global marketing-session 1

8/3/2019 Global Marketing-session 1

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GLOBAL

MARKETINGBy:

Aastha Uppal

Aishani Vij

Apoorwa MiddhaAvantika Gupta

Deviyani Bhasin

Nitiz Kaila

Sneha Kumar


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GLOBALIZATION


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Globalization refers to the increasing unification of theworld's economic order through reduction of barriers tointernational trade.

The goal is to increase material wealth, goods, andservices through an international division of labor byefficiencies catalyzed by international relations,specialization and competition.

It describes the process by which regional economies,societies, and cultures have become integrated throughcommunication, transportation, and trade.


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The term is most closely associated with the

term economic globalization: the integration of national

economies into the international economy

through trade, foreign direct investment, capital

flows, migration, the spread of technology,and military presence.

However, globalization is usually recognized as beingdriven by a combination of economic, technological,

socio-cultural, political, and biological factors.


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EFFECTS OF GLOBALIZATION

Effect on World Trade

Industrial Effects

Financial Effects

Economic Effects

Political Effects

Ecological Effects

Informational Effects


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Effect on World Trade

From an economic perspective, the primary engine that is

driving the complex effects of globalization on trade isliberalization.

This means that globalization emphasizes that trading

among member countries that trade in goods and servicesshould be borderless.


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Once markets are free from trade restrictions, factors ofproductioncapital and labour -- will be directed by the

unrestricted forces of demand and supply, leading to

efficient investment by producers.

Labor would move from one sector into another with

smooth transition and goods move from one market to

another without friction.

The ultimate result will be an increase in total outputfor

all trading partners.


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Industrial

Emergence of worldwide production markets and broader

access to a range of foreign products Movement of material and goods between and within

national boundaries.

Financial

Emergence of worldwide financial markets and better access

to external financing for borrowers.


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Economic Realization of a global common market, based on the

freedom of exchange of goods and capital.

In the job market, employees compete indirectly in aglobal job market. Because workers compete in a globalmarket, wages are less dependent on the success or failureof individual economies.

Improved productivity and increased competition. Due tothe market becoming worldwide, companies in variousindustries have to upgrade their products and usetechnology skillfully in order to face increasedcompetition.


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Political The development of globalization has wide-ranging impacts

on political developments, which particularly go along withthe decrease of the importance of the state.

Through the creation of institutions such as the EU,the WTO, the G8 or the International Criminal Court, thestate loses power of policy making and thus sovereignty.

However, many see the relative decline in US power as beingbased in globalization, particularly due to its high tradeimbalance. The consequence of this is a global power shifttowards Asian states, particularly China, that has seemtremendous growth rates.


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Ecological The advent of global environmental challenges that might

be solved with international cooperation are climate change,cross-boundary water and air pollution, over-fishing of theocean, and the spread of invasive species.

Informational

Increase in information flows between geographicallyremote locations. Arguably this is a technological changewith the advent of fiber optic communications, satellites,and increased availability of telephone and Internet.


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IMF


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ABOUT THE IMF

The IMF is an international organization of 185 membercountries. It was established to promote international

monetary cooperation, exchange stability, and orderlyexchange arrangements; to foster economic growth and

high levels of employment; and to provide temporary

financial assistance to countries to help ease balance of

payments adjustment


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WHY WAS IT CREATED?

The IMF was conceived in July 1944, whenrepresentatives of 45 governments agreed on a

framework for international economic cooperation.

The IMF's founders charged the new institution withoverseeing the international monetary system to ensure

exchange rate stability and encouraging membercountries to eliminate exchange restrictions that hinderedtrade


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WHAT DOES THE IMF DO?

The IMF's primary purpose is to ensure the stability of theinternational monetary system the system of exchangerates and international payments.

To maintain stability and prevent crises, the IMF reviewsnational, regional, and global economic and financialdevelopments


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The IMF also makes financing temporarily available tomember countries to help them address balance ofpayments problems

It also provides technical assistance and training to helpcountries build the expertise and institutions they need foreconomic stability and growth


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WHERE DOES THE IMF GET ITS

MONEY?

