...Inc. In this chapter: Introduction The Mercantilists’ Views on Trade Trade Based on Absolute Advantage: Adam Smith Trade Based on Comparative Advantage: David Ricardo Comparative Advantage and Opportunity Costs The Basis for and the Gains from Trade under Constant Costs Introduction Basic questions: What is the basis for trade? What determines which country exports each good? What are gains from trade? What benefits do countries get from international trade? Which goods are exported/imported by each country? What is the pattern of trade? Assume two-nation, two-good world The Mercantilists’ Views on Trade Mercantilism Economic philosophy in 17th and 18th centuries, in England, Spain, France, Portugal and the Netherlands. Belief that a nation could become rich and powerful only by exporting more than it imported. A nation’s wealth is measured by the amount of precious metals it owns. The Mercantilists’ Views on Trade Mercantilism Export surpluses bring inflow of gold and silver. Trade policy was to encourage exports and restrict imports. Mercantilists advocate excessive government intervention to impose this trade policy. Trade is a zero-sum game: One nation gains only at the expense of another. In other words, mutual benefits from trade are impossible! The Mercantilists’ Views on Trade Mercantilists measured the wealth of a nation by the stock of precious...
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...Foreign Trade and Exchange International trade exists due to things produced in a particular country that individuals, firms and governments in foreign countries want to purchase. Trade provides a greater selection of goods and services to choose from, often at lower costs than at home. In order to prosper and profit, countries want to use their resources such as labour, land and capital, as efficiently as possible. However, the quantity, quality and cost of resources can differ substantially between countries. Some have natural advantages, such as ample minerals or a climate suited to agriculture. Others have a well-trained workforce or highly developed infrastructure, advanced telecommunications systems and reliable electric utilities, which benefit the production and distribution of goods and services. Canada, as an example, depends heavily on trade to sustain incomes and living standards of Canadians and the prosperity of the nation. Other than trying to produce everything domestically, which would be inefficient, countries often concentrate on producing those things that they can produce best, and then trade for other goods and services. By doing so, both the country and the world become wealthier. Today, most industrialized nations could produce almost any product they chose. However, this does not make good economic sense. Much of the labour, land and capital that would have to be directed toward the production of a new item unfamiliar to that nation could be used more...
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... DATED THE 5th June, 2012 In exercise of powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-2014, the Director General of Foreign Trade hereby notifies the Handbook of Procedures (Volume I) and the Appendices to the Handbook of Procedures (Volume I). This shall come into force from 5th June, 2012. (Anup K. Pujari) Director General of Foreign Trade e-mail: dgft@nic.in (Issued from F. No. 01/ 61/180/0050/AM13/PC-3) iii iv CONTENTS CHAPTER SUBJECT PAGE GLOSSARY 1 1 INTRODUCTION 5 2 GENERAL PROVISIONS REGARDING EXPORTS AND IMPORTS 7 3 PROMOTIONAL MEASURES 53 4 DUTY EXEMPTION / REMISSION SCHEME 67 5 EXPORT PROMOTION CAPITAL GOODS SCHEME 125 6 EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs) SCHEME AND BIO- TECHNOLOGY PARKS (BTPs) 139 7 SPECIAL ECONOMIC ZONES 165 8 DEEMED EXPORTS 167 9 MISCELLANEOUS MATTERS 171 v vi GLOSSARY (ACRONYMS) Acronym ACC ACU AEZ ANF ARO ASIDE BG BIFR BOA BOT BRC BTP CBEC CCP CEA CEC CIF CIS CoD CoO CVD DA DoBT DC DEPB DFIA DFRC DGCI&S DGFT DIPP DoC DoE DoIT DoR DoT DTA Explanation Assistant Commissioner of Customs Asian Clearing Union Agri Export one Aayaat Niryaat Form Advance Release Order Assistance to States for Infrastructure Development of Exports Bank Guarantee Board of Industrial and Financial Reconstruction Board of Approval Board of Trade Bank Realisation Certificate Biotechnology Park Central Board of Excise and...
