International trade | World Trade | global trade policies | Date of international trade

International trade | World Trade | global trade policies | Date of international trade

Talking about International trade | World Trade | Date of international trade | global trade policies | World Bank Group | import and export | economic relations in international trade

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    Friday 24 January 2014

    trade in commercial services

    01:06 0
    trade in commercial services

    trade in commercial services
    trade in commercial services

    Once again, Europe is the world’s biggest trading region,

    accounting for over half of commercial services exports and just

    under half the world’s imports. Trade in services is similar to

    agriculture in that it is highly concentrated among a small group of

    countries. The developed countries and emerging Asian economies

    account for 85%, with China and India the only developing

    countries in the top 20. That said, trade in commercial services

    is expanding quickly everywhere. In Africa, for example, services

    exports and imports) expanded by 21% and 19% respectively in)

    2007, higher than the world averages of 18% and 16%.
    Posted by at No comments:

    Tuesday 21 January 2014

    Commercial services in international trade

    05:40 0
    Commercial services in international trade

    Commercial services in international trade
    Commercial services in international trade

    Another factor to consider in this type of trade is that it is harder

    to measure services and their value than it is to measure goods.

    Restaurants and their staff, for example, may not include tips

    in their bookkeeping or tax returns. And the spread of Internetbased

    services is making the problem of measurement even more

    difficult, especially when companies hide their transactions to

    avoid paying taxes.

    Transportation, travel and “other commercial services” (including



    the largest categories. “Other” has been both the largest and the

    fastest growing category throughout this decade. Incidentally,

    such a broad classification shows the difficulties that can arise in

    analysing trade flows and developments.
    Posted by at No comments:

    Monday 20 January 2014

    The volume of international trade in services

    03:08 0
    The volume of international trade in services
    The volume of international trade in services
    The volume of international trade in services

    The low volume of trade in services compared with merchandise

    may seem surprising, given that most jobs in OECD economies and

    many other countries are now in (services), and services account for


    70% of the total value-added in the economies of OECD countries.

    Yet for OECD countries overall, service exports in 2006 accounted

    for around 22% of total (exports), for a value of $2.1 trillion (75% of

    total world services exports) compared with $7.5 trillion for OECD


    Service imports to OECD) countries in 2006 accounted for 19% of)

    the total imports, worth $1.9 trillion (70% of total world services

    imports) and OECD imports of goods were worth $8.2 trillion.


    For a start, many services have to be consumed at the point

    of production – hotel rooms or office cleaning, for instance.


    is (trade) as defined by mode 3 (“commercial presence”) the value

    of such business would not show up in balance of payments data

    since these only show cross-border trade. This type of trade is

    growing as new domains, such as education, health and municipal

    services like waste management, are opened up to international

    competition.
    Posted by at No comments:

    Saturday 18 January 2014

    Production and international trade

    03:51 0
    Production and international trade
    Production and international trade
    Production and international trade

    The last half century has seen an increase in the trade in part

    and components, and the related international fragmentation of

    production helps explain why trade is growing faster than GDP.

    Actual physical production cannot be done without the logistics,

    accountancy, banking, personnel management and all the other

    services needed to support it. But that doesn’t mean that all of

    these elements have to take place in the same location, and many

    services tasks are now done elsewhere. Tasks where the higher

    wages in the home country are not justified by higher productivity

    are the first to go abroad. Call centres are one example. This has

    prompted some economists to talk of a new era of trade, driven by

    cheaper, more efficient communications and lower trading costs.

    By their very nature, some services cannot be done abroad. Others

    can. But they can all be “traded”. The WTO’s General Agreement on

    Trade in Services (GATS) describes four different ways (“modes”)

    of doing this. The first mode covers those situations where the

    service provider and client may be in different countries. In the

    second mode, the client goes abroad. A third mode involves

    a company opening a business abroad to provide services. The

    fourth mode concerns individuals who travel to another country to

    carry out a task, but not to immigrate. Trade in services is covered

    by the GATS, which is defined in more detail in the chapter on the

    WTO and trade rounds. So-called “South-South” trade in services

    is dealt with in the chapter on trade and development.
    Posted by at No comments:

    Saturday 11 January 2014

    Trade in services

    06:11 0
    Trade in services
    Trade in services
    Trade in services

    No systematic evidence exists on the factors determining
    fragmentation. But data on quality of infrastructure, the institutional
    environment and administrative costs indicate that low-income
    countries are poorly placed to participate in production networks,
    despite their advantage in terms of costs. If it’s hard to get the goods
    to international markets on time and to the standard required, low
    wages will not persuade companies to invest.
    The term globalisation is commonly used to describe the
    interconnectedness of our world since 1945 in terms of trade in goods
    and services, migration and other factors. However, as the poem in
    Chapter 2 illustrates, there is nothing new in all this. People have
    been trading ideas and products for millennia. What is distinctive in
    trade terms about the last 60 years is the degree to which technology
    now enables us to spread the supply chain of many products among
    different countries and the speed with which firms can now locate
    and relocate the various country links in the chain. Before the 20th
    century (trade) consisted mainly of countries importing a series of raw
    materials and manufacturing the entire final product at home.
    Posted by at No comments:

    Friday 10 January 2014

    Economy and trade costs

    11:33 0
    Economy and trade costs
    Economy and trade costs
    Economy and trade costs

    Recent economic literature has also looked at the impact of

    falling (trade costs) on the location of production, focusing on

    the location of different production stages. In particular, this

    strand of literature predicts that a reduction in trade costs leads

    to greater fragmentation of production, with firms spreading the

    different stages of their production process to different locations.

