International Price Escalation Essay Example | Topics and Well Written Essays - 1000 words

International Price Escalation - Essay ExampleThe rise in the prices of entirely these commodities started in the year 2006, when the international markets faced a steep hike in the prices of all the eatables around the globe. This essay shall discuss the concept of price escalation along with its causes and the course to be taken to reform it. Price Escalation According to the definitions given by the economists, the concept of price escalation refers, more or less, to the concept of puffiness in the economy. It is defined as the tendency and ability of prices to reach the supernormal heights when the products atomic number 18 be marketed. Taking this concept further, international price escalation occurs when the goods are particularly being marketed internationally. The companies, due to the affects of escalation, the companies normally pack their activities and resources in re positioning and establishing their brand overseas (ECLAC, 2006, Online). The major causes that cont ribute to such price hikes imply import duties, trade barriers, added transport, warehousing and freight embodys, insurance, international lawyer charges, and other necessary charges. Causes There are various causes for the price escalation of the commodities on international level. There may be many imbalances between the subscribe to and supply side of the products and services which causes prices to rise globally without any assurance of coming down again. much clearly, these causes include Structural Factors The structural causes of the global price hike include Rise in the cost of production The implication of the price rise is possible due to the fact that the oil resources are diminish and getting scarcer with the passage of time. The consumption patterns have been shifting and though, the newer technology is deployed to increase the efficiency but the economic crunch and recession has brought further obstacles. This, in turn, has impacted the prices of food and other bi-products of oil to increase thus, braggart(a) shocks to the prices of the related products (Dessus & Hoyos, 2008, Pp. 201). Change in consumption patterns in various countries and sustained rapid growth matchless of the major reasons for the international price escalation is the change in consumption patterns and trends of the population in various countries. The growth economies such as India and china account for the changing consumption trends of various products. One of the contributing factors to this structural spiral is the continuous expansion and thus, growing demands for the foods and services in various countries (Dawe, 2008, Online). Moreover, the translation of growing economies has increase the per capita income of the consumers, and so they are capable enough to improve their standards of living. This has helped push up the demand of the consumption baskets with higher(prenominal) rates (Dasgupta & Serageldin, 2000, Pp. 111). Temporary Factors The temporary fact ors accounting for such price escalation include the following Natural disasters and low-down weather The world has experienced bad weather, natural disasters and other avalanches which results into the inevitable damage of the natural products. These unfortunate events have resulted into an extreme rise in the prices of natural products such as wheat, rice, cotton and other crops (Temple & Johnson, 1998,