AGRICULTURAL TRADE AND INTERNATIONAL ECONOMICS

INSTRUCTIONS TO CANDIDATES

Answer Question ONE and any other THREE questions

 

QUESTION ONE

(a) Kenya is a member of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). Discuss the impact of one of these on the trade and development of a specific agricultural commodity in Kenya.                                                                                                             (12 Marks)

(b) Differentiate between import substitution and export promotion trade policies.                                                                                                             (8 Marks)

 

(d) Explain why according to stolper-samuelson free trade benefits the abundant factor and harm the scarce factor  (5 Marks)

QUESTION TWO

(a) Using suitable examples, explain why agriculture is a cause of contention in the international trade negotiations.    (10 Marks)

( b) Explain why a country with capability of producing goods may still import such goods.  (5 Marks)

 QUESTION THREE

(a) Heckscher-Ohlin argued that comparative advantage arises from differences in factor endowments between trading countries. Discuss                                                                                                                                              (10 Marks)

(b) Differentiate between Tariff and Non-Tariff Barriers                   (5 Marks)

 

QUESTION FOUR

(a) Compare and contrast the role of fiscal and monetary policies in economic development of Kenya.                                                                                         (10 Marks)

(b) Explain why empirical test of Rybczynski theorem produced paradoxical results.                                                                                                                            (5 Marks)

 

QUESTION FIVE

(a) Explain how the following trade policy instruments impact on trade of agricultural commodities.

  1. Domestic Support (3 Marks)
  2. Market Access (3 Marks)
  • Export Competition (3 Marks)

(b) Compare and contrast absolute advantage and comparative advantage.                                                                                                                                           (6 Marks)

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