You are the economic advisor to the President of Knightland, who is concerned about several problems confronting his country. Knightland’s top exporting sector, manufacturing, is falling substantially behind those in other countries that can sell their products more cheaply on the international market. Also, his citizens are suffering from inflation, largely driven by rising food prices.
Knightland is bordered by four other countries: three of those countries are Georginia, Eastlantica, and Alassippi. These countries combined account for 60-75% of the foreign trade with each other upon which they all depend. Knightland has a large skilled population, but not much in the way of rich mineral resources for manufacturing, which is its top export industry. It also lacks in the way of agricultural products for that matter. Georginia has rich mineral resources for manufacturing, but very little in regard to an agricultural sector. Eastlantica has a climate that allows it to excel at agricultural production of all kinds, but it lacks mineral resources for manufacturing. Alassippi lacks much in the way of any of the above resources, except it does have a fishing industry and the nearest major shipping port to the other 100 countries on the planet, which constitutes 79% of that world’s population. Knightland, Georgiana, Eastlantica, and Alassippi all impose substantial tariffs to protect their own industries in which they lack inherent or natural assets.
Knightland is also bordered by Bullanova, a country that is much, much larger than it and the other three aforementioned countries, and Bullanova has various economic assets, which allow it to have a much stronger economy than any of the four previously mentioned countries. While your president gets along well with the queen of Bullanova, your president worries that the queen is getting up in years and may at some point relinquish the thrown to her eldest son, a prince who has aspirations for using Bullanova ’s economic power to gain dominance over Knightland and some of the others.
Since the people of Knightland have a vigorous and independent spirit that your president wants to protect, what kind of economic action would you recommend your president take to improve the economic and international prospects for Knightland? Based on insights from this class, please provide recommendations for each of the following: 1) an economic policy that Knightland could undertake unilaterally to help its manufacturing sector and address the problem of rising food prices, 2) economic policies that Knightland could undertake on a bilateral basis with some of its neighbors, and 3) multilateral economic policies Knightland could promote collectively with Georgiana, Eastlantica, and Alassippi to address some of their common economic and geopolitical problems. Be sure to integrate into your discussion relevant concepts, historical examples, and names of prominent individuals covered in the course, as well as discussion of advantages and disadvantages associated with each of your three proposals.
