International trade (TIẾNG ANH KINH tế SLIDE)

International trade: Purchase, sale, or exchange of goods and services across national borders.. Theories of International trade1.Mercantilism: Trade theory holding that nations should

International Trade

I Overview of International trade

1 International trade: Purchase, sale, or

exchange of goods and services across

national borders.

2 Foreign Direct Investment (FDI): Purchase of

physical assets or a significant amount of the ownership of a company in another country to gain a measure of management control.

3 Portfolio Investment: Investment that does not

involve obtaining a degree of control in a

company.

II Benefits of International trade

• Open doors to new entrepreneurial

opportunity across nations

• Provide a country’s people with greater

choice of goods and services

• An important engine for job creation in

many countries

III Theories of International trade

1.Mercantilism: Trade theory holding that

nations should accumulate financial

wealth, usually in the form of gold, by

encouraging exports and discouraging

imports

2 Absolute advantage: Ability of a nation to produce a good more efficiently than any other nation

3 Comparative advantage: Inability of a nation to produce a good more efficiently than other

nations, but an ability to produce that good more efficiently than it does any other good.

4 Factor proportions theory: Trade theory holding that countries produce and export goods that

require resources (factors) that are abundant

and import goods that require resources in short supply

IV The balance of trade

• Visible trade consists of all those goods which

can be seen and touched such as machines,

televisions, motorcycles, refrigerators, food, raw materials…

• Invisible trade refers to all those items which we export, which cannot be seen or touched such as sales of insurance, banking services, airline

seats or sea cargo space….

• The balance of trade is the difference in value

between imports and exports of goods over a

particular period.

V The balance of payments

• The balance of payments is the difference between the amount of money one

country pays to other countries, especially for imports, and the amount it receives,

especially for exports

1 Current account

• Current account is a national account that

records transactions involving the import and

export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country

• Current account surplus (a trade surplus): When

a country exports more goods, services, and

income than it imports.

• Current account deficit (a trade deficit): When a country imports more goods, services and

income than it exports.

2 Export documents

-Bill of lading (BL): containing details of the goods being

shipped, their destination and which ship they will be

traveling.

-Export invoice: The ‘bill’ to the customer, requiring

payment once he has received the goods.

-Certificate of origin: To prove the goods have come from

UK for example and are not being imported under false pretences from a different country whose goods might be prohibited from entry.

-Certificate of value: To prove the goods are worth what the invoice says they are worth.

-Customs declaration: A signed statement of what the

parcels, packages or crates contain

2 Export documents

-Declaration of dangerous goods: Required by

international law for certain classes of goods

such as explosives or volatile chemicals.

-Certificate of insurance: Needed by the shipping company, or airline, or by your customer, so that they can be assured that the value of the goods

is covered should an accident happen.

-Health certificate: Needed for drugs and similar products and for transport of animals.

-Import licence: Permission to import your goods Needed for certain countries and products

VII Reasons for governmental

intervention in trade

• Cultural motives

-The cultures of countries are slowly altered

by exposure to the people and products of other cultures

-Cultural influence of the United States: the United States, more than any other

nations, is seen as a threat to national

cultures around the world

2.Political motives

-To protect jobs

-To preserve national security-To respond to ‘unfair’ trade-To gain influence

3 Economic motives

-To protect infant industries

-To pursue strategic trade policy

VIII Methods of restricting trade

1 Tariffs: Government tax levied on a

product as it enters or leaves a country.-To protect domestic producers

-To generate revenue

2 Quotas: Restriction on the amount (measured in units or weight) of a good that can enter or leave

a country during a certain period of time.

-Reasons for import quotas:

+To protect domestic producers by placing a limit

on the amount of goods allowed to enter the

country.

+To force companies of other nations to compete against one another for the limited amount of

imports allowed.

-Reasons for export quotas:

+To maintain adequate supplies of a product

in the home market

+To restrict supply on world markets,

thereby increasing the international price

of the good

3 Embargoes: Complete ban on trade

(imports and exports) in one or more

products with a particular country

4 Local content requirements: Laws

stipulating that a specified amount of a

good or service be supplied by producers

in the domestic market

5 Administrative delays: Regulatory control

or bureaucratic rules designed to impair the rapid flow of imports into a country

6 Currency controls: Restrictions on the

convertibility of a currency into other

currencies

IX Organizations in international

trade

1 The International Monetary Fund (IMF)- set up in 1974 to ensure that the world’s currencies were kept at reasonably stable rates against each other

2 The United nations Conference on Trade and

Development (UNCTAD) - set up in the mid-1960s, has interests in many areas regarding international trade It is concerned with:

-Transport by sea and the charges which shipping

companies levy.

-the activities of multinational companies; those giant

companies which have factories making products in

many different countries (e.g Ford, General Motor,

IBM…)

-how barriers to trade work and, especially, how they work

to the disadvantage of the poorer countries of the world -setting up systems to protect the prices of certain

commodities (copper, tin, tea, sugar…) which are

particularly important to the economies of the world’s

poorer countries

3 The General Agreement on tariffs and trade (GATT) – set up after World War II with the object of reducing the average levels of tariffs on manufactured goods throughout the world.

4 World Trade Organization (WTO) - created on January 1, 1995 – the only international

organization regulating trade between nations -Main goals:

+to help the free of trade

+to help negotiate further opening of markets

+to settle trade disputes between its members

Questions to answer

1 What is the difference between the

balance of trade and balance of

payment?

2 Name three items of invisible trade

3 Outline three ways in which businesses

benefit from international trade

4 Why might the Vietnamese government

urge the Vietnamese consumers to “Buy Vietnamese”?

Thank you for your attention!