The IMF's resources come mainly from the quotas thatcountries deposit when they join the IMF. The UnitedStates, the world's largest economy, has the largest quota

in the IMF.

The IMF earns income from the interest charges and feeslevied on its loans. It uses this income to meet fundingcosts, pay for administrative expenses, and maintain

precautionary balances.


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WORLD BANK


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INTRODUCTION

The World Bank is an international financial

institution that provides loansto developing

countries for capital programs. The World Bank has a

stated goal of reducing poverty. By law, all of its

decisions must be guided by a commitment to

promote foreign investment, international trade and

facilitate capital investment.

World Bank is one of the five institutions created at the

Bretton Wood Conference in 1944 after 2nd world war.


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The World Bank consists of the International Bank for

Reconstruction and Development (IBRD) and the

International Development Association (IDA), the latter

created in 1960.

Both institutions make loans to governments (or to

public or private entities that have a government

guarantee) for projects and programs related to"development," that is, loans designed to promote

economic and social progress in member countries.


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The IDA, however, provides concessional loans (interestfree and long term) to the very poor countries (measuredby per capita gross national product) that cannot affordIBRD loans.

Unlike the IBRD, which raises its funds on theinternational capital markets, the IDAs funding comesfrom donations from the worlds rich countries.


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Three other entities are associated with, but legally and

financially independent of the IBRD and the IDA: The

International Finance Corporation (IFC), the International

Center for Settlement of Investment Disputes (ICSID),

and the Multilateral Investment Guarantee Agency

(MIGA).

Collectively, these five entities are known as the WorldBank Group.


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THE WORLD BANK-NOT A BANK IN

THE COMMON SENSE OF THE WORD

Single person cannot open an account or ask for a loan.

Rather, the Bank provides loans, grants and technical

assistance to countries and the private sector to reduce

poverty in developing

It has over 187 member countries and provides over $24

billion annually for activities ranging from agriculture totrade policy, from health and education to energy and

mining. and transition countries.


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WORLD BANK FUNCTIONS

1) Although the IMF and the IBRD Seem Like Very

Similar Institutions, Formally They Differ in

Fundamental Ways.

a) Both are multilateral institutions whose charters callfor weighted voting; both also focus on economic

matters in member countries.

b) The IBRD, however, is an investment bank that

intermediates between investors, who buy the Banksbonds, and developing countries, which borrow from the

Bank.


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2) The IBRDs Lending Stresses Market-Based

Economic Development and Poverty Reduction.

a) The IBRD initially focused on project lending,

concentrating on investment in physical capital indeveloping countries.

b) In the 1960s and 1970s the IBRD began to focus on

investing in human capital.

c)The debt crisis of the 1980s prompted the IBRD tomake market-based adjustment loans.


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3) In the 1990s the Bank Tried to Improve its

Responsiveness While Stressing Poverty Alleviation

and Corruption Reduction.

In the 1990s the World Bank, a relatively largeinstitution with its headquarters in Washington, D.C.,

came under criticism from many quarters. Critics claim it

is a top-down, unresponsive institution that is out of

touch with grassroots development realities in membercountries. In response, the Bank has formed an Inspection

Panel to monitor the Banks compliance with its own

policies.


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4)The IFC, MIGA and ICSID Help Mobilize the Private

Sector.

The International Finance Corporation (IFC), formed in

1956, promotes private sector investment in poorcountries that would otherwise not easily attract private

investment.

Established in 1988, the Multilateral Investment

Guarantee Agency (MIGA) is the most recent addition tothe World Bank Group. MIGA is an investment insurance

agency that encourages foreign direct investment in

developing nations.


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The International Center for Settlement of Investment

Disputes (ICSID) was established by treaty in 1966 in

order to provide a forum for arbitration or mediation of

disputes between foreign investors and their host

countries.

Its purpose is to promote increased flows of international

investment by providing a forum outside the host statefor settlement of investment disputes.


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MFAMULTI FIBREARRANGEMENT


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INTRODUCTION

The Multi Fibre Arrangement (MFA) governed the worldtrade in textiles and garments from 1974 through 2004,imposing quotas on the amount developing countriescould export to developed countries.