    In other words, it may be more profitable to import components

    from different places for final assembly rather than concentrating

    production in one country.

    Trade costs are only one factor determining the decision to

    fragment production. The likelihood of offshoring (moving

    part of production to a foreign country) is higher in the case of

    standardised tasks where little investment in training and quality

    control is needed. In addition, countries with a good institutional

    framework, good quality infrastructure and flexible administration

    (for example, short times to cross the border or to set up a business)

    are more likely to attract foreign firms looking to offshore.
    Posted by at No comments:

    evolution of the economy in international trade

    01:36 0
    evolution of the economy in international trade
    evolution of the economy
    evolution of the economy

    At the same time, there are other forces working against

    agglomeration, so-called (centrifugal forces) that encourage economic

    activity to spread out geographically. (Trade) has a crucial influence

    in deciding which tendency will dominate at a given stage in the

    evolution of the economy. The expansion of manufacturing requires

    attracting labour from agriculture by the possibility of higher wages.

    But then countries that are essentially agricultural may start to

    develop industry, and offer lower wages than the traditional core

    industrial nations. This helps to develop manufacturing in these

    less central economies. If trade costs continue to fall, low wages

    may prove sufficiently attractive to overcome the disadvantages of

    manufacturing goods with a relatively unskilled workforce away

    from the main markets.


    Literature on the analysis of trade flows

    often refers to computable general

    equilibrium (CGE) and gravity models.

    The CGE models use detailed information

    on the structures of selected economies

    and policies, and integrate them in a

    multi-country, multi-sector, “marketclearing”

    framework with a sophisticated

    representation of demand and supply

    relations.

    Market-clearing is the idea that markets

    will eventually clear excess supply or

    unmet demand. This approach is used for

    predictions of the future effects of a set

    of economic policies and enables a rich

    analysis of trade liberalisation scenarios at

    various levels.

    In contrast to the gravity approach,

    CGE analysis allows direct assessment

    of welfare effects of trade reforms.

    Each result can be traced back to

    theoretical assumptions and the structural


    The gravity approach uses historical data

    to study the statistical significance and


    and other factors, including the effects of


    The basic version of the gravity model

    (relates the volume of bilateral (trade

    flows to the economic size of two trading

    countries as well as to economic “distance”

    as measured by various trade costs.

    This approach can help in understanding

    historical trends and in particular to

    separate the impact of trade policy changes

    from other factors affecting trade volumes.

    But it is not directly useful for assessing

    the welfare implications or distributional

    aspects of trade policy changes (“winners

    and losers” in the country concerned).

    Incidentally, behind an expression like

    analysis of trade flows” there lies a“

    phenomenal amount of data collection and

    processing. The gravity model analyses this

    chapter draws on, by OECD economists

    Kowalski and Shepherd, involved processing

    1.5 million lines of data.

    48 (OECD Insights: (International Trade

    Although there has been some decline in the share of

    manufacturing output from the core group of industrial countries

    over the past quarter of a century, this decline has been relatively

    small. These countries accounted for about 86% of world

    manufacturing output in 1976, and in 2002, their share was still

    about 81%. This focus on manufacturing as a whole may, however,

    hide changes in specific sectors. In the case of iron and steel, for

    example, the core’s share has fallen from more than 70% to about

    50% of global output. The takeover of the Anglo-Dutch steel group

    Corus by Indian-based Tata Steel in 2007 shows how multinationals

    originating in developing countries are starting to have an impact
    Posted by at No comments:

    Thursday 9 January 2014

    Modelling trade flows

    06:21 0
    Modelling trade flows

    trade flows
    trade flows

    Literature on the analysis of trade flows

    often refers to computable general

    equilibrium (CGE) and gravity models.

    The CGE models use detailed information

    on the structures of selected economies

    and policies, and integrate them in a

    multi-country, multi-sector, “marketclearing”

    framework with a sophisticated

    representation of demand and supply

    relations.

    Market-clearing is the idea that markets

    will eventually clear excess (supply) or

    unmet demand. This approach is used for

    predictions of the future effects of a set

    of economic policies and enables a rich

    analysis of (trade) liberalisation scenarios at

    various levels.

    In contrast to the gravity approach,

    CGE analysis allows direct assessment

    of welfare effects of trade reforms.

    Each result can be traced back to

    theoretical assumptions and the structural


    The gravity approach uses historical data

    to study the statistical significance and

    magnitude of relationships between trade

    and other factors, including the effects of


    The basic version of the gravity model

    (relates the volume of bilateral (trade

    flows to the economic size of two trading

    countries as well as to economic “distance”

    as measured by various trade costs.

