International Economics Prof. D. Sunitha Raju Introduction to International Economics.
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Transcript of International Economics Prof. D. Sunitha Raju Introduction to International Economics.
International Economics
Prof. D. Sunitha Raju
Introduction to International Economics
International Economics
Session Objectives
1. Review of trends in global trade
2. Structure of trade-by countries, regional blocs
3. Institutional structure for trade – WTO, UNCTAD, IMF
4. Trade Policy Framework
International Economics
World Trade Trends
a) Significant increase in the value of manufactures compared to primary commodities
b) Growing importance of developing countries in world trade
c) Significant increase in south-trade
d) Internationalization of production system & growth of FDI
International Economics
1995 2000 2006 GrowthRateOf
Values19952006(%)
Reporter Name
Value($billions)
Share inWLD toWLD(%)
Value($billions)
Share inWLD toWLD (%)
Value($billions)
Share inWLD toWLD(%)
World 5037.5 100.0 6316.1 100.0 11565.8 100.0 129.6
Developingeconomies
1417.4 28.1 2061.7 32.6 4110.8 35.5 190.0
Developingeconomies
570.2 11.3 786.6 12.5 1824.2 15.8 219.9
Source: UNCTAD’s South-South Trade Information System
Total Merchandise Exports1995-2006
International Economics
MATRIX OF WORLD MERCHANDISE TRADE BY MAJOR PRODUCT CATEGORY, 1965, 1985 AND 2003
Importers
Developed countries Developing countries
Exporters Value
($ billion)
Share
(Per cent)
Value
($ billion)
Share
(Per cent)
1965
Developed countries
All merchandise 87.0 67.2 29.3 22.6
Manufactures 55.3 64.5 22.6 26.4
Primary commodities 30.4 75.2 6.2 15.2
Developing Countries
All merchandise 17.6 68.9 6.4 25.1
Manufactures 2.0 53.4 1.6 43.8
Primary commodities 15.6 71.7 4.7 21.8
Contd:-
International Economics
Importers
Developed countries Developing countries
Exporters Value
($ billion)
Share
(Per cent)
Value
($ billion)
Share
(Per cent)
2003
Developed countries
All merchandise 3555.1 74.7 1033.4 21.7
Manufactures 2829.7 74.0 864.3 22.6
Primary commodities 614.3 78.0 136.2 17.3
Developing Countries
All merchandise 1141.7 53.8 921.4 43.4
Manufactures 879.1 54.4 714.3 44.2
Primary commodities 258.3 52.6 200.2 40.8
International Economics
Commodity Composition of World Merchandise Trade, 2001 (billion dollars and percentage share of world total)
Category Value of Exports Percent of World Exports
Agricultural products
$547 9.1
Food 437 7.3
Raw materials 110 1.8
Mining Products 790 13.2
Ores and other minerals
63 1.0
Fuels 616 10.3
Nonferrous metals 111 1.9
Manufactures 4,477 74.8
Iron and Steel 130 2.4
Chemicals 595 9.9
Other semi-manufactures
432 7.5 Contd.:-
International Economics
Category Value of Exports Percent of World Exports
Machinery and transport equipment
2,453 41.0
Automotive products
565 9.5
Office and telecom equipment
828 13.8
Other machinery and transport equipment
1,061 17.7
Textiles 147 2.5
Clothing 195 3.3
Other consumer goods 525 8.8
Products not classified elsewhere
171 2.9
Total merchandise exports
5,984 100
Source: WTO, International Trade (Geneva, 2002) Table A8
Contd…
International Economics
Geographical Composition of World Merchandise Trade, 2001
(billion dollars and percentage share of world total)
Region or Country Value of Exports
Share (%)
Value of Imports
Share (%)
North America $994 16.1 $1,410 21.9
United States 731 11.9 1,181 18.2