The MFA was introduced in 1974 as a short-termmeasure intended to allow developed countries to adjustto imports from the developing world. Developingcountries have a natural advantage in textile production

because it is labour intensive and they have low labourcosts. According to a World Bank/International MonetaryFund (IMF) study, the system has cost the developingworld 27 million jobs and $40 billion a year in lostexports.


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However, the Arrangement was not negative for alldeveloping countries. For example the European Union(EU) imposed no restrictions or duties on imports fromthe very poorest countries, such as Bangladesh, leading

to a massive expansion of the industry there.

At the General Agreement on Tariffs and Trade(GATT) Uruguay Round, it was decided to bring thetextile trade under the jurisdiction of the World Trade

Organization. The Agreement on Textiles and Clothingprovided for the gradual dismantling of the quotas thatexisted under the MFA. This process was completed on1 January 2005. However, large tariffs remain in placeon many textile products.


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Bangladesh was expected to suffer the most from theending of the MFA, as it was expected to face morecompetition, particularly from China.

However, this was not the case. It turns out that even in theface of other economic giants, Bangladeshs labour ischeaper than anywhere else in the world. While somesmaller factories were documented making pay cuts andlayoffs, most downsizing was essentially speculativetheorders for goods kept coming even after the MFA expired.In fact, Bangladesh's exports increased in value by about$500 million in 2006.

However, poorer countries within the developed world,

such as Greece and Portugal, are expected to lose out.


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When the EU announced their new quotas to replace the

lapsed MFA, Chinese manufacturers accelerated their

shipping of the goods intended for the European market.

This used up a full year's quota almost immediately. As a

result, 75 million items of imported Chinese garments

were held in European ports in August 2005.


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On Jan 1, 2006 the worldwide quota of apparels andtextiles came to an end.

Since within the quota a buyer was forced to buy wherethe quota was available and not where goods wereproduced most efficiently it shielded the developingeconomies (India, China) from two sources ofcompetition namely global supply chain force and

competition from large suppliers.

The end of the quotas was the beginning of the era ofglobalization in the sector of apparels and textiles.


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UNCTAD


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UNCTAD

In the early 1960s, growing concerns about the place of

developing countries in international trade led many of

these countries to call for the convening of a full-fledged

conference

Specifically devoted to tackling problems and identifying

appropriate international actions

The first United Nations Conference on Trade and

Development (UNCTAD) was held in Geneva in 1964


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UNCTAD

Promotes the development-friendly integration of

developing countries into the world economy

Aims to help shape current policy debates and thinkingon development, ensuring that domestic policies and

international action are supportive in bringing about

sustainable development


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KEY FUNCTIONS OF UNCTAD

It functions as a forum for intergovernmental

deliberations, supported by discussions with experts

and exchanges of experience, aimed at consensus

building

It undertakes research, policy analysis and data

collection for the debates of government

representatives and experts


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KEY FUNCTIONS OF UNCTAD

It provides technical assistance tailored to the specific

requirements of developing countries, with special

attention to the needs of the least developed countries

and of economies in transition. When appropriate,

UNCTAD cooperates with other organizations and

donor countries in the delivery of technical assistance


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MAIN ACTIVITIES OF UNCTAD

Trade and commodities

Commodity diversification and development

Competition and consumer policies

Trade Negotiations and Commercial Diplomacy

Trade Analysis and Information System (TRAINS)

Trade and environment

Investment and enterprise development

International investment and technology arrangements

Investment Policy Reviews

Investment guides and capacity building for the LDCs

Empretec: Promotes entrepreneurship and development


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Macroeconomic policies, debt and development

financing

Policy analysis and research

Technical and advisory support

DMFAS programme: Computer-based debt management and financial

analysis system specially designed to help countries manage their

external debt.

Technology and Logistics ASYCUDA programme: Integrated customs system that speeds up

customs clearance procedures and helps Governments to reform and

modernize their customs procedures and management.

