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International Trade Bachelor - Essay Example

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International trade is a way to achieve a higher standard of living and improving the per capita income and GDP growth for all trading nations. The post war (WWI and WWII) era has seen a rapid expansion of trade in the trading sections among all the trading nations…
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International Trade Bachelor

Download file to see previous pages... Commerce includes all those activities, which are connected with trade and auxiliaries to trade such as transport, warehousing, insurance and banking and finance.
In 1980 only 25 percent of the exports of developing countries were manufactures; by 1998 this had raised to 80 percent Davis and Weinstein show that developing country exports are indeed now labor-intensive.
This is an astonishing transformation over a very short period. The developing countries that have shifted into manufactures trade are quite diverse. Relatively low-income countries such as China, Bangladesh, and Sri Lanka have manufactures shares in their exports that are above the world average of 81 percent. Others, such as India, Turkey, Morocco, and Indonesia, have shares that are nearly as high as the world average. Another important change in the pattern of developing country exports has been their substantial increase in exports of services. In the early 1980s, commercial services made up 17 percent of the exports of rich countries but only 9 percent of the exports of developing countries. During the third wave of globalization the share of services in rich country exports increased slightly-to 20 percent-but for developing countries the share almost doubled to 17 percent. What accounted for this shift Partly it was changing economic policy. Tariffs on manufactured goods in developed countries continued to decline, and many developing countries undertook major trade liberalizations. At the same time many countries liberalized barriers to foreign investment and improved other aspects of their investment climate. Partly it was due to continuing technical progress in transport

Containerization and airfreight brought a considerable speeding up of shipping, allowing countries to participate in international production networks. New information and communications technologies mean it is easier to manage and control geographically dispersed supply chains. And information based activities
are "weightless" so their inputs and outputs (digitized information) can be shipped at virtually no cost. Some analysts have suggested that new technologies lead to the "death of distance" undermining the advantage of agglomeration. This is likely true in a few activities, while for other activities distance seems to be becoming even more important-for example, the proximity requirements of "just-in time" technologies. The OECD agglomerations continue to have massive cost advantages and technological change may even be increasing these advantages. Even within well-located countries there will be clustering as long as agglomeration economies are important, and hence wage pressure to migrate to towns and cities. For example, within the United States, which has similar institutions across the country, there has been a clear trend for economic activity and labor to migrate away from the center of the country. One hundred years ago the Mississippi River and the Great Lakes provided reasonably good transport links. But recent increases in the scale of ocean-going ships and related declines in ocean shipping rates have increased the competitiveness of U.S. coastal locations compared to the center. It is cheaper to ship iron ore from Australia to Japan than the much shorter distance across the Great Lakes from Minnesota to the steel mills of Illinois and Indiana. For large countries such as China and India we ...Download file to see next pagesRead More
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