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8/3/2019 Int Marketing 2 - Institutions & World Economy
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Institution & world EconomyInternational Marketing
Prof: Sham Choughule
Indian Institute of Foreign TradeNew Delhi
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Background
Various macro economic issues likeeconomic growthPopulation-Inflation-Balance of Trade-Balance of Payment
Free Trade agreements are affectinginternational marketing activities.
Therefore, study of these factors,
especially economy and trading blocs isimportant in international Trade
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Rank Country
Per captia GDP in $Population in
Million
GDP in $
trillion
1 USA 46.003 310 14.3
2 Japan 39.787 127 5.1
3 China 3.666 1.339 4.9
4 Germany 41.008 82 3.4
5 France 40.887 65 2.7
6 UK 35.196 62 2.2
7 Italy 35.105 60 2.1
8 Brazil 8.142 193 1.6
9 spain 31.182 47 1.5
10 Canada 39081 34 1.311 India 1.044 1.184 1.2
12 Russia 8.661 142 1.2
Top 12 economies in the world -2010
Source: IMF
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Economic factors & marketing
Economic growthGDP growth in China &India InflationLess demand for goods due to higher inflation
BOT- Import is more than exportnegative trade
balanceimport restrictionimport is not priority BOPis a record of all of the economic transaction
between residence of the ountry and rest of the world
Example- Insurance-shipping freighttourist
Therefore, single most important characteristic of theglobal market environment is economic dimension
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Global Personal tax ratesGlobal Personal tax in %
Rank Country Tax %
1 Denmark 62
2 Swden 55
3 China 45
4 Germany 42
5 France 40
6 USA 35
7 India 30
8 Canada 29
9 Bangaladesh 25
10 Singapore 20i
Higher tax means low saving could not create demand for goods
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Economic systems
CapitalistUSA-Europe- Japan
SocialistOld USSR-Israel
Mixed EconomyIndia
Highlight of world economy
$ 4 Trillion of trade in good & services per year $ 1 Trillion Foreign Exchange transaction per day
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Highest rate of Inflation in the world
Rank Country inflation % Rank Country inflation %
1 Zimbabwe 384.7 11 Zambia 21.4
2 Angola 76.6 12 Uruguay 19.4
3 Burma 49.7 13 Ethiopia 17.8
4 Haiti 37.8 14 Suriname 17
5 Venezuela 31.1 15 Iran 16.4
6 Iraq 29.3 16 Tajiistan 16.3
7 Belarus 28.2 17 laos 15.3
8 Dominican 27.5 18 Romania 15.3
9 Ghana 26.7 19 Liberia 15
10 Turkey 25.3 20 Guinea 14.8
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OCED OECD brings together the governments of
countries committed to democracy and themarket economy from around the world to:
Support sustainable economic growth
Boost employment Raise living standards
Maintain financial stability
Assist other countries' economic development Contribute to growth in world trade
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Fast factsEstablished: 1961conventionLocation:Paris, FranceMembership:32 countriesBudget:EUR 328 millionSecretariat staff:2 500Secretary-General:Angel Gurra
Publications:250 new titles/yearOfficial languages:English/FrenchConsulttheSecretary-General's Annual
Report
OCED
The OECD is represented outsideof Paris by Centres.They serve as regional contactsfor the full range of OECDactivities, from the sales ofpublications, to inquiries from themedia, to liaison withgovernments, parliaments,business, labour and civil society.
Berlin
Mexico City Tokyo Washington
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Members
Old 2007
In May 2007, OECD countriesagreed to invite Chile, Estonia,Israel and Russia to opendiscussions for membership of
the Organisation and offeredenhanced engagement toBrazil, China, India, Indonesiaand South Africa. The approvalof so-called "road maps" inDecember 2007 marked the
start of accession talks withChile, Estonia, Israel, Russiaand Slovenia
Australia,Austria, Belgium, Canada,Chile, CzechRepublic, Denmark, Finland,
France,Germany, Greece, Hungary,Iceland, Ireland, Italy, Japan,Korea,Luxembourg, Mexico, theNetherlands,
New Zealand, Norway,Poland, Portugal,Slovak Republic, Slovenia,Spain, Sweden,Switzerland, Turkey, UnitedKingdom, United States
The 32 member countries of
OECD are:
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GATT
General Agreement on Tariff & Trade
1947-Treaty among 123 member countries
Objectives To promote trading among members
Succeeded in liberalizing world merchant
trade 1st Jan 1995 Establishment of WTO
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GATT
The original GATT (GATT 1947) is still in effect underthe WTO framework, subject to the modifications ofGATT 1994.
The General Agreement on Tariffs and Trade(GATT) covers international trade in goods.
The workings of the GATT agreement are theresponsibility of the Council for Trade in Goods
(Goods Council) which is made up ofrepresentatives from all WTO member countries
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GATT & International marketing
Subsidy for Agriculture
Market access for goods
Sanitary & Phytosanitary measure
Anti Dumping duty
Customs valuation
Rules of origin
Import licensing
Safeguards
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WTO
The World Trade Organization (WTO) is theonly global international organization dealing
with the rules of trade between nations. At itsheart are the WTO agreements, negotiatedand signed by the bulk of the worlds tradingnations and ratified in their parliaments. The
goal is to help producers of goods andservices, exporters, and importers conducttheir business
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UNCTAD
The first United Nations Conference on Tradeand Development (UNCTAD) was held inGeneva in 1964. Given the magnitude of the
problems at stake and the need to addressthem, the conference was institutionalized tomeet every four years, with intergovernmentalbodies meeting between sessions and a
permanent secretariat providing the necessarysubstantive and logistical support
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UNCTAD
United Nations Conference on Trade andDevelopment (UNCTAD Established in 1964,
UNCTAD promotes the development-friendlyintegration of developing countries into the world
economy
Group of 131 countries
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UNCTAD Functions
A forum for intergovernmental deliberations, supported bydiscussions with experts and exchanges of experience, aimed atconsensus building.
It undertakes research, policy analysis and data collection for the
debates of government representatives and experts.
It provides technical assistance tailored to the specificrequirements of developing countries, with special attention to theneeds of the least developed countries and of economies in
transition. When appropriate, UNCTAD cooperates with otherorganizations and donor countries in the delivery of technicalassistance.
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Agreement of UNCAD
The Generalized System of Preferences(1968), whereby developed economies grantimproved market access to exports fromdeveloping countries.
A number of International CommoditiesAgreements, which aimed at stabilizing theprices of export products crucial for developingcountries.
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Agreement of UNCAD
the Convention on a Code of Conduct for LinerConferences, which strengthened the ability ofdeveloping countries to maintain nationalmerchant fleets.
the adoption of a Set of Multilaterally AgreedEquitable Principles and Rules for the Controlof Restrictive Business Practices. This worklater evolved into what is today known as Tradeand Competition Policies.
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Trading blocs
PTA-preferential Trade Agreement
FTA-Free Trade Area
Customs Union Common Market
Economic union
Spect m of Fo mal Regional T ading A angements
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Spectrum of Formal Regional Trading Arrangements
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FTA
FTA have the ability to createopportunities and can help tight theslowdown in global trade
Example
Many companies shifted their operationbase from USA/EU to India and China andFar East countries to restore themselves
From recession 2008 (shipping company)
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Free Trade Agreements (FTAs)
Where all tariff and non-tariff barriers areabolished and free access is allowed to theproducts of member countries.
In FTA, each member is free to maintaindifferent most-favoured-nation (MFN) barriers onnon-members. (Example SPTA and ISFTA )
Rules of Origin between the members of FTA is
agreed to ensure that genuine products of theFTA partners alone are given duty-free access(World Bank 2005)
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Customs Unions
Customs Unions (CUs) A Customs Unionmoves beyond a free trade area byestablishing a common external tariff on all
trade between, members and non-members.
Customs Unions typically contain
mechanisms to redistribute tariff revenueamong members.
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Common Markets (CMs)
A Common Market deepens a customsunion by providing free flow of factors ofproduction such as labour and capital in
addition to the flow of outputs.
Example
Central America Common Market
MERCOSUR
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MERCOSUR (Mercado Comun del Cono Sur, also known as SouthernCommon Markets
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Economic Unions (EUs)
In an Economic and Monetary Union,members share a common currency andmacro-economic policies (Example
European Union).
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EU-27 is largest single market in the world with 27 countries
15+10+2= 27 from 1 1 2007 Rumania and Bulgaria
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North America Free Trade Agreement
Canada Maxico -& USA This is major FTA in the world
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MERCOSUR (Mercado Comun del Cono Sur, also known as SouthernCommon Markets
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10 ASEAN Countries
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Indias Major Trade partner
Direction of India's Foreign Trade
Destination of India's Export Source of India's Import
Area share % Area share %
EU-27 countries 21.8 EU-27 countries 13.3
Rest of Europe 1.57 Rest of Europe 5.5
Africa 6.7 Africa 6.9North America 12.8 North America 6.7
Latin America 3.9 Latin America 3.5
ASEAN 10.5 ASEAN 8.6
East Asia 0.97 East Asia 3.5
WANA 21.2 WANA 30.3
South Asia 5.1 South Asia 0.6
Rest of Asia 14.75 Rest of Asia 18.4
Other 0.71 other 2.7
Total 100 Total 100
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Indias FTA
SAPTA- SAARC preferential Trading Agreement
BangladeshBhutanIndia-The Maldives-NepalPakistan-Sri Lanka and Afghanistan
APTA-Asia Pacific Free Trade Agreement BangladeshChina-India-South Korea and Shi Lanka
IndiaThailand FTA
India-Singapore CECAComprehensive Economic Co
operation Agreement
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Indias Trade Relations
The India-Asian Free Trade Agreement in goodswhich will eliminate tariffs on 4000 product over6 years already in operation in 2010
Direct benefit from 1)Singapore 2) Thailand 3)Malaysia 4)Indoneasia
5)Philippines 6) Brunei 7)Vietnam 8) Laos 9)Myanmar10)Combodia
Indirect benefit :ASEAN has a FTA with China-SouthKorea and Japan
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Indias present & Future Agreement
Agreement No of Countries
1 SAPTA 8
2 EU 27 27
3 ASEAN 10
4 MERCOSUR 4
5 Gulf 6
Total 55
If all the negotiations India is having now are completing successfully nearly80% of our trade will be with FTA partner
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Thanks
shamc2001@yahoo.co.in
http://en.wikipedia.org/wiki/File:Current_Account_Balance_2006.pngmailto:shamc2001@yahoo.co.inhttp://en.wikipedia.org/wiki/File:Current_Account_Balance_2006.pngmailto:shamc2001@yahoo.co.in