Global Market Place

Composition & Patterns of World Trade

WTO Statistics

World merchandise trade and trade in commercial services by region and selected

economy, 2008

Shares of regional trade flows in world merchandise exports, 2008

Leading exporters and importers in world merchandise trade, 2008

World merchandise imports by region and selected economy, 1948, 1953, 1963, 1973,

1983, 1993, 2003 and 2008

World merchandise exports by region and selected economy, 1948, 1953, 1963, 1973,

1983, 1993, 2003 and 2008

WTO Country Profile

India

China

Japan

United States

Geo Business Model

Geo-Business Model

There are 3 main

interacting forces

that affect the

firm’s international

decisions.

Conditioning Variables

Product Specific Variable – that confer competitive advantages for

the foreign investor

•R & D

•Product Differentiation

•Product processing

•Management Skills

•Know-how

• Economies of scale

Conditioning Variables

Country Specific features – that helps to sustain competitive

advantages of the firms

• Economic Size of the market

• Nature of domestic competition

• Resource scarcity

• Surplus

Conditioning Variables

Inter-nation variables – that relate to trade/financing across

borders

• International Finance

• Tariffs

• Strategic Alliances

Motivational variables

Measures that motivate towards building Competitive Strategy

• Market Seeking – Horizontal/forward integration

• Resource-seeking - vertical/backward integration

• Production efficiency- lower resource cost

• Technology-seeking-access to foreign technology or skilled labor

• Risk Avoidance- minimizing quantum or probability of losses

Control variables

That comprise administrative actions-policies of home and

host governments that directly or indirectly influence

international business through +ive incentives and/or –ive

controls.

Influence on Variables

The organisation perceives the conditioning

variables(opportunities for competitive

advantage), respond appropriately(motivation

variable-competitive strategy) but has no

influence over the control variables.

It describes any government policy or regulation that restricts

international trade.

A trade bloc is a type of intergovernmental agreement, often

part of a regional intergovernmental organization, where

regional barriers to trade (tariffs and non-tariff barriers) are

reduced or eliminated among the participating states.

Trade Barrier

Types of Trade barriers

Import duties

Import quotas

Import licenses

Tariffs

Export licenses

Subsidies

Voluntary Export Restraints

Mercantilism

Impact of Trade Barriers

Direct Effects

• Decline in Consumption

• Increased Domestic Production

• Decline in Imports

• Tariff Revenue

Indirect Effect

• Inflation

• Special interests’ privileges

• Government control and political considerations in

economic matters

• Balance-of-payments positions

• Supply-and-demand patterns

• International relations (~trade wars)

Impact of Trade Barriers

Other Impacts:

• Manufacturer’ supply sources

• Choices available to consumers

• Competition

• Impact On Income Distribution

Impact of Trade Barriers

Monetary Barriers

• Blocked currency

• Differential exchange rates

• Government approvals

Why Protection?

Countries use protectionist measures to shield a country’s markets from intrusion by foreign competition and imports. Protectionism contributes to industrial inefficiency and makes a nation uncompetitive. Protectionism is implemented through the imposition of trade barriers, which include tariff barriers and non-tariff barriers.

Case for Protection

Military Self-Sufficiency

Increase Domestic Employment

Diversification-For-Stability

Infant-Industry Argument

Strategic Trade Policy

Protection-Against-Dumping

Increase of business size

Retaliation and bargaining

Need to keep money at home

Encouragement of capital accumulation

Maintenance of standard of living and real wages

Conservation of natural resources

Industrialization of a low-wage nation

Case for Protection

Trade Liberalisation

Trade liberalization refers to the removal of government incentives and restrictions from trade between nations. Trade liberalisation driven by macroeconomic policies and economic reforms, including Structural Adjustment programmes.

What are + and – of TL?

Thank You