Latin America 349 5.7 381 5.9
Mexico 159 2.6 176 2.7
Western Europe 2,484 40.3 2,527 39.2
European Union (15)a 2,290 37.2 2,335 36.3
Excl. intra-EU trade 873 14.2 914 14.2
Transition economies 285 4.6 268 4.2
Central /Eastern Europe 129 2.1 159 2.5
Russian Federation 103 1.7 54 0.8
Contd.:-
a Australia, Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom
International Economics
Region or Country Value of Exports
Share (%)
Value of Imports
Share (%)
Africa 141 2.3 134 2.1
Middle East 239 3.9 174 2.7
Asia 1,671 27.1 1,544 24.0
Japan 405 6.6 350 5.4
China 266 4.3 244 3.8
IT traders (6)b 582 9.4 530 8.2
Total 6,162 100.0 6,439 100.0
b Republic of Korea, Malaysia, Philippines, Chinese Taipei, Thailand, and Singapore
Source: WTO, Annual Report (Geneva, 2002) p.13
International Economics
Characteristics of World Trade Developments
(a) Uneven growth across countries – Severe imbalances in world economy
(b) Focus on poverty reduction– Improved export opportunities
(c) Importance of national policies– External demand condition important determinants of
national policies– Emergence of macro policies/instruments as important
tool• Exchange rate
International Economics
World Output Growth, 2001-2006(Annual percentage change)
Region/country 1990-2000 2001 2002 2003 2004 2005 2006
World 2.9 1.5 1.8 2.7 4.1 3.6 3.6
Developed countries
of which:
2.5 1.2 1.2 2.0 3.1 2.7 2.7
Japan 1.1 0.4 0.1 1.8 2.3 2.7 2.8
United States 3.5 0.8 1.6 2.7 4.2 3.5 3.1
European Union 2.2 1.9 1.2 1.2 2.5 1.6 2.3
of which:
European Union-15 2.2 1.9 1.1 1.1 2.3 1.4 2.2
Euro area 2.1 1.8 0.9 0.8 2.1 1.3 2.0
France 2.0 2.1 1.2 0.9 2.3 1.2 2.1
Germany 1.8 1.2 0.1 -0.2 1.6 0.9 1.8
Italy 1.6 1.8 0.4 0.3 1.2 0.0 1.0
United Kingdom 2.7 2.2 2.0 2.5 3.2 1.7 2.3
International Economics
Region/country 1990-2000
2001 2002 2003 2004 2005 2006
South-East Europe and CIS -4.3 5.9 5.2 7.2 7.9 6.3 6.0
CIS -5.0 6.2 5.3 7.8 8.2 6.8 6.3
South-East Europe -1.0 4.8 4.8 4.5 6.6 4.6 4.8
Developing Countries 4.9 2.6 3.8 5.1 7.0 6.2 6.2
Developing countries, excluding China
4.0 1.4 2.6 3.9 6.2 5.3 5.3
Latin America 3.2 0.3 -0.8 2.0 5.7 4.4 4.6
Africa 2.7 3.7 3.4 4.7 5.1 5.3 5.9
Asia 6.3 3.6 6.1 6.5 7.9 7.2 7.0
West Asia 3.9 -0.2 3.9 5.0 7.3 5.7 5.1
East and South Asia 7.0 4.5 6.5 6.8 8.0 7.4 7.3
Source: UNCTAD 2006
International Economics
GDP Growth in Selected Developing Countries and Regions,1960-2004
(Average annual percentage change)
Region/country 1960-1965
1965-1970
1970-1975
1975-1980
1980-1985
1985-1990
1990-1995
1995-2000
2000-2004
Africa
Sub-Saharan Africa,
excl. South Africa
5.4
3.9
4.9
3.9
4.4
3.9
3.8
1.9
2.2
1.7
2.6
3.2
1.1
1.5
3.4
3.7
3.9
4.2
Latin America 4.6 5.8 6.6 5.1 0.5 1.8 3.6 2.8 1.5
East Asia 5.0 7.5 6.8 7.6 7.1 8.2 8.8 4.9 6.2
China 2.1 5.3 5.1 6.1 11.0 7.8 12.9 8.5 9.4
First-tier NIEs 8.0 9.8 8.3 9.0 7.1 9.1 7.3 4.2 3.8
South Asia 4.5 4.9 2.3 3.6 5.3 5.9 5.0 5.3 5.7
India 4.2 4.9 2.4 3.0 5.3 6.6 5.3 5.8 6.1
Developing countries 4.8 6.0 6.4 5.1 2.9 4.3 5.4 4.1 4.4
Source: UNCTAD
International Economics
Exports and Imports of Goods and Services as a Percentage of Gross Domestic Product (GDP), 2001
Country Exports as Percentage of GDP
Imports of Percentage of GDP
Netherlands 68% 62%
Norway 48 30
South Korea 46 41
Canada 45 39
Germany 35 34
Finance 29 27
United Kingdom 28 30
Mexico 28 30
United States 11 14
Japan 11 10Source: International Monetary Fund, International Financial Statistics, June 2002.
