 200,000/= per month. It can be ... Read More
Methods of wage payment
(a) Sliding scale method (Wage index system). This is where wage payment is related to the cost of living. Workers are paid more if the ... Read More
Wage restraint.
Wage restraint. This is where the government indirectly influences private employers and trade unions to keep down the wages paid to the workers to check ... Read More
Wage freeze
Wage freeze. This is where the government directly and deliberately keeps down the wages paid to the workers for some time to check on the ... Read More
Piece rate.
Piece rate. This is where wages are paid according to the amount of work done by the employee for example 10,000/= for 2000 bricks made. ... Read More
Maximum wage legislation (Wage ceiling).
Maximum wage legislation (Wage ceiling).This is where the government sets a wage below the equilibrium wage above which the employer is not allowed to pay ... Read More
Minimum wage legislation (wage floor).
Minimum wage legislation (wage floor).This is where the government sets a wage above the equilibrium wage below which the employer is not allowed to pay ... Read More
Factors affecting reserve wages
Changes in the individual's overall wealth. Rich employee cannot not accept low wage Length of unemployment. A person who has be on lengthy unemployment accepts ... Read More
Real Wage.
Real Wage. This refers to the basket of goods and services that a nominal wage can purchase in a given time. Read More
Nominal (Money) Wage.
Nominal (Money) Wage. This refers to the wage paid to the worker in monetary terms in a given time for example 50000/= paid to the ... Read More
Wages meaning
A wage is a monetary reward to labour for the services it renders in the production process in a given time. Read More
Determinants of efficiency and productivity of labour
The quality of education and training. The higher the level and quality of education and training, the higher the efficiency of labour and the lower ... Read More
Efficiency of labour.
Efficiency of labour refers to the measure of quality and quantity of output a unit of labour can produce in a given time. Or Efficiency ... Read More
Productivity of labour
Productivity of labour. It refers to output produced per unit of labour employed in a given time. Read More
Factors that determinants of demand for labour
Derived demand for labour. The higher the derived demand for labour, the higher demand for labour and the lower the derived demand for labour, the ... Read More
Demand for labour
This refers to the quantity of labour desired by an employer at a given wage rate in a given time. OR. It refers to the ... Read More
Determinants of Labour supply
The health conditions of the worker. Good health conditions of the worker increase labour supply while poor health conditions reduce labour supply. The level of ... Read More
Labour supply
Labour supply refers to the number of individuals who are willing and able to work at the prevailing wage rate in a given time. Or ... Read More
Characteristics (structure) of Uganda’s labour force
It is a rapidly growing labour force. This is due to the high population growth rate. It is dominated by the young group aged between ... Read More
Labour force.
Labour force. This consists of economically active persons who are either employed or unemployed, aged between 16 - 64 years. The labour force excludes groups ... Read More
Labour meaning
Labour refers to physical and mental human effort used in the production process. Labour is rewarded by a wage in the factor market. Labour can ... Read More
Economic Chapter 11: Labour economics
Labour Labour refers to physical and mental human effort used in the production process. Labour is rewarded by a wage in the factor market. Labour ... Read More