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...Mercantile Bank Limited Head Office, Dhaka Schedule of Charges 2. Foreign Trade Services 2.1 Import Maximum 0.50% (Below 100% Margin) and 0.25% (100% Margin) 0.40% (Below 100% Margin) and 0.25% (100% Margin) 0.90% for 1st 180 days or part thereof 0.60% for 2nd 180 days or part thereof BDT 500.00 Maximum 0.40% (Below 100% Margin) and 0.25% (100% Margin) 0.40% (Below 100% Margin) and 0.25% (100% Margin) 0.40% 0.20% BDT 500.00 0.40% for 1st Quarter Maximum 0.40% per quarter 0.20% for each subsequent quarter or part thereof Period/Value Previous Rate of Commission/Charges Revised Rate of Commission/Charges 2.1.(i) Commission for opening of L/C under Cash/AID/Loan/Barter etc. 1st Quarter Each subsequent Quarter or part thereof 1st quarter 2.1.(ii) Commission for opening of Back to Back L/C including EDF L/C Each subsequent quarter or part thereof Minimum Ist Quarter 2.1.(iii) Acceptance Commission (BTB L/Cs) Each subsequent quarter or part thereof Per quarter/Part thereof Minimum 2.1.(iv) Commission for opening of L/C under Deferred Payment 0.60% for 1st quarter or part thereof 0.40% for 2nd quarter or part thereof BDT 1,000.00 Nil At actual minimum BDT 300.00 Maximum 0.50% for per quarter or part thereof But minimum BDT 1,000.00 2.1 (v) Acceptance Commission (except BTB L/Cs) For each quarter 0.40% per quarter At actual minimum BDT 300.00 2.2 2.3 If L/Cs are sent by mail (This shall cover cost of registered mail of...
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...Alimatou TRAORE Concept Application essay #1 International Trade- IBS390 Summer 2015 International Trade and Foreign Direct Investment Introduction 1. International Trade, what is it? 2. FDI : Definition and different types 3. Impacts of FDI( Foreign Direct Investment) on International Trade 4. Costs and Benefits of FDI( Foreign Direct Investment) Conclusion Introduction The world economy has developed over the past few decades in a great manner, regarding investment in particular and the way multinationals enterprises are now investing in the developing world to increase their production, assets, and interconnected market networks. Individuals everywhere in the world turn out to be closer than ever before. Goods and services available in one nation A will be instantly promoted in another country B or C. Universal exchange and communication became more basic. This current situation is called Globalization. Globalization is at the same time the primary cause and effect of the incredible growth of International Trade over the past decades. Thanks to International Trade, consumers around the world enjoy a wider range of products than they would if they only had access to domestically made products. 1. International Trade, what is it? International trade simply refers to the movement of goods and services across borders. This activity gives rise to a greater competition and more competitive pricing in the market. However let’s not...
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...Introduction: Trade is an integral part of the total developmental effort and national growth of all economies including Bangladesh. It particularly plays a central role in the development plan of Bangladesh where foreign exchange scarcity constitutes a critical bottleneck. Export trade can largely meet ‘foreign exchange gap’, and export growth would increase the import capacity of the country that, in turn, would increase industrialization, as well as overall economic activities. Bangladesh’s import needs are substantial; hence the need to rapidly increase exports is immediate. In order to finance the imports and also to reduce the country’s dependence on foreign aid, the Government of Bangladesh has been trying to enhance foreign exchange earnings through planned and increased exports. However, the global trade scenario has exposed structural limitations of the Bangladesh economy, posing a variety of challenges for the country that has underdeveloped technology and a low capital base. In this assignment we discuss the composition, performance and trends of foreign trade of Bangladesh. In the process, we examine Bangladesh’s export and import performance compared to those of various countries, regions and the world over the years. We also discuss the sources of Bangladesh’s imports and directions of Bangladesh’s exports and the dynamic changes over the years, and highlight the trends of export and import shares to GDP and trade balance positions with different countries...
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...Trade openness, Foreign Direct Investment in Southeast Asia 1 Introduction Over the last three decades, foreign direct investment (FDI) inflows have provided strong impetus for economic development across countries. FDI serves as an important source of supply funds for domestic investment thus, promoting capital formation in the host country (Omisakin et al.2009). DI inflows can assist an economy by giving opportunities orameliorating the level of service sector (i.e telecommunications, banking and finance, transport), wholesale and retail trade, business and legal services. During this period there have been different strands in the empirical and theoretical literature aimed at investigating the relationship between FDI inflows and their determinants in developed and developing markets. According to UNCTAD (2009), many developing countries, including the leastdeveloped ones, have attracted only small amounts of FDI inflows despite their efforts towards economic liberalization in an increasingly globalizing world. Moreover, FDI inflows are highly concentrated in a small number of countries. The demand-side of FDI theory argues that investment will go primarily to countries large enough to support the scale economies needed for production (Trevino and Mixon2004). For Grosse and Trevino (1996) this explanation helps to understand why most FDI is directed to developed rather than to developing countries, given that most investment historically has been marketseeking. Developing...
