Matakuliah : J0474 International Marketing
Tahun
: 2009
The Dynamic Environment of International Trade
Chapter 2
Learning Outcome
• The Twentieth to the Twenty- First Century
• Balance of Payments
• Protectionism
• Easing Trade Restrictions
•The International Monetary Fund and World Bank Group
• Protests against Global Institutions
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The Twentieth to the Twenty- First Century
The first half of the 20th century was marred by a major worldwide
economic depression that occurred between two world wars
that all but destroyed most of the industrialized world.
The last half of the century, while free of a world war, was marred
by struggles between countries espousing the socialist Marxist approach and
those following a democratic capitalist approach to economic development.
After World War II,
Marshall Plan
The General Agreement on Tariffs and Trade (GATT)
Newly Industrialized Countries ( N I Cs)
State Owned Enterprises ( SO Es)
By the last decade of the 20th century:
European Union, NAFTA, AFTA, APEC
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The First Decade of the Twenty-First Century
and Beyond
In the 21st century,
How will these changes
that are taking place in
the global marketplace
impact international
business?
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Companies are looking for
ways to become more
efficient,
improve productivity,
expand their global reach
while maintaining an ability
to respond quickly to deliver a
product that the market
demands.
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Balance of Payments
Balance of Payments is
The system of accounts that records a nation’s international financial transactions.
A balance of payments represents the difference between receipts
from foreign countries on one side and payments to them on the other.
On the plus side ,
On the minus side.

A balance of payments statement includes
three accounts:



1. The current account.




2.The capital account

3. The official reserves account


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Protectionism
I.
Protection Logic and Illogic :
1.
Protection of an infant industry,
2.
Protection of the home market,
3.
Need to keep money at home,
4.
Encouragement of capital accumulation,
5.
Maintenance of standard of living and real wages,
6.
Conservation of natural resources,
7.
Industrialization of a low-wage nation,
8.
Maintenance of employment and reduction of unemployment,
9.
National defense,
10. Increase of business size,
11. Retaliation and bargaining
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Protectionism
II. Trade Barriers:
1. Tariffs
is a tax imposed by a government on goods entering at its borders.
2. Quotas
is A specific unit or dollar limit applied to a particular type of good
3. Voluntary Export Restraints
An agreement between the importing countries and
exporting countries for a restriction on the volume of exports.
4. Boycotts and Embargoes
A government boycott is an absolute restriction against the purchase
and importation of certain goods from other countries.
An embargo is a refusal to sell to a specific country
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Protectionism
II. Trade Barriers:
b.
5. Monetary barriers :
a. Blocked currency
The differential exchange rate
c. Government approval
6. Standards
Non tariffs barriers include standards to protect health,
safety and product quality.
7. Antidumping Penalties
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Easing Trade Restrictions
1. The Omnibus Trade and Competitiveness Act
The trade act was designed to deal with trade deficits, protectionism,
and to overall fairness of our trading partners.
The bill covers three areas considered critical in improving U.S. trade :
Market access, export expansion and import relief.
c.
2. General Agreement on Tariffs and Trade
In general, GATT covers three basic elements :
a. Trade shall be conducted on a nondiscriminatory basis,
b. Protection shall be afforded domestic industries
Consultation shall be the primary method used to solve global trade problems.
GATS
TRI Ms
TRI Ps
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Easing Trade Restrictions
3. World Trade Organization
The WTO is an institution, not an agreement as was GATT.
WTO sets many rules governing trade between its 148 members, provides
A panel of experts to hear and rule on trade disputes between members.
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The International Monetary Fund
and World Bank Group
IMF and WB group are two global institutions created
to assist nations in becoming and remaining economically viable.
IMF ,originally 29 countries signed the agreement,
Now 184 countries are members.
The objectives of the IMF are the stabilization of foreign exchange rates and
establishment of freely convertible currencies to facilitate
the expansion and balanced growth of international trade.
The IMF developed Special Drawing Rights (S D R )
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The International Monetary Fund
and World Bank Group
The World Bank Group is a separate institution that has as its goal the reduction
of poverty and the improvement of living standards
by promoting sustainable growth and investment in people.
The bank provides loans, technical assistance,
and policy guidance to developing-countries members to achieve its objectives.
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Summary
•
•
•
Free international markets help underdeveloped countries become selfsufficient and because open markets provide new customers, most
industrialized nations have, since World War II, cooperated in working
toward freer trade.
Such trade will always be partially threatened by various governmental
and market barriers that exist or are created for the protection of
local business. However, the trend has been toward freer trade.
The future of open global markets lies with the controlled and equitable
reduction of trade barriers.
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