    This approach can help in understanding

    historical trends and in particular to

    separate the impact of trade policy changes

    from other factors affecting trade volumes.

    But it is not directly useful for assessing

    the welfare implications or distributional

    aspects of (trade policy) changes (“winners

    and losers” in the country concerned).

    Incidentally, behind an expression like

    analysis of trade flows” there lies a“

    phenomenal amount of data collection and

    processing. The gravity model analyses this

    chapter draws on, by OECD economists

    Kowalski and Shepherd, involved processing

    1.5 million lines of data
    Posted by at No comments:

    Wednesday 8 January 2014

    Agglomeration effects and global value chains

    08:51 0
    Agglomeration effects and global value chains

    Agglomeration effects and global value chains
    global value chains

    Despite globalisation of (supply chains and sales), many industries

    tend to be concentrated in certain places or locales, suggesting

    that there are economic benefits from firms being located in close

    proximity to one another. The concentration of computer-related

    activities in California’s Silicon Valley is one example, but the

    phenomenon is not new. The textiles sector has been clustered

    around the same areas of Italy for centuries, for instance.

    Under certain economic conditions, geographic concentration

    increases the productivity of all the firms located in a particular

    place and it makes their total output larger than if each one had

    been operating in a different region. These “agglomeration effects”

    occur because workers, and thus their skills and knowledge,

    move between sectors and geographical regions and because one

    manufacturing firm can use components supplied by a neighbour

    (“intermediate inputs”) in its own production. Likewise, services

    can be provided more efficiently to firms that are near each other.

    There are also a number of benefits that are hard to quantify but no

    less real, such as the informal networks of researchers and other

    specialists that emerge from social contact.
    Posted by at No comments:

    Sunday 5 January 2014

    Volumes in international trade

    05:14 0
    Volumes in international trade


    There has been a spectacular increase in the number of global

    supply chains created in recent years and in the volumes passing

    through existing chains. One of the forces driving this growth

    has been cheaper, more efficient communications and office

    technology. This enables multinationals and strategic alliances

    of firms to effectively split up the supply chain and produce

    increasing numbers of components in different countries according

    to comparative advantages. However, there are other forces at play.

    The price of oil affects transport costs and, accordingly, the optimal

    locations for production in relation to final markets. These types

    of influences are referred to as (real economy) forces.

    The crisis in global financial markets that began in mid-2007

    is a good reminder that the real economy and real trade are also


    46 (OECD Insights: (International Trade

    (system. The crisis involved volatile changes in (investment

    patterns around the world and associated volatile exchange rate

    movements that made it very difficult for multinationals to plan

    future developments with their global supply chains. Reduced

    demand from (trading) partners had repercussions everywhere,

    leading to cutbacks in output from factories not only in the OECD

    countries but also in China and the other emerging economies.

    One of the reasons for this turmoil was the availability of

    cheap finance in selected OECD countries after 2001. This led

    to riskier (investments) by OECD firms in emerging markets than

    would otherwise have been undertaken. In short, global supply

    chain expansion after 2001 was very likely much higher than will

    be the case over the next decade, and we are likely to see some

    contraction because the cost of capital (the interest rates companies

    have to pay) has risen. When the crisis struck in 2007 there was a

    flight to financial safety and some closure of productive capacity

    in particular economies. Financial markets can have important

    (effects on the real (trading economy.
    Posted by at No comments:

    Saturday 4 January 2014

    Supply chains in international trade

    06:02 0
    Supply chains in international trade
    Supply chains in international trade
    Supply chains in international trade

    Supply chains have become much more complex in recent

    decades. The computer chip manufacturer, Intel, might

    commission a Swedish firm of engineers to design a new chip. The

    design is emailed to a chip manufacturer in Taipei who exports

     45  (OECD Insights: (International Trade

    the chips to a Malaysian circuit board manufacturer who exports

    the board to Ireland which, in turn, exports the computers to the

    EU with after-sales service provided by a call centre in Bangalore,

    India. If you included all the actors and steps needed to make a

    computer, the description would fill a few pages of this book. This

    makes describing the (trade) in such products difficult. In 2006,

    computers were the highest valued export item from China and

    digital integrated circuits were one of China’s largest imports. To

    further complicate matters, digital integrated circuits were also

    one of China’s largest export products. In fact, after oil, integrated

    circuits were the second largest world export item in 2006.

    A look at national statistics on manufacturing shows just how

    important components have become. In the United States, the

    average share of components in the output of the manufacturing

    sector was 35% while in the nonmanufacturing sector the figure

    was less than 9%. The ratios are quite similar in the other major

    OECD countries. In Germany, the ratio was 40.8% in manufacturing

    to 8.5% in nonmanufacturing. In emerging (economies), such as

    Brazil and China, the share of manufactured intermediates in

    the manufacturing sector was between 40% and 50%. Within

    manufacturing itself, the sectors with the highest share of use of

    components in the OECD countries are motor vehicles (58.6%)

    and office, accounting and computing machinery (54.3%). For the

    emerging economies, the sectors with the highest share of use of

    components were electrical machinery and apparatus (55.8%) and

    motor vehicles (53.1%).
    Posted by at No comments: