world trading system: what do we know and don’t know?
TRANSCRIPT
WORLD TRADING SYSTEM:
WHAT DO WE KNOW AND DON’T KNOW?
Meaning of Trade
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15-4
COUNTER TRADE
Denotes a whole range of barter-like agreements
Primarily used when a firm exports to a country whose currency is not freely convertible Developing countries
Importing country may lack the foreign exchange reserves required
8 to 10% of world trade in form of countertrade Example: Venezuelan government’s contract with
Caterpillar.
Goods vs. Services
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GOODS AND SERVICES
Goods are things you can buy that you can touch. Can you buy apples? Can you touch apples? Then the apples are goods.
Can you touch and buy jump ropes, swing sets, bats and balls, caps, pans, or pencils? These items are all called goods.
GOODS AND SERVICES
From time to time we also buy things that cannot be touched. For example, we buy haircuts when we go to the barber shop or the salon. We buy repairs and cleaning for our teeth when we go to the dentist. In both cases, we are buying a SERVICE. It is something done for us.
Traded vs. Non-Traded Products / Services
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Local and Global Trade (economic vs. political vs. cultural
borders)
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Country A
Country B
Country C
FLOWS ACROSS ECONOMIC BORDERS
Barriers
Barriers
Trade with System vs. Trade without System
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THE EFFECT OF TRADE WITHOUT SYSTEM
January
February
March
April
May
June
July
August
September
October
November
December 1929
1930
1931
1932
1933
$3.0bn
$0.9bn
Trade figures: per month
Focus on the flows of goods and services across countries (beyond national economic border),
rules and regulations governing the flow, and
impacts of strengthening the flows on economic, social, and environmental aspects of developing countries
WORLD TRADING SYSTEM
Value chain
FLOW OF GOODS AND SERVICES
• Who is involved?• How do they benefit?
Cotton
Country A
Country B
Country C
FLOWS ACROSS ECONOMIC BORDERS
Barriers
Barriers
Multilateral
Regional
Bilateral
RULES AND REGULATIONS
IMPACTS OF LIBERALIZATION TO DEVELOPING COUNTRIES
Cotton
Cotton
Before liberalization in
terms of economic, social, and environment
After liberalization in terms of
economic, social, and environment
Value Chain
Country A
Value Chain
Country B
WORLD TRADING SYSTEM
Barriers, Rules,
RegulationsImpacts of Liberalization
Impacts of Liberalization
Trade and development PoliciesImport SubstitutionExport led GrowthSustainable and Inclusive
TRADE DEVELOPMENT POLICY
FUTURE TREND