Download Understanding International Trade: Patterns, Regulations, & Measuring Trade - Prof. Patric and more Study notes International Business in PDF only on Docsity! Patrick Yanez IN312 International Trade Department of International Trade & Marketing (ITM) http://www3.FITnyc.edu/ITM Before trade… In isolation, P has - good food, wines - exciting arts, music - a seemingly rich life However some P citizensP , - feel left behind - want to explore the world - capture colonies - seek religious freedom - want to import spices, gold Pat Yanez “Trade Pattern” 1. A Viable Product 1. Must satisfy a want and/or a need - Originally, most imports resulted from countries’ absolute advantages T d t i t lt f t i ’ ti d t- o ay, mos mpor s resu rom coun r es compara ve a van ages 2. Must exist in sufficient abundance to develop a “pattern” - Cotton, most manufactured products (radios, TVs, clothing), etc. - Short-term exploitation may endanger long-term sustainability i.e. ivory, some forests and arable lands, petroleum, etc. 3 Must be transportable. - Physical properties (weight, height, strength, etc.) must be enduring 4. Must be socially and legally acceptable in importing country - Social and legal standards might change over time: tobacco Pat Yanez 2. Trading Parties “Trade Pattern” 1. An individual or a company who is willing to import T i t illi d bilit t b i i d t fo mpor : w ngness an a y o r ng n a pro uc rom another country while meeting regulations and profits goals. 2. An individual or a company who is willing to export To export: willingness and ability to send a local product to another country while meeting regulations and profits goals. 3. In some cases a single company can be the importer and exporter simultaneously Some countries allow foreigners to own an exporting business. Some don’t. Pat Yanez “Trade Pattern” 3. Market Orientation - Profit rates change from country to country P fit t i ti i ht b li it d h ll i 1. International commerce is driven by companies’ profit motive 2. International commerce follows “Laws of Supply and Demand” - Law of Demand: When prices are low, quantity demanded is high L f S l Wh i hi h tit li d i hi h - ro repa r a on m g e m e or c a eng ng - aw o upp y: en pr ces are g , quan y supp e s g - “Absolute” and “Comparative” Advantages of the country (macro) 3. “International Supply” depends on Competition and Competitiveness Local consumers will buy imports if they are cheaper than local products - Competitiveness advantage of the company (micro) 4. “International demand” depends on consumers’ willingness to buy imports - - Imports’ quality and safety is increasingly a concern - Sustainability awareness (“footprint”) might increase desire for local products Pat Yanez A challenging question… What regulations (i.e. national law, bilateral and/or regional agreements, WTO’s mandates, etc.) should prevail? Consider: - Sovereignty Wh d i i i i l ?- y o countr es enter nto nternat ona agreements - How trade agreements are approved by countries? Pat Yanez Chapter 1- Going Global: Measuring Levels of Trade • Imports and Exports Wh t i t b l d t d• en expor s = mpor s: a ance ra e • When exports > imports: trade surplus • When exports < imports: trade deficit • Controlling levels of trade: • Government regulations • Tariffs • Quotas • Foreign investment controls Pat Yanez Chapter 1- Going Global: Measuring Levels of Development • World Trade Organization (WTO) • Developed, developing, and least-developed nations G N ti l P d t (GNP)• ross a ona ro uc • Gross Domestic Product (GDP) • Purchasing Power Parity (PPP) Pat Yanez
