Trade and Development PDF

TRADE AND DEVELOPMENT  Trade and Development Developing countries represent two-thirds of WTO members. Supporting their greater integration into global trade is a major priority for the WTO. WTO agreements have special provisions aimed at helping developing countries implement WTO rules while...

TRADE AND DEVELOPMENT  Trade and Development Developing countries represent two-thirds of WTO members. Supporting their greater integration into global trade is a major priority for the WTO. WTO agreements have special provisions aimed at helping developing countries implement WTO rules while WTO technical assistance and other WTO- supported initiatives are aimed at increasing their capacity to trade. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The WTO also cooperates with the United Nations and other international organizations to advance the attainment of the Sustainable Development Goals.The goal is to ensure that trade flows as smoothly, predictably and freely as possible.  1.International Trade and World Markets Trade - can be described as the transfer of ownership of goods and services from one person or entity to another. Simply put, trade is a process where people or entities barter- i.e one side provide goods or services, while the other side pays with money, goods and services. International trade - thus involves the movement of goods and services across boarders between countries. whithin international trade exist Bilateral trade- trade between two countries and Multinational Trade- Trade between more than two countries. International Trade enables countries to access goods and services provided other countries. The Market makes international trade possible. these are systems and structures put in place to enable buyers and sellers to trade items (a.k.a Commodities).  Commodities These are the essentially the items that countries trade. Commodities can either be raw materials or processed and finish products. The commodities traded by LEDCs are ussually different from those traded by MEDCs. 8dkfgjkdg LEDCs- Less Economically Developed Countries. MEDCs- More Economically Developed Countries. Raw materials are commodies traded by LEDCs, while MEDCs trade processed and finished products. This thus results in the share of global trade of LEDCs being small as the export of raw materials usually costs less than the export of processed products which are traded by MEDCs. O  Terms of Trade (TOT) This term is used to describe the relationship between the prices a country sells its exports for and the prices it pays for its imports. Favourable TOT describe processes where the value of imports. TOT = Exports value + Imports value x 100. if the imports an d impor ts are e qu ally balan ce d. TOT will be 100. Favourable TOT will be greater than 100. Unfavourable TOT will be less than 100. N.b: It makes economic sense to try and get more for what  Balance of Trade Balance of trade can be either positive or negative. NEGATIVE BALANCE OF TRADE = IMPORTS ARE GREATER THAN EXPORTS. POSITIVE BALANCE OF TRADE = EXPORTS ARE GREATERTHAN IMPORTS  2. Trade Relationships The aim of international trade is to grow the economy of the county while ensuring that citizens live in prosperity e.i Decreased poverty rates and increase job opportunities. T r a d e Relationships F r e e T r a d e Fair Trade Trade Barries  Free Trade Free Trade is trade that occurs without any restrictions. Free Trade allows nations to open boarders to one another, consequently allowing for goods and services (commodities) to move freely between them. In free trade, there are no tariffs or customs (trade barriers) duties that might increase the process. Free trade is meant to benefit all trading partners. Countries with similar economic systems may form free-trade agreements  Trade Bariers These are introduced to protect local manufacturers from international competition. Governments might introduce measures to make imported goods more expensive. These include: -Import tariffs and taxes (taxes placed on imported goods making them more expensive than local goods) -Subsidies for local industries (a subsidy is a financial assistance paid to a local business by the government to help support that business; create employment; stimulate business and reduce imports) -Quotas (limits that governments set to the amount of imported goods that can enter a country within a particular time frame). Trade barriers are also used in order to protect jobs in a country; protect locul products from foreign competition; and to encourage local industries.  Fair Trade Fair trade supports farmers in LEDCs by paying fair prices directly to them. The relationship in Fair Trade is directly between producers and consumers and not between nations/countries. This trade ensures that workers enjoy better working conditions and are not exploited. Principles of Fair trade: -Creating opportunities: farmers communicate directly to MEDC markets. -Fair and stable prices: producers are involved in determining the prices of their production which also ensures fair wages. - Social development: partnerships and relationships between producers and MEDC markets are long-term. Thus, farmers can re-invest their extra income in infrastructure and technology. -Gender equality: ensuring women are paid fair wages for their work and services.  3. Globalisation Globalisation refers to the interconnectedness of various societies. This is the process whereby the increased flow of goods, services, capital, technology, ideas, information an.. people between countries leads to an combined global economy and society. Globalisation has resulted in some brands spreading across the globe.  Globalisation and Development communicati on Global Governanc e Globalisation Trad Impacts Open Development in Boarders e seven Deffirent ways: Migratio Multinational n Corporation Econom ic Growth  7 Impacts of Globalisation in Development 1. Trade: it is now easier to trade and exchange goods. 2. Communication: countries are better linked, therefore can share knowledge casier. 3. Global governance: international community is trying to regulate global economic activities. 4. Open boarders: boarders are becoming less important as freer movement of people, goods and ideas occurs 5. Multinational Corporation: control world resources and operate globally. 6. Economic growth: stimulated production, trade and economic growth. 7. Migration: more people move within their countries and across boarders.  Advantages of Multinational corporations (MNC), which are companies that own or control production Globalisation facilities in more than one country, increase employment opportunities and offer better salaries and working conditions in host countries. There is increased access to information, spread of knowledge and innovations. There is rapid and effective natural disaster response and relief. There is increased tolerance and appreciation for cultural diversity. Migrant workers sed remittances of money they have earned back to ther home countries. Global associations as the United Nations, the World Bank, the International Monetary Fund and the World Trade Organisation regulate international disputes and identify and disperse funds for development pregrammes. Outsourcing, which involves companies employing workers in other countries to the some of their work, has increased employment opportunities in developing countries through call centres and clothing shoe and car manufacturing. Global environmental awareness, Responsibility and Accountability improve.  Disadvantages of Globalisation Increased trade and travel facilitate the spread of plant, animal and human diseases. Economic interdependence leads to global financial crisis. Great demand for new materials and unsustainable use of natural resources. Insufficient infrastructure to support technology excludes some nations from world events and advancements. MNCs exert economic and political influence in their host country. Employment in MNCs creates an upper-middle class - increasing income inequalities. Outsourcing creates unemployment in developed countries and may lead to sweatshops, in which people work in poor conditions for very low pay in LEDCs. Rules and Regulations of global associations influence policy and choices of  4. Export-LED Development Development is an economic strategy used by developing nations to "catch -up" to developed nations. Their aim is to increase wealth (development) by increasing exports through: Investing in industry, manufacturing and education in order to create specialised export products, and then Re-investing the money earned in social and physical structure Countries such as Honk Kong, Singapore, Taiwan and South Korea have become more developed by using this approach.  Thank you for listening! Lucenio C. Pagal jr. Beverly Valle