International Trade Chapter I: Introduction to International Trade
Lectured by: Mrs. LONG Mamidi
I. Introduction
The growth of market day to day
The effect: the growth in economic and develop of nations Eg: GDPs Cambodia 1997-2007-2011
=> 302- 459-850 The flow of goods and service of one country and not only local Effect on Consumers, Suppliers, Government
I. The introduction
Globalization
more formally refers to the economic, social, cultural or environmental changes that tend to interconnect peoples around the world. Global marketplace on consumers, businesses and governments. That is where the study of international economics begins.
I. Introduction of International Trade
International trade - applies microeconomic models to help understand the international economy. Its content includes: supply and demand analysis, firm and consumer behavior, perfectly competitive, oligopolistic and monopolistic market structures, the effects of market distortions.
The Definition of Int. Trade
International trade is the exchange of goods and services across international boundaries or territories. In most countries, it represents a significant share of GDP. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the primary meaning of "globalization".
Objective of Int. trade
Effects on individuals and businesses because of international trade itself, because of changes in trade policies and due to changes in other economic conditions. The course will develop arguments that support a free trade policy as well as arguments that support various types of protectionist policies. understand the centuries-old controversy between free trade and protectionism.
II. Why International Trade?
1. The Reasons of Trade Why International Trade? Why one country conduct trade with other?
The deficient of raw material, lumber or oil Resources to produce goods and/or services Exchange of food and finished goods
Each country has it own specialist: Capital, labor, land
Specialization
Capital-intensive product: car, truck, heavy construction equipment, industrial machinery- highly developed industrial base. Eg:Japan-Car Labor-intensive commodities: clothes, shoes, other consumer good- low labor costs &modern production facilities. Eg: China, Indonesia, Philipine Land-intensive product: cattle production &Wheat farming. The country with no large tracts of land- buy. Eg: USA-leading exporter of wheat.
III. Factors Influence International Trading Activities
1. Political Environment
Encourage: reduce taxes or some other
investment incentive
Discourage Impose strict regulation- cause large companies to leave &open a plant in a country that provide more favorable operating conditions. So, the concern of political stabilityforeign trade and investment. Foreign currency- subject to price fluctuation Former Soviet Union: Strong political belief
III. Factor Influence International Trading Activities
2. Economic Environment The important factor: tax-apply to imported goods, import tariff Protective tariff to protect domestic companies Import quota: limited the amount of a particular product export. Eg: Quota Car from Japan Non-tariff barrier- help to protect domestic companies. Eg: licenses, permit, paper allow imports- Japan&EU use this strategy often
III. Factor Influence International Trading Activities
3. Cultural environment General Motor sell Chevy Nova. Nova in Speanish mean doesnt go. Bribery 4. Physical environment Near River is potential market
IV. World Trade Organization and Agreement
1.
GATT 1947: USA+23 countries- General Agreement on Tariff and Trade( GATT) which is now more than 100 countries. Purpose: foster equal (nondiscriminatory treatment for all member nations) Promote the reduction of tariff by multilateral negotiation Foster the elimination of import Quotas
Now begin to liberalize agriculture and services market. They would eliminate the many quota systems - like the multi-fiber agreement in clothing - that had sprouted up in previous decades. minimum standards to protect intellectual property rights such as patents, trademarks and copyrights.
The WTO:
created to manage this system of new agreements, to provide a forum for regular discussion of trade matters process for settling trade disputes that might arise among countries. As of 2006, 149 countries were members of the WTO "trade liberalization club" and many more countries were still negotiating entry.
2. USA+Canada+Mexico North American Free Trade Agreement (NAFTA) in 1994 To compete effectiveness with EEC( European Economic Commodity) and other trading blocs that might develop in future. 3. IMF: International Monetary Fund mission provide loan to country that are in financial trouble. IMF: dictates the term of the loans, including cutting domestic subsidies, privatizing government industries, and moderation trade policies. 4. World Bank: 157- help less developed countries achieve economic growth through improved trade. ( provide laon, guaranteeing, insuring private loans to nation in need financial assistant.
V. Some Trade Terminology
In trade policy discussions terms such as: protectionism free trade, trade liberalization are used repeatedly. One other term is commonly used in the analysis of trade models: namely national autarky, or just autarky.
Some countries, Singapore and (formerly) Hong Kong, highly free trade oriented. Others, like North Korea and Cuba, have long been relatively closed economies and thus are closer to the state of autarky. The rest of the world lies somewhere in between.
Most policy discussions are not about whether governments should pursue one of these two extremes. Instead, discussions focus on which direction a country should move along the trade spectrum. Since every country today is somewhere in the middle, discussions should move the nation in the direction of free trade or in the direction of autarky.
