chapter 1-introduction to int trade

8/4/2019 Chapter 1-Introduction to Int Trade

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International Trade

Chapter I: Introduction to

International Trade

Lectured by: Mrs. LONG Mamidi


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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 countryand not only local

Effect on Consumers, Suppliers, Government

I. Introduction


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I. The introduction

Globalization more formally refers to the economic,

social, cultural or environmental changes

that tend to interconnect peoples aroundthe world.

Global marketplace on consumers,businesses and governments.

That is where the study of internationaleconomics begins.


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I. Introduction of International Trade

International trade - appliesmicroeconomic models to help understandthe international economy.

Its content includes:

supply and demand analysis,

firm and consumer behavior,

perfectly competitive,

oligopolistic and monopolistic marketstructures,

the effects of market distortions.


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The Definition of Int. Trade

International trade is the exchange ofgoods and services across internationalboundaries or territories. In most

countries, it represents a significant shareofGDP.

Industrialization, advancedtransportation, globalization,multinational corporations, and

outsourcing are all having a majorimpact. Increasing international trade isthe primary meaning of "globalization".
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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-oldcontroversy between free trade andprotectionism.


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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


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Specialization

Capital-intensive product: car, truck,heavy construction equipment, industrialmachinery- highly developed industrial

base. Eg:Japan-Car Labor-intensive commodities: clothes,

shoes, other consumer good- low laborcosts &modern production facilities. Eg:China, Indonesia, Philipine

Land-intensive product: cattleproduction &Wheat farming. The countrywith no large tracts of land- buy. Eg:USA-leading exporter of wheat.


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III. Factors Influence InternationalTrading Activities

1. Political Environment

Encourage: reduce taxes or some otherinvestment incentive

Discourage Impose strict regulation- cause large

companies to leave &open a plant in a countrythat provide more favorable operating

conditions. So, the concern of political stability-foreign trade and investment.

Foreign currency- subject to price fluctuation

Former Soviet Union: Strong political belief


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III. Factor Influence InternationalTrading Activities

2. Economic Environment The important factor: tax-apply to

imported goods, import tariff Protective tariffto protect domestic

companies Import quota: limited the amount of a

particular product export. Eg: Quota Carfrom Japan

Non-tariff barrier- help to protect domesticcompanies. Eg: licenses, permit, paperallow imports- Japan&EU use this strategyoften


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III. Factor Influence InternationalTrading Activities

3. Cultural environment

General Motor sell Chevy Nova.

Nova in Speanish mean doesntgo.

Bribery

4. Physical environment

Near River is potential market


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IV. World Trade Organization andAgreement

1. GATT

1947: USA+23 countries- GeneralAgreement 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


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Now begin to liberalize agriculture andservices market.

They would eliminate the many quotasystems - like the multi-fiber agreement in

clothing - that had sprouted up in previousdecades.

minimum standards to protect intellectualproperty rights such as patents, trademarks

and copyrights.


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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" andmany more countries were stillnegotiating entry.


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2. USA+Canada+Mexico North American FreeTrade Agreement (NAFTA) in 1994 To compete effectiveness with EEC( European

Economic Commodity) and other trading blocsthat might develop in future.

3. IMF: International Monetary Fund mission provideloan to country that are in financial trouble.

IMF: dictates the term of the loans, includingcutting domestic subsidies, privatizinggovernment industries, and moderation trade

policies.4. World Bank: 157- help less developed countries

achieve economic growth through improvedtrade. ( provide laon, guaranteeing, insuringprivate loans to nation in need financial assistant.


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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 theanalysis of trade models: namely national autarky, or just

autarky.


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Some countries, Singapore and(formerly) Hong Kong, highly freetrade oriented.

Others, like North Korea and Cuba,have long been relatively closedeconomies and thus are closer to

the state of autarky. The rest of the world lies

somewhere in between.


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Most policy discussions are not aboutwhether governments should pursue oneof these two extremes.

Instead, discussions focus on whichdirection a country should move alongthe trade spectrum.

Since every country today is somewhere

in the middle, discussions should movethe nation in the direction of free tradeor in the direction of autarky.

chapter 1-introduction to int trade

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