E-Tourism Initiative


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Technology

TrainForTrade programme

Transport and Trade Logistics

Africa

Least developed countries (LDCs)

Landlocked developing countries (LLDCs)

Small island developing States (SIDS)

OFFICE OF THE SECRETARY


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OFFICE OF THE SECRETARY -

GENERAL


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MEMBERSHIP OF UNCTAD


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MEMBERSHIP OF UNCTAD


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MEETINGS

The intergovernmental machinery of UNCTAD consists

basically of the Conference, the Trade and Development

Board, two Commissions, and expert meetings

The Conference meets every four years

In-between the quadrennial Conferences, the Trade and

Development Board oversees the activities of theorganization.


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MEETINGS

The board meets in Geneva in a regular session and up to

three times a year in executive sessions to deal with

urgent policy issues, as well as management and

institutional matters.

The Commissions meet once a year; each Commission

convenes a number of expert meetings on specific topics.


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ASSOCIATIONS & ALLIANCES

In performing its functions, the secretariat works together

with

Member Governments

Interacts with organizations of the United Nations systemand regional commissions

Governmental institutions

Non-governmental organizations

The private sector Trade and industry associations

Research institutes and universities worldwide


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GATT


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GATT

The General Agreement on Tariffs and Trade (GATT),which was signed in 1947, is a multilateral agreementregulating trade among about 150 countries.

According to its preamble, the purpose of the GATT is the"substantial reduction of tariffs and other trade barriers andthe elimination of preferences, on a reciprocal and mutuallyadvantageous basis.

The GATT functioned de facto as an organization, conductingeight rounds of talks addressing various trade issues andresolving international trade disputes.


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GATT

The Uruguay Round, which was completed on December15, 1993 after seven years of negotiations, resulted in anagreement among 117 countries (including the U.S.) toreduce trade barriers and to create more comprehensiveand enforceable world trade rules.

Until the Uruguay Round of GATT negotiations, theword environment did not appear in the GATT text.Several provisions and sections of GATT may be relevant

to environmental issues.


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GATT

Consideration of GATT's relationship to environmentalpolicy is an emerging concern in trade and environmentalpolicy circles.

This agreement also created the World TradeOrganization (WTO), which came into being on January1, 1995.

Reports by panels of experts have been an essential partof the GATT dispute settlement system since the 1950s.This system continues in the WTO, with some changes inprocedure and enforcement.


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ASPECTS of GATT

General Most-Favoured-Nation Treatment

National Treatment on Internal Taxation and Regulation

General Elimination of Quantitative Restrictions

Non-discriminatory Administration of Quantitative Restriction

Subsidies

General Exceptions


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ASPECTS of GATT

The GATT Final Act Embodying the Results of theUruguay Round contains several other relevant items:

Trade-Related Aspects of Intellectual Property Rights

Agreement on Subsidies and Countervailing Measures

Agreement Establishing the Multilateral TradeOrganization


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WTO - WORLD TRADEORGANISATION

INTRODUCTION TO WTO


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An international body founded in 1995 to promote

international trade and economic development byreducing tariffs and other restrictions.

It is a forum for governments to negotiate trade

agreements. It is a place for them to settle trade disputes.It operates a system of trade rules.

The WTO is a place where member governments try tosort out the trade problems they face with each other.

The WTO is run by its member governments. All majordecisions are made by the membership as a whole, eitherby ministers (who usually meet at least once every twoyears) or by their ambassadors or delegates (who meetregularly in Geneva).

INTRODUCTION TO WTO


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At its heart are the WTO agreements, negotiated and signed

by the bulk of the worlds trading nations. These documents

provide the legal ground rules for international commerce.

They are essentially contracts, binding governments to keeptheir trade policies within agreed limits.

The goal is to help producers of goods and services,

exporters, and importers conduct their business, while

allowing governments to meet social and environmentalobjectives.

The WTO was born out of negotiations, and everything it

does is the result of negotiations.


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FUNCTIONS

Trade Negotiations

The WTO agreements cover goods, services and

intellectual property. They spell out the principles ofliberalization, and the permitted exceptions. They include

individual countries commitments to lower customs

tariffs and other trade barriers, and to open and keep open

services markets.


