Massimiliano Di Pace1 INTERNATIONAL TRADE CONCEPTS - globalisation - internationalisation - international trade

Massimiliano Di Pace2 INTERNATIONAL TRADE CONCEPTS Globalisation: possibility for everybody (all operators from every area of the world) to sell everything (every good and service), to everybody (all consumers in every area of the world)

Massimiliano Di Pace3 INTERNATIONAL TRADE CONCEPTS Other concepts relating to Globalisation: process leading regional economies, societies, and cultures to integration on account of communication and trade

Massimiliano Di Pace4 INTERNATIONAL TRADE CONCEPTS Other concepts relating to Globalisation: integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology

Massimiliano Di Pace5 INTERNATIONAL TRADE CONCEPTS The United Nations ESCWA (United Nations Economic and Social Commission for Western Asia, headquartered in Beirut, one of the 5 regional commissions under the administrative direction of the United Nations Economic and Social Council) has written that globalisation "is a widely-used term that can be defined in a number of different ways”

Massimiliano Di Pace6 INTERNATIONAL TRADE CONCEPTS ESCWA states that “when used in an economic context, globalisation refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labor... although considerable barriers remain to the flow of labor”

Massimiliano Di Pace7 INTERNATIONAL TRADE CONCEPTS The concept of Globalisation was introduced in the 60s, when multinational corporations started to disseminate the world with their products, and became widespread in the 80s, when some brands and logos were well known in every country (i.e. Coca Cola, Mc Donald’s, Benetton, Exxon-Esso, Mercedes)

Massimiliano Di Pace8 INTERNATIONAL TRADE CONCEPTS The term “global village” was “coined” in the ’60s by the mass media sociologist Marshall McLuhan In the recent years many authors have written on globalisation (Baldwin, Beck, Giddens, Harley, Pollin, Sen, Stiglitz)

Massimiliano Di Pace9 INTERNATIONAL TRADE CONCEPTS The globalisation is the result of break down of borders, and practically, as far as trade is concerned, of the overcome of traditional trade barriers

Massimiliano Di Pace10 INTERNATIONAL TRADE CONCEPTS The trade barriers are: - tariffs (or duties) - quotas - standards - customs rules - (custom officials’ corruption)

Massimiliano Di Pace11 INTERNATIONAL TRADE CONCEPTS As a matter of fact globalisation has been promoted by international organisations such as Gatt (today Wto) Imf has played an important role for stabilisation of currencies rates and for easing financial capital flows

Massimiliano Di Pace12 INTERNATIONAL TRADE CONCEPTS At regional level there are important examples of globalisation: Eu single market Nafta Mercosur Asean

Massimiliano Di Pace13 INTERNATIONAL TRADE CONCEPTS The level of globalisation can be measured according to some parameters: - percentage of Gdp due to Exports - workforce engaged in exporting companies - movements of capitals, as a proportion of Gdp - foreign workers, weighted by population

Massimiliano Di Pace14 INTERNATIONAL TRADE CONCEPTS The effects of globalisation are multifold: - standardisation of goods and services - increasing competition - broader choice for consumers and economic operators - more intense capital flows

Massimiliano Di Pace15 INTERNATIONAL TRADE CONCEPTS - stronger labour mobility - faster pace of technological innovations - higher mutual influence of economies - major need of policies coordination for governements - more difficult control activities for crime fighting and fiscal monitoring

Massimiliano Di Pace16 INTERNATIONAL TRADE CONCEPTS - greater importance of international languages - challenges for environmental protection - risk of political strains on commodities

Massimiliano Di Pace17 INTERNATIONAL TRADE CONCEPTS Globalisation has stirred up ideological debate - no global movements: developed in opposition to the perceived negative aspects of globalisation - commercial disputes: between developed countries and developing countries

Massimiliano Di Pace18 INTERNATIONAL TRADE CONCEPTS Critics on globalisation relate to: - unfair exploitation of poor countries - multinational companies imposing their products - delocalisation towards countries with lower labour cost and more flexible environmental rules - external policies driven by commercial purpose - income inequality worsened between and within nations - fading away of local cultures

Massimiliano Di Pace19 INTERNATIONAL TRADE CONCEPTS The concept of internationalisation can be referred to: - economies - companies When referred to economies, internationalisation means that your internal market is open to foreign companies, and that your national companies operate overseas

Massimiliano Di Pace20 INTERNATIONAL TRADE CONCEPTS When referred to companies, internationalisation can have 2 possible meanings: 1° (stricter concept): a company is “international”, when it is present in foreign markets with its own facilities (such as branches, local companies), for commercial or productive purposes

Massimiliano Di Pace21 INTERNATIONAL TRADE CONCEPTS 2° (broader concept): a company is “international”, when it sells abroad directly, even if it has not permanent facilities in foreign market (i.e. selling during local exhibitions) According to the latter concept, the internationalisation process of a company starts with exports

Massimiliano Di Pace22 INTERNATIONAL TRADE CONCEPTS As a matter of fact, companies, before establishing facilities abroad, they consolidate their experience of sales in a foreign market, and just after that they consider to build up a facility, which is at the beginning a commercial branch, and afterwards, if necessary, a manufacturing local company

Massimiliano Di Pace23 INTERNATIONAL TRADE CONCEPTS International trade is the exchange of goods carried out by different countries Goods are usually are valued at the frontier of the exporting country (cif or fob)

Massimiliano Di Pace24 INTERNATIONAL TRADE CONCEPTS Under the theoretical point of view we cannot call “export” the sale of goods in other countries members of the same single market (i.e. Eu countries)

Massimiliano Di Pace25 INTERNATIONAL TRADE CONCEPTS The exchange between countries may include also: - sale of services (i.e. transportation, tourism, communications, insurance, financial services, information services, business and personal services); - transfer of income (salary paid to non-resident Workers, investment income due to financial assets) - current transfers (remittance of foreign workers to homeland)

Massimiliano Di Pace26 INTERNATIONAL TRADE CONCEPTS The previous transfers are registered in the current account of balance of payments Other transfers are registered in the capital account: - transfer of financial capitals (funds) - transactions of intangible assets (patents, goodwill) Others in the financial account: - direct investments (equity capital) - portfolio investment (equity and debt securities) - other investments (including derivatives, reserve assets)

Massimiliano Di Pace27 INTERNATIONAL TRADE CONCEPTS