International trade (TIẾNG ANH KINH tế SLIDE)

Theories of International trade1.Mercantilism: Trade theory holding that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging

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 goods 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

Gain or loss?

Terms of trade

Terms of trade or TOT is the relative

prices of a country's export to import (TOT=P E /P I )

An improvement in a nation's terms of trade(the increase of the ratio) is good for that country in the sense that it has

to pay less for the products it imports, that is, it has to give up fewer exports for the imports it receives.

Gain from trade

 According to the orthodox economists: All countries have its own comparative advantage and they gain from trade

 According to the neo-Marxists: the

LDCs lost from trade

 Comparative advantage explains how

trade can create value for both parties even when one can produce all goods with fewer resources than the other The net benefits of such an outcome are

called gains from trade It is the main

concept of the pure theory of

international trade.

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….

 The balance of trade is the difference in value between imports and exports of goods over a particular period.

V The balance of

payments In economics, the balance of payments

(BOP) measures the payments that flow between any individual country and all other countries.

 IMF definition: "Balance of Payments is

a statistical statement that summarizes transactions between residents and

nonresidents during a period.”

 It is used to summarize all international economic transactions for that country during a specific time period, usually a year.

 The balance of payments comprises the current account, the capital account,

and the financial account "Together,

these accounts balance in the sense

that the sum of the entries is

conceptually zero.”

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.

3 Financial account

 The financial account records

transactions that involve financial

assets and liabilities and that take place between residents and nonresidents.

 A balance of payments equilibrium is

defined as a condition where the sum of debits and credits from the current

account and the capital and financial

accounts equal to zero; in other words, equilibrium is where

Current account + (Capital + Financial account) = 0

 This is a condition where there are no

changes in Official Reserves When

there is no change in Official Reserves, the balance of payments may also be

stated as follows:

Current account = - (Capital + Financial account)

Or

Current account deficit (or surplus) =

Capital and Financial account) surplus (or deficit)

Balance of payments identity

 Current Account = Capital Account + Financial Account + Net Errors and Omissions

VI Exporting

1. Export procedures

-Transport the goods to the docks or

airport

-Pass them through customs

-Clear them through another set of

customs on arrival

-Present them to the correct customers

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

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

 Protectionism is the economic policy of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent

foreign take-over of local markets and companies This policy is closely aligned with anti-

globalization, and contrasts with free trade, where government barriers to trade are kept to a

minimum The term is mostly used in the context of economics, where protectionism refers to policies

or doctrines which "protect" businesses and

workers within a country by restricting or

regulating trade with foreign nations.

that economy.Critics say quotas often lead to corruption (bribes to get a quota allocation),

smuggling (circumventing a quota), and higher prices for consumers.In economics, quotas are thought to be less economically efficient than tariffs which in turn are less economically

efficient than free trade.

of restraining trade between nations

For political reasons, tariffs are usually imposed on imported goods, although they may also be imposed on exported goods.

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.

3 The General Agreement on tariffs and

trade (GATT) – set up after World War II

4 World Trade Organization (WTO)

Thank you for your attention!

1.Company structure and strategies

2 Motivation

3 Marketing

4 International trade

5 Financing International trade

6 Mergers and acquisition

7 Accounting and financial statement

8 Stock and bond