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Implementation and Monitoring

WTO agreements require governments to make their tradepolicies transparent by notifying the WTO about laws inforce and measures adopted. Various WTO councils and

committees seek to ensure that these requirements arebeing followed and that WTO agreements are beingproperly implemented. All WTO members must undergoperiodic scrutiny of their trade policies and practices.


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Dispute Settlement

The WTOs procedure for resolving trade quarrels underthe Dispute Settlement Understanding is vital forenforcing the rules and therefore for ensuring that tradeflows smoothly. Countries bring disputes to the WTO ifthey think their rights under the agreements are beinginfringed. Judgement is passed by specially appointedindependent experts are based on interpretations of the

agreements and individual countries commitments.


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Building Trade Capacity

WTO agreements contain special provision for

developing countries, including longer time periods to

implement agreements and commitments, measures toincrease their trading opportunities, and support to help

them build their trade capacity, to handle disputes and to

implement technical standards. The WTO organizes

hundreds of technical cooperation missions to developingcountries annually. Aid for Trade aims to help developing

countries develop the skills and infrastructure needed to

expand their trade.


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Outreach

The WTO maintains regular dialogue with non-

governmental organizations, parliamentarians, other

international organizations, the media and the generalpublic on various aspects of the WTO, with the aim of

enhancing cooperation and increasing awareness of WTO

activities.


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ATCAGREEMENT ONTEXTILES AND CLOTHING


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INTRODUCTION TO ATC

The textile and clothing industries are important to alarge number of developing countries. However, the

world trade in textiles and clothing has been subject to an

ever-increasing array of bilateral quota arrangements over

the past three decades.

The range of products covered by quotas expanded from

cotton textiles under the Short-Term and Long-Term

Arrangements of the 1960s and early 1970s to an ever-

widening list of textile products fashioned from natural

and man-made fibres under five extensions of the Multi-

Fibre Arrangement (MFA) over the period 1974-1994.


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MULTI FIBRE AGREEMENT

The purpose behind the Mulit-Fibre Arrangement was to

allow developed countries time to adjust to competition from

developing countries, which could produce the same textile

products much more cheaply. It was thought that developingcountries could flood the markets in developed countries with

less expensive textiles, which would have had a negative

effect on the developed countries.

Critics of the Arrangement argued thishampered development. It was in effect from 1974 through

the end of 2004. It is formally called the Agreement on Textile

and Clothing.


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ATCTHE BASIC AIM

The basic aim of the Agreement on Textiles and Clothing

(ATC) is to secure the removal of restrictions currently

applied by some developed countries to imports of

textiles and clothing.

To this end the Agreement sets out procedures for

integrating the trade in textiles and clothing fully into the

GATT system by requiring countries to remove the

restrictions in four stages over a period of 10 years

ending on 1 January 2005.


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The flexibility available under the integration procedureshas, however, enabled countries to remove restrictions in

the first two stages only on a limited number of products.

The first major impact of the integration programme is

therefore expected when the third-stage integration takes

place (on 1 January 2002); the bulkof the restrictions will

be withdrawn in the last phase, when the transition period

ends and the Agreement expires.

WTO AGREEMENT ON


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TEXTILES AND CLOTHING

The World Trade Organization (WTO) Agreement on

Textiles and Clothing (the Agreement) provided for the

phased liberalization and elimination over the transition

period of quotas on textiles and apparel imported fromWTO member countries.

The Agreement was approved as part of the Uruguay

Round Agreements Act by the U.S. Congress in

December, 1994. The Agreement went into effect onJanuary 1, 1995.


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This Agreement sets out provisions to be applied by

Members during a transition period for the integration of

the textiles and clothing sector into GATT 1994.

Article 2 of the Agreement states that product integration,

including the phase out of Multi-Fiber Agreement (MFA)

quotas and the acceleration of quota growth rates for

products not yet integrated into the WTO, is to occur over10 years, in three stages. ("Integrated" products are

removed from the universe of textile products subject to

MFA-type quotas.)


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THANK YOU

global marketing-session 1

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