1. International Business Management (MS34B)
International Trade & Competitiveness
Facilitator: Densil A. Williams
MS34B, UWI Mona, Department of Management Studies

2. MS34B, UWI Mona, Department of Management Studies
Contents
Theories of International Trade
International Trade in a Globalized World
Developing Countries Response
Competitiveness of Small Economies
Concluding Remarks
MS34B, UWI Mona, Department of Management Studies

3. MS34B, UWI Mona, Department of Management Studies
Absolute Advantage
MS34B, UWI Mona, Department of Management Studies

4. Comparative Advantage
MS34B, UWI Mona, Department of Management Studies

5. The Logic of Comparative Advantage
US gives up one unit of shoe production – its area of comparative disadvantage – releasing ten units of productive resources that can be used to produce 2.5 extra units of computer software.
US trades these extra 2.5 units to Bolivia, which allows Bolivia to give up 2.5 units of computer software production, releasing thirty units of resources. Bolivia transfers these thirty units of productive resources into the production of shoes, producing 2 additional units of shoes.
Globally, an extra unit of shoes has been produced, with no loss in computer software production, through re-allocation of resources according to relative productive efficiency (i.e. comparative advantage).

6. Assumptions of behind Comparative Advantage- (Ricardian Model)
Mobility of Factors of Production Within Countries
Immobility of Factors of Production Internationally
Homogeneity of Tastes
Demand sufficient to absorb supply
Constant Returns to Scale
No Learning/Experience Curve
MS34B, UWI Mona, Department of Management Studies

7. Globalization and Trade
The integration of markets i.e. capital, labour goods.
Leads to the formation of a single world economy, society and culture driven by technology and the transnationalization of capital.
Based on critical rules of engagement- the neo-liberal model
MS34B, UWI Mona, Department of Management Studies

8. Globalization and Trade
Characteristics of Trade under Globalization
Central role of WTO in trade relations
Construction of regional trade blocs
Policies of economic liberalization
MS34B, UWI Mona, Department of Management Studies

9. Globalization and Trade
Impact of Globalization
Alleged loss of national sovereignty.
Attainment of global competitiveness by all
Consolidation of private capital
MS34B, UWI Mona, Department of Management Studies

10. Strategies for dealing with Trade in a Globalized World
Defensive
Negotiation Capability: COTED, WTO; CARIBCAN, EPA
Proactive
Building Internationally Competitive Industries, Firms and an Enabling Environment
- Introducing new export activities and the importance of innovation and upgrading in existing ones.
MS34B, UWI Mona, Department of Management Studies

11. Competitiveness of Small Economies
Small Developing Economies need; Macro-stability (Economic, Social, Political, Regulatory) to be competitive.
Variation in per capita income among small economies
export orientation
service orientation
country risk
macroeconomic policy choice
infrastructure
education
Variation best explained by differences in country risk and infrastructure.
MS34B, UWI Mona, Department of Management Studies

12. Competitiveness of Small Economies
Role of the State
The state has a strong role to play in small developing economies that are aiming to be internationally competitive.
Why?
Risk are higher for small state
Competitiveness brings greater benefits to all
MS34B, UWI Mona, Department of Management Studies

13. Competitiveness of Small Economies
The need for a Developmental State similar to what is used in East Asia.
There is the need for “strategic global repositioning”.
MS34B, UWI Mona, Department of Management Studies

14. Competitiveness of Small Economies
This must be based on the framework of Competitiveness, Governance and Diplomacy.
These constitute the most pressing issues facing the developmental problems of the Caribbean.
MS34B, UWI Mona, Department of Management Studies

15. MS34B, UWI Mona, Department of Management Studies
Concluding Remarks
The nature of international trade has changed due to the increasingly globalized nature of the world economy.
Small, developing countries like those in the Caribbean region have to find creative ways to deal with this new reality, especially in light of the erosion of preferential market access and the increasing need to become internationally competitive.
MS34B, UWI Mona, Department of Management Studies

16. MS34B, UWI Mona, Department of Management Studies
Concluding Remarks
In this discourse, we proposed the need for a stronger role of the state in driving competitiveness in these economies.
Also, there is the need for proactive strategies to improve export offerings and build internationally competitive industries and firms.
MS34B, UWI Mona, Department of Management Studies