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...Application in Foreign Trade in India” Authors: Nader Angoutin Research Scholar in Commerce, University of Kerala, Trivandrum. Email:Nader_Angoutin@yahoo.com Abstract This paper analyses the Study of International Marketing Application in Foreign Trade in India. The study argues the international marketing as simple extension of exporting, whereby the marketing miss is simply adapted in some way to take into account differences in consumers and segment. International marketing research really plays an important role in the marketing research. The study will help in understanding the application of international marketing and knowing the socio economic, foreign trade and financial economic effects. This will fill a critical gap as not much information is available in the context of International Marketing Application in Foreign Trade in India. Keywords: International Marketing- Foreign Trade INTRODUCTION: International marketing is simply the application of marketing principles to more than one country. However, there is a crossover between what is commonly expressed as international marketing and global marketing, or across national borderlines. The intersection is the result of the process of internationalization. Many American and European authors see international marketing as simple extension of exporting, whereby the marketing miss is simply adapted in some way to take into account differences in consumers and segment. International trade is also...
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...1. DEFINITION: FOREIGN EXCHANGE One of the largest businesses carried out by the commercial bank is foreign trading. The trade among various countries falls for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The bank, which provides such operation, is referred to as rending international banking operation. Mainly transactions with overseas countries are respects of import; export and foreign remittance come under the preview of foreign exchange transactions. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. In this case the bank plays a vital role to bridge between the buyer and seller. H.E. Evitt defined “Foreign Exchange” as the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the currency of another country. Foreign Exchange Department is an international department of the bank. It deals with globally and facilitates international trade through its various modes of services. It bridges between importers and exporters. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department mainly deals with foreign currency. This is why this department is...
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...Under present law, a foreign person or foreign corporation is taxed at a flat rate of 30% on his gross income on his US –source income that is not “connected” with US trade or business. The questions are: • Whether the foreign person is engaged in a US business • If a tax treaty is in effect between the US and the country of the foreign person. If there is an existing tax treaty, the income will not be subject to US tax unless the income is from “permanent establishment” in the US. Trade or Business – Taxpayer engaged in the marketing of goods or services on a regular, continuous and considerable business activity in the US. 1. Performance of personal services- de minimis- foreign persons who is present in the US not more than 90 days during the tax year and receives no more than $3000. 2. Trading in stocks, securities or commodities- through a US broker will not be taxed by US . Congress created several “safe harbor” for trading on the US market and avoid taxes in order to attract foreign investors. A broker, dealers will be taxed because they are regularly engaged in the purchase and sale of stocks for profit or if he maintain an office or other fixed place of business in the US. 3. Other Situation- A. Effect of agency arrangements- b. Partnership, trusts and estates c. Banking- Not all lenders are commercial banks. It will be determined if a foreign person conducting a business by one or more of the activities of: Receiving deposits, making personal loan to the...
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...Loss of General Account interest on RAD balance: The balance of Foreign Currency account is showed in the Trial Balance of AD Branch in taka form which is deposit for them and earns general account interest on the daily balance on foreign currency. But the Remittance Awaiting Disposal (RAD) Account of Saiham Cotton Mills Ltd. & Faisal Spinning Mills Ltd. are being maintained with Central Trade Services Unit (CTSU) and neither the branch nor the CTSU is getting general account interest on the daily balance of RAD account of Saiham Cotton Mills Ltd. & Faisal Spinning Mills Ltd. In light of the above table, it is certain that we have loosed BDT 1.80 million general account interest from 01.01.2014 to 31.05.2014 which will be BDT 4.31 million in 2014 for not showing FC account balance in Trial Balance of our branch. Moreover, RAD account balance is not adding with total deposit of the branch and it is not contributing the deposit mix of the branch since it is a low cost deposit. No sharing of interest income on UPAS payment & USD Purchase: The L/C of Saiham Cotton Mills Ltd. and Faisal Spinning Mills Ltd. is opened either UPAS arrangement or EDF arrangement as per Corporate Office’s approval ref: BA/CO/CRM(CACO)/AHH/eS/2013/0813 dated 20.10.2013. In case of UPAS, we do not earn any interest income at the time of payment of L/C by the client to OBU though our proposal was to take share 2% rate of interest (along with DHANMONDI BRANCH 50% overdue interest earnings for overdue...