International Economics
Leading Exporters and Importers of Merchandise, 2001 (billion dollars and percentage share of world total)
Exporters ImportersRank
Country Value Share(%)
Rank
Country Value Share(%)
1 United States $730.9 11.9 1 United States $1,180.5 18.3
2 Germany 569.6 9.2 2 Germany 493.0 7.7
3 Japan 404.7 6.6 3 Japan 350.1 5.4
4 France 319.5 5.2 4 United Kingdom
332.5 5.2
5 United Kingdom
273.5 4.4 5 France 322.9 5.0
6 China 266.2 4.3 6 China 243.6 3.8
7 Canada 262.2 4.3 7 Italy 233.7 3.6
8 Italy 241.3 3.9 8 Canada 228.3 3.5
9 Netherlands 229.8 3.7 9 Netherlands 207.9 3.2
10 Hong Kong, China domestic exports re-exports
190.720.0
170.7
3.10.32.8
10 Hong Kong, China
retained
importsa
202.331.5
3.20.5
a Retained imports are defined as imports less re-exports Contd.:-
International Economics Exporters Importers
Rank
Country Value Share(%) Rank
Country Value Share(%)
11 Belgium 179.9 2.9 11 Mexico 176.2 2.7
12 Mexico 158.5 2.6 12 Belgium 169.9 2.6
13 Korea, Republic of
150.7 2.4 13 Spain 144.5 2.2
14 Taipei, Chinese 122.9 2.0 14 Korea, Rep. of 141.1 2.2
15 Singapore Domestic Exports re-exports
121.766.156.6
2.01.10.9
15 Singapore retained importsa
116.060.4
1.80.9
16 Spain 110.8 1.8 16 Taipei, Chinese 117.2 1.7
17 Russian Federation
103.2 1.7 17 Switzerland 84.1 1.3
18 Malaysia 88.5 1.4 18 Malaysia 74.4 1.2
19 Ireland 83.4 1.4 19 Austria 73.9 1.1
20 Switzerland 82.1 1.3 20 Australia 63.9 1.0
Total of aboveb 4,690.1
76.1 Total of aboveb 4,945.1 76.8
Worldb 6,162.4
100.0 Worldb 6,438.8 100.0
b includes significant re-exports or imports for re-exportsSource: WTO, Annual Report (Geneva, 2002) p.22
International Economics
Leading Exports and Importers of Commercial Services, 2001 (billion dollars and percentage share of world total)
Exporters ImportersRank Country Value Share(%) Ran
kCountry Value Share(%)
1 United States $262.9 18.3 1 United States $187.6 13.1
2 United Kingdom
108.3 7.5 2 Germany 128.5 9.0
3 Germany 79.8 5.5 3 Japan 106.7 7.5
4 France 79.0 5.5 4 United Kingdom
88.5 6.2
5 Japan 63.3 4.4 5 France 60.0 4.2
6 Italy 59.5 4.1 6 Italy 58.5 4.1
7 Spain 56.7 3.9 7 Netherlands 52.3 3.7
8 Netherlands 50.9 3.5 8 Canada 39.6 2.8
9 Hong Kong, China
43.0 3.0 9 Belgium -Luxembourg
38.9 2.7
10 Belgium -Luxembourg
42.6 3.0 10 China 36.4 2.5
Contd.:-
International Economics Exporters Importers
Rank Country Value Share(%) Rank
Country Value Share(%)
11 Canada 34.7 2.4 11 Ireland 33.6 2.4
12 China 31.0 2.2 12 Korea, Rep. of 32.6 2.3
13 Austria 30.0 2.1 13 Spain 32.2 2.3
14 Korea, Rep. of 28.4 2.0 14 Austria 29.0 2.0
15 Singapore 26.4 1.8 15 India 23.7 1.7
16 Switzerland 25.9 1.8 16 Taipei, Chinese 23.6 1.7
17 Denmark 22.8 1.6 17 Hong Kong, china
22.9 1.6
18 Sweden 20.8 1.4 18 Sweden 22.7 1.6
19 Taipei, Chinese 20.8 1.4 19 Russian Federation
20.5 1.4
20 India 20.1 1.4 20 Singapore 20.0 1.4
Total of above 1,106.9
