International Trade Environment Cateora ch' 2 10th ed

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International Trade EnvironmentCateora ch. 2
(10th ed)

• trade statistics
• trade flows
• OECD, DCs, NICs, Tigers and Dragons,
  Emerging Economies
• High / Medium / Low income countries
• major players
• MNCs, KEIRETSU, CHAEBOL, SOE
• trade framework

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Trade Policies promoting or controlling

• why trade is good
• why trade is bad
• indicator of trade problems
• balance of trade (US/Japan)
• exchange rates
• easing barriers WTO / GATT / IMF
• promoting development WB
• protectionism - trade barriers
• cycles in trade policies? (cf. Asian crisis)

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Competitive Battles (p. 27)

• in the past Western Europe / USA / Japan
• in future the entire globe?
• global trade?
• the big traders?
• trading with whom?
• neighborhood principle with some exceptions
  emerging
• important fact
• trade increasing share of world GDP

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Marketing and nature of tradegoods (consumer /
industrial) - services

• importance des MNCs and intra-firm trade
• distribution of world trade
• 1 / 3 intra-firm MNCs
• 1 / 3 MNCs with non-affiliated corporations
• 1 / 3 between non-MNCs
• Source WTO, Press 57/9 Oct 1996, p. 1 and
  UNCTAD

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Intra-firm / intra-industry marketsdifferent
role for marketing

• intra-firm transactions inside a single firm
  (and its affiliates)
• intra-industry two-way trade of similar
  manufactured goods (for reasons of diversity,
  product differentiation)

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Intra-industry Tradereflects 2 aspects of
globalization

• 1. trade resulting from specialization based in
  product differentiation / economies of scale (ex
  auto-pact US - Canada)
• 2. products produced sequentially in stages
  distributed over several countries (ex
  computers, shoes, maquiladoras, SEZ, EPZ)

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Importance of intra-industry tradeSource WTO,
International Trade Trends and Statistics (1995)
www.wto.org/htbin/htimage.. 97-02-18, p. 23

• foreign sourcing
• intermediate products in imports of manufactured
  goods (1991)
• 6 countries in Western Europe gt60
• 6 more countries in W.E. 50-60
• Canada 52
• USA 47
• Japan 31

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Diversity in tradeeffect on marketing?

• basic products commodities and natural
• resources
• manufactured goods
• intermediate products (components)
• intra-firm or contract
• finished
• consumer goods
• business to business
• services

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Japan Inc. Source The Economist, Business
Travellers Guide - Japan (87)See also articles,
The Economist, 960217 (Japan/companies) 970628
(Surveys/Japan finance)

• cartels and cooperation (collusion) on a scale
  not possible in West
• (because of anti-trust and competition rules)
• cooperative networks in industry (Keiretsu)
• cooperative networks in distribution (Sogo
  Shosha)
• close links government / business (Zaikai)

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Zaikai the power brokers of Japan

• zai money
• kai world
• made up of to top management of top firms
• using generous funds, contacts with politicians,
  influence networks (cf. recent scandals)
• put pressure on government and labor
• influence trade negotiations

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Japans Trade Role of Corporate Networks

• cartels an integral part of Japans economy
• high degree of collusion and collective action,
  often under government leadership
• example Japans automobile industry enter into
  agreement with steel industry to assign quotas
  and establish prices
• no outsiders can tender

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Sogo Shosha general trading companies

• 13 in all
• dominate commodity and capital goods imports
• particularly interested in high-volume,
  high-value trade
• offer market intelligence based on world-wide
  local office networks

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Sogo Shoshamajor Japanese trading companies

• collectively handle more than half of Japans
  trade, internal and external (1980s)
• the largest
• Mitsubishi
• Mitsui
• Marubeni
• C. Itoh
• Sumitomo

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Jetro Japan External Trade Organization

• now concentrates heavily on promotion of imports
  to Japan
• many offices in Japan and overseas
• provides advice and information
• maintains data bases

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Chaebol - Koreas Conglomerates

• dominate every aspect of Koreas economy
• 1960s
• Korea decided to concentrate countrys resources
  in a handful of companies given cheap credit and
  shelter from foreign competition
• 30 large groups dominate economy
• Source Economist 960706 53-54.

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High Concentration

• 4 largest Chaebol
• Hyundai, Samsung, LG, Daewoo
• their combined sales 80 of GNP
• control almost 60 of exports
• employ 3 of workforce

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Chaebol vs small firms

• Chaebol have expanded into areas such as
  entertainment and retailing
• small firms may have only one Chaebol as customer
  but no sense of shared destiny as in the case
  of Keiretsu and their suppliers
• Chaebol get the best graduates and managers
• do Chaebol stifle innovation?

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The World Bank Lending and Knowledge in a Time
of Rapid Change (http//www.worldbank.org/html/ext
dr/whatis.htm)

• WB loans and advice to more than 100 developing
  countries and countries in transition.
• main focus helping the poorest people and the
  poorest countries
• investing in people, basic health and education
• protecting the environment
• supporting and encouraging private sector
  development
• 6,000 employees (30,000 job applications/year!)

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Word Bank Activities

• strengthening ability of governments to deliver
  quality services, efficiently and transparently
  (good governance)
• promoting reforms to create a stable
  macroeconomic environment
• WB is largest provider of development assistance,
  about US 20 billion in new loans each year.
• coordinating with other organizations
  private,government, multilateral, and NGOs

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Role of International Monetary Fund
(IMF)(http//www.imf.org/external/np/exr/facts/gl
ance.htm)

• to promote international monetary cooperation
• to facilitate the expansion and balanced growth
  of international trade
• to promote exchange stability
• to assist in the establishment of a multilateral
  system of payments
• to lend temporarily to its members experiencing
  balance of payments difficulties
• total staff 2,600 (Washington DC overseas)

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WTO FACT FILE(http//www.wto.org/wto/index.htm)

• Location Geneva, Switzerland
• Established 1 January 1995
• Origin Uruguay Round negotiations (1986-94)
• Membership 132 countries (as of Sep. 1997)
• Secretariat staff 500
• Functions
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes

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Openness or Protectionism

• see The Economist
• 990102, p. 90 graph Economic Freedom
• 990102, p. 59-61 Angus Reid/Economist Poll
• Liberalism lives (see graph p. 59)