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...or False) 3. To use a country to export goods to better developed countries and markets requires foreign markets to be closed, which if generally the case in developing countries. (True or False) 4. Culture can be important, not only shaping the opportunities and risks in a country but also for the likelihood that a company can implement its market strategy. (True or False) 5. Microfinance, in its modern version, was introduced by Muhammad Yunus, a Bangladeshi economist. (True or False) 6. The fair trade system attempts to intervene directly on both market and nonmarket issues by coordinating the flow of consumer revenue to participating producers. (True or False) 7. Rule of law can override politics and political ties when doing business in emerging market countries. (True or False) 8. Emerging markets countries have imposed a variety of restrictions on foreign direct investment, foreign exchange transactions, and the repatriation of earnings. (True or False) 9. Media restrictions, ethnic and religious conflicts, political corruption, and political megalomania are some of the risks faced in emerging market countries. (True or False) 10. Emerging market countries face financial restrictions, price controls, and regulatory risks when doing business in developed countries. (True or False) 11. One concern with the fair trade...
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...revenue is divided between the parent and the collaborated company. There are different modes through which a company can enter China; the main ones have been briefed below: Representative Office: The simplest way for a company to establish in China is through opening a representative office in China. The representative office acts as a bridge between the foreign company and its business partners in China. It gives the company a platform to conduct market research, make business contacts, manage product promotion and manage other activities for the parent company like making travelling arrangements for its company representatives. Compensation Trade: Manufacturing companies who want to outsource their production usually have a compensation trade agreement with firms in China. Usually a barter system is followed in which the parent company gives machinery to the Chinese and the Chinese produce the product for the company. This type of agreement needs compliance with the Foreign Trade Authority. Due to the rising interest of the Chinese government in attracting the foreign companies towards China, there is an array of ways a foreign company can collaborate with a Chinese company to form a joint-venture. Most widely used joint-venture modes are : Cooperative Joint Venture: Under the CJV type of collaboration both the companies enjoy convenience and the flexibility of making their own terms and regulations. This type of a collaborated firm does not need to be a legal entity. The profit...
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...increasingly integrated global economy by utilizing free trade, free flow of capital, and the tapping of cheaper foreign labor markets. Globalization can be good for business in that it makes operating in foreign markets more efficient. The term good can be defined as having profit, advantage or benefit. Therefore, globalization is good for business in that it benefits the organization by increasing profit in other world markets. (1, Premise) By operating on an open market, businesses can communicate more efficiently and effectively with their customers and suppliers. This will allow businesses to better manage their supplies, inventories, and their distribution networks. Businesses can now market and sell their products with ease and on the same schedule as they would in their home country. (1, Conclusion) Globalization allows businesses to do better business in foreign countries by being able to market and sell their products by using free trade and the free flow of capital. (2, Premise) Another advantage of globalizing a business is that we can outsource products to other countries to make. Production of these products will be of similar quality but cheaper to make. It will help boost other economic markets in that it will increase jobs in that region. By outsourcing these jobs to foreign countries, it will leave better jobs for American workers. (2, Conclusion) Globalization will benefit businesses and foreign countries in that products are outsourced to other countries...
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...exporting products, ideas, and influence. Americans wanted to teach other nations the American values of democracy, free enterprise capitalism, and Protestant Christianity. The social factors of American imperialism were to extend western ideas, religion, and government. The main idea was to find markets all around the world. The Americans wanted to expand their values, increase foreign trade, enhance American prestige, and guarantee future security. They were willing to do this by expanding boundaries, purchasing colonies, or persuading encouragement to take control and better the American social lifestyles and security. The economic growth of industrial networks had linked America with foreign markets like never before. Employment and farmers were depending on foreign countries to keep the economy going. Farmers and industries relied on the world to purchase products and goods and at the same time kept the economy going by providing jobs and keeping farmers from going broke and selling their farms. As America relied on foreign trade for wealth and power, they needed a strategic way to protect the foreign markets, and the seas where ships transported goods from shore to shore. Alfred Thayer Mahan, a navy captain and later admiral, created the idea of forming a navy. The idea of replacing wood vessels with steel persuaded America to have a modern and powerful Navy and the means to become an imperial power within the world. Reference: Davidson, Gienapp, Heyrman, Lytle, Stoff...
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