76.9 Total of above 1,057.8 74.0
World 1,440.0
100.0 World 1,430.0 100.0Source: WTO, Annual Report (Geneva, 2002) p.24
International Economics
Pro
du
cts
and
mar
ket
s
Simple Average
1994 2005
Developed countries
Developing countries
Developed countries
Developing countries
All products
Developed countries 5.43 5.73 2.54 3.80
Developing countries 18.83 19.96 9.14 9.87
Agriculture
Developed countries 5.09 3.11 5.19 3.02
Developing countries 19.92 18.98 15.55 11.59
Manufactures
Developed countries 5.49 6.21 2.28 3.94
Developing countries 18.76 20.13 8.52 9.68
Effectively Applied Tariffs in Developed and Developing Countries
by Selected Product Group, 1994 And 2005 (per cent)
International Economics
1994 2005
Developedcountries
Developingcountries
Developedcountries
Developingcountries
Labour-intensive manufacturers
Developed countries 9.35 11.59 4.94 8.44
Developing countries 26.07 26.74 11.95 13.86
Other manufactures
Developed countries 4.56 3.81 1.64 2.13
Developing countries 17.85 18.47 8.06 8.60
Pro
du
cts
and
mar
ket
s
International Economics
International Economic Problem
(a) Trade protectionism in Industrial countries
(b) Excessive fluctuations in Exchange Rate
(c) Structure unemployment & slow growth
(d) Restructuring problems in transition economies
(e) Poverty in developing countries
International Economics
Trade Concerns for Africa
Reliance on trade taxes for government revenue
Liberalization may increase macroeconomic volatility
How to deal with costs of adjustment to trade reform
Food import prices may rise
Trade preferences may decline
International Economics
Dependence on trade taxes in Sub-Saharan Africa
Trade tax revenue
(as percentage of total revenue)
Number of Countries
1985-1994 2000-2003
0-10.9 5 7
11-20.9 11 8
21-30.9 5 10
31-40.9 11 10
41-50.9 7 7
51-100 3 2
Total 42 44Source: FAO 2007
International Economics
Share of Agriculture in Employment (%)
Region/Group 1970 2000
Africa 76 58
Sub-Saharan Africa 82 66
Asia 71 56
Latin America and Caribbean
42 20
European Union (15) 13 4
Canada 8 2
United States 4 2
Japan 20 4
Developed Countries 18 7Source: FAO 2007
International Economics
Value of Preferences under EU Schemes (as % of exports to the EU)
Range Country
0 to 10 per cent Sudan, Mali, Niger, Chad, Gambia, Guinea-Bissau, Guinea, Sierra Leone, Liberia, Cote d’Ivoire, Ghana, Togo, Benin, Nigeria, Central African Republic, Equatorial Guinea, Sao Tome and Principe, Democratic Republic of Congo, Rwanda, Burundi, Ethiopia, Eritrea, Djibouti, Somalia, Kenya, Uganda, Tanzania, Madagascar, Comoros, Zambia, and Zimbabwe
Greater than 10 but less than 30 per cent
Lesotho, Botswana, Namibia, Malawi, Mozambique, Seychelles, Angola, Gabon, Cameroon, Senegal, Cape Verde, Burkina Faso, and Mauritania
Greater than 30 per cent Swaziland, Mauritius and Republic of Congo
Source: FAO 2007