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Topic 1: Global Trade and the Singapore Economy (Risks (Economic…
Topic 1: Global Trade and the Singapore Economy
Risks
Economic
Insolvency of Buyer, Inability to fulfill promised delivery of goods
Cultural
corruption, language barriers, lack of legal protection
Political
War, Riots, Non-renewal of export/import licenses, trade embargoes
Singapore in Global Trade
Economy
dependent on exports
consumer electronics
IT products
pharmaceuticals
no foreign debt, high revenue
2nd most open economy
Reliance on Global Trade
Exports
14th largest 2010
S$470 billion in 2016
Imports
15th largest 2010
S$403 billion in 2016
Institutions Governing Global Trade
Main Institutions
General Agreements on Tarrifs and Trade (GATT)
World Trade Organisation
International Monetary Fund
Group of Twenty (G20) 1944
United Nations 1945
World Bank 1944
Role of WTO
succeeded GATT in 1995
primary responsible for policing the world trade system and enforcing rules laid down in trade treaties signed by WTO member states
instrumental in
promoting the lowering of barriers to cross-border trade
creating a more open global business system between countries
Rationale of Global Trade
production and markets in different countries become interdependent due to dynamics of the entire supply chain
Global trade transactions take place across national borders to satisfy the needs of companies and the individual.
Globalization
Definition: Globalization refers to the trend away from distinct national economic units and toward one huge global market that is more integrated as well as interdependent.
Impacts
More developing countries adopting open international trade policies
Barriers to cross-border trade and investment are declining due to advancement in:
information technology
telecommunications
transportation
Motivation for trade
Lowered Trade Barriers
companies can strategically relocate operations
cost and time savings
Ability to expand: sell products and services to the world
Reduced Costs
cheaper oveseas manufacturers
cheaper overseas labour
Technological Advances
Internet
major force in global trade
creates an electronic global marketplace
containerization
Definition: Global trade occurs when a company exports products or services to consumers in another country.