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INTERNATIONAL TRADE (COMPANIES AND INTERNATIONAL TRADE (GLOBAL VALUE…

- - - - Entering a new market therefore entails costs that the company must be able to bear. SO:
        
        Only the most productive companies in each market can access international markets through export.
        
        One of the problems facing this new theory is the limited statistical information available on the behaviour of enterprises.
        
        Only a still smaller part of the more productive ones are able to establish themselves in foreign markets through investment.
  - - - The existence of Global Value Chains (GVC) gives rise to the exchange between countries not of finished goods, but of tasks or phases in the production of a good. This has been possible thanks to:
        
        Reduction of transport costs
        
        Developments in information and communication technologies (ICT), which have made coordination costs cheaper.
        
        Global Value Chain Development Report: With this tool you can classify the added value generated in each economy in four categories
        
        That produced in one country and consumed in final products in another country (which would correspond to the concept of traditional export).
        
        That produced in one country and used as intermediate consumption in a production process that results in a final good produced and consumed in a second country.
        
        That produced and consumed in final products within a country
        
        A product produced in one country and used as intermediate consumption in a second country, resulting in an intermediate or final good which, in turn, is exported to another country.
  - - - By participating in these value chains, countries and enterprises in developing countries also become more vulnerable to:
        
        HENCEFORT:
        
        The fragmentation of production and the creation of global value chains presents both an opportunity and a challenge for developing countries.
        
        The supply disruptions that may be suffered by other companies located in countries far away from them, but with which they are related through trade and fragmentation of production.
        
        Comercial Wars
- - - - Intra-industrial trade is possible due to the existence of increasing yields in production, companies that can differentiate their products and consumers with different preferences.
        
        Types
        
        Horizontally differentiated
        
        when they are products of similar quality that differ in some other characteristic.
        
        Vertically differentiated
        
        depending on the quality of the varieties
  - - - Each country tends to specialize in the product in which the relative cost of production factors is lower, this is called commercial advantage
      - H-O analysis
        
        With trade, countries tend to specialize more in the good that uses their relatively abundant factor relatively intensively, and export it.
- - - - Retarding factor
        
        The prices of primary goods grow at a slower rate than the prices of manufactured goods
        
        Specialization in primary products makes the accumulation of technological capabilities that can be translated into sustained increases in productivity more difficult
        
        High variability in international prices
  - - - Certain emerging industrial exporters, particularly in Asia, especially due to China's growing role in world trade
        
        Middle Eastern oil exporters also gained market share, although their participation is very dependent on the price of oil
      - Developed countries
        
        Europe holds the first position, but with a significant loss of market share in the last 15 years
        
        The decline in the share of North America - particularly the United States - in world exports is also appreciated
- - - - change in the point of consumption
      - shift in the use of production factors
      - increase in international trade
    - - Assume an economy with only two goods, M and E, a frontier of production possibilities NN 'and an internal price relation that is given by the slope of the line Pi
      - after opening, the country changes its productive allocation, increases trade and raises both its level of consumption and the level of utility that can be accessed
      - this economy would produce at point A, where the internal price ratio is tangent to the production possibilities curve
  - - - Consequences
        
        free trade situation in which the internal price is given by the world price Pm, in which local producers sell Q1, local consumers consume Q4 and import Q4 – Q1
        
        Beneficiaries: Business groups and workers Disadvantaged:consumers
        
        Citizens of the country that introduces protection lose part of the consumer surplus
        
        The area a becomes surplus of the local producers, the area c goes to the State as a tariff collection
- - - - meetings in which all the signatory countries of the Agreement participate to conclude the tariff reductions on a mandatory basis for all
      - The Doha Program of 2011 contained the liberalization of agricultural markets
      - Bali Conference in 2013, which consisted of simplifying bureaucratic procedures at customs to make trade in goods faster and more transparent
      - Buenos Aires at the end of 2017, there were certain advances such as not imposing Customs duties on electronic commerce and measures for small economies to participate in the international trading system.
  - - - Generalized System of Preferences
      - A free trade zone consists in the elimination of tariffs among member countries, each maintaining its own trade policy with respect to third countries
      - NAFTA, in which Canada and Mexico participated with the United States, since January 1994
      - Regional economic integration, as it is based on a selective trade liberalization, represents an exception to the most favored nation clause
        
        The Economic and Monetary Union in Europe is the most advanced example of regional economic integration
    - - Country A imported the quantity Q4 – Q3 from the rest of the world. These goods were imported at a PC price.
      - Once the free trade zone or customs union has been established, imports can be made at a PB price
      - consumers expand their surplus (a + b + c + d) and some domestic producers are displaced.
- - - - The growth in manufactured exports (6.7%) is higher than the average for world trade (5.5%) and almost double that of raw material exports (3.5% for agricultural products and 3.8% for minerals).
        
        While in 1950 raw materials accounted for 60% of world trade, today their weight is 25%, having been in the 1990s even below that value.
        
        One of the causes of this trend is the disparate value of the respective income elasticities, which is lower in the case of primary products (agricultural and mineral) than that of manufactured products: as a consequence, as world income increases, the demand for manufactured products grows faster than that for primary products.
        
        Between 2003 and 2013, there was a period of high prices for raw materials, and, even more intensively, energy and mineral products, which allowed the weight of these products in trade to exceed 30%.
        
        However, since 2014 there has been a fall in the prices of these products, which has been particularly marked in the case of oil.
    - - The progressive liberalization of financial services, air transport and telecommunications, among others, has led to a significant increase in transactions in these sub-sectors, in addition to more traditional ones such as tourism services, international transport (sea and air) or insurance.
        
        In 2017, services exports accounted for 22.3 per cent of world exports, excluding intra-EU trade.
        
        The main service exporters were, in this order: the European Union, the United States, China, India, Japan and Singapore, which together account for 63.1 per cent of world exports.
    - - From 1950 to 2017, the exports increased in a 5,5% but the production only a 3,7%. This is caused by the progressive liberalization of goods and services, also the tariffs. Also, we have to add the new type of economic policies.
        
        This process can be measured with the indicator called the "coefficient of openness", which is the result of the sum of imports plus exports of a country among its GDP.
        
        1985-36%
        
        2016-56%
        
        1960-23%
        
        Because trade has grown more slowly, some have called it Slowbalization: economies remain open to trade, but trade expansion has slowed considerably, growing by only 0.7 per year in real terms over the period 2008-2017.
        
        Commercial wars
        
        Importance of services
        
        Making transport cheaper