...'Terms of Trade - TOT' The value of a country's exports relative to that of its imports. It is calculated by dividing the value of exports by the value of imports, then multiplying the result by 100. If a country's terms of trade (TOT) is less than 100%, there is more capital going out (to buy imports) than there is coming in. A result greater than 100% means the country is accumulating capital (more money is coming in from exports). Using the terms of trade to determine the health of a country's economy can draw the wrong conclusions. It is important to know why exports increase relative to imports, especially since the terms of trade are directly impacted by changes in export and import prices. Terms of trade measurement is often recorded in an index for economic monitoring. If a country's terms of trade improve, it means that for every unit of exports sold it can buy more units of imported goods. So potentially, a rise in the terms of trade creates a benefit in terms of how many goods need to be exported to buy a given amount of imports. It can also have a beneficial effect on domestic cost-push inflation as an improvement indicates falling import prices relative to export prices. However, countries may suffer in terms of falling export volumes and a worsening balance of payments. The UK's terms of trade have generally improved over the last 20 years, indicating that exports price have has been rising relative to import prices. This is partly caused by the fact that globalisation has...
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...markets have become the driving forces fueling global growth in retail sales and space. Over the 10-year history of A. T. Kearney’s Global Retail Development Index (GRDI), an annual research project designed to help global retailers prioritize which countries to enter, the population of developing markets increased 11%, while retail sales per capita has almost doubled, retail space has more than tripled and Internet access grew by nearly 500%. Clearly, developing markets hold significant potential for retail growth, but picking which markets are prime for development has been a tough learning experience. Initially many global retailers focused their developing market expansion aspirations on China, which gained acceptance into the World Trade Organization (WTO) in 2001. As the decade unfolded, retailers were drawn to the potential of Southeast Asia, the BRIC nations (Brazil, Russia, India and China) and Eastern European markets like the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Rumania, Slovakia and Slovenia following their joining the European Union (EU) in 2004. But over the 10 years of retail growth tracked by our research, five nations have consistently ranked in the Top 10: China, India, Russia, Vietnam and Chile. Almost everyone understands China’s size and therefore its market potential. More difficult is establishing its true market value, particularly when it comes to the emerging middle class and burgeoning urban population. As many retailers have...
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...Badges of trade In 1955, the raoyal commission on taxation (uk), provided six indicator or badges of trading. If we could pin anyone or more of these badges to a particular transaction then we could estalisj the existence of business/trade. Let us consider the six badges identified by the royal commission: a. The subject matter of realization The nature of the asset that is dealt with may indicate the fact that there is trading. If an asset that is acquired does not yield to the owner income, perdonal enjoyment or aesthetic pleasure, the chances are that he purchased the item to sell it at a profit b. Length of ownership This test is not decisive. However, aquick resale may support the fact that there is trading. In the case of turner v last (1965), where the taxpayer sold a piece of landa within four months of ownership c. Frequency of similar transaction This is a decisive test, frequency of similar transactions are likely to be held to ocnstitiute a trade. In the case of Pickford v Quirke (1927), Rowlatt j said: It is very well jnown that one transcation of buyinf and selling a thing does not make a man trader, but if it is repeated and becomes systematic , then be becomes a trader and the profits of the trader, not taxable as long as they remain isolated, become taxable as items in a trade as a whole. d. Motive The commission on taxation identified three reasons for purchasing a property: for personal use, to keep as a long term investment and derive income therefrom...
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...the environment. The government can control the output of products that aren’t the best for us. In other countries such as Europe, the government requires food manufacturers to label genetically modified ingredients (GMO) on the back of any food product that may contain them. With laws that govern the usage of food additives and GMO’s, consumers can then “vote with their dollars”, having a big influence on what type of items will be produced. I think the fair trade philosophy is most ideal in todays world. Educated consumers want to buy products that are manufactured with no cruelty and where equal rights for the people who construct the products, are incorporated in their daily activity. In 2011, Apple was the headline of many news article that spoke about the conditions of the factories where Apple products are produced. Many people were disgusted with the way workers in the Foxconn factories where treated with even reports of people committing suicide because of the brutal work conditions. I think the fair trade philosophy will work great for the global economy because it will create better work environments for manufacturing facilities, causing more consumers to feel guilt free about purchasing products from companies that have...
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...States The United States would not be the country it is today without its major trade partners. International trades make up a large part of China’s economy, which is the same for the U.S. Both the United States and China share similar structures as far as the market system orientation of trade and economic systems. It is important that China and the United States work together to help the countries strengthen its economic state. China’s Economic Background China is proving to be one the fastest growing, major economies in the world, perhaps even the most dynamic. Since the country opened its reform policy, and began a capitalistic society, the economy has grown drastically. China is the second largest economy by their nominal GDP and by the purchasing power after the U.S. (“Office of the United States Trade Representative”, n.d.). However, along with the United States, China has experienced tough times with a recession, which began in 2008. Since China provides so much of the United States’ goods, they are an extremely attractive country to do business with. Main exports from United States to China China and the United States goods and services trade was approximately $539 billion in the year 2011. With that, our deficit with China in 2011 was $282 billion. As of today, China stands as the second largest trade partner for goods, totaling $104 billion. United States goods exports to China in 2011 were...
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...absence of the tariff (i.e., under free trade). You may assume that transportation costs are zero and that demand and supply curves are linear. | With $5 per unit Tariff | Free Trade | World price of shirts | $20 | $20 | Tariff per unit | $5 | $0 | Price per unit of shirts | $25 | $20 | Quantity of Shirts (‘000s) | 200 | 250 | Quantity of Shirts (‘000s) | 120 | 50 | (a) Calculate the quantity imported under free trade and with the tariff. Import quantity = domestic consumption – domestic production Under free trade: 250 – 50 = 200 With the tariff: 200 – 120 = 80 (b) Use a diagram to illustrate the effect of the tariff on prices and quantities in this case, and then calculate the changes in consumer surplus, producer surplus, and tariff revenue resulting from the tariff. Changes in: Consumer surplus = -(a+b+c+d) = (200x5) + 0.5(50x5) = -$1,125,000 (loss) Producer surplus= a = (50x5) + 0.5(70x5)= $425,000 (gain) Tariff revenue = c = 80x5 = 400,000 (gain) Net national welfare = -(b+d) = -0.5[(70x5) + (50x50] = - $300,000 (loss) P($) D S 25 Pw+t a b c d 20 Pw 50 120 200 250 Question 2: The following table summarizes two hypothetical situations in the market for T-shirts in a large economy. The first column depicts the situation in the presence of a $10 per unit tariff on imported T-shirts. The second column represents the situation under free trade. You may assume that demand and supply curves...
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...that can be accessed are out of the range of what SME exporters require. I want to therefore use this medium to suggest a way forward for the government. The federal government should make laws to encourage the establishment of specialised banks that will only finance export transactions. These laws should allow private individuals to establish export focussed banks and Government should own and contribute 50% of these banks’s capitalisation so as to have a good control over its operations in order to realise its objectives. The law should stipulate the following among other things: a) The export banks are to finance only export transactions and any financing done outside this should be penalized. b) The export banks should offer trade finance products like Export Credit guarantee, Export Credit Insurance, Factoring, Forfaiting, Invoice discounting etc. c) The interest rate on the export financing facilities from this bank should be set by the Central Bank and should be lower than the prevailing rate in the market at any point in time. d) Government should reward any of the export banks that have the highest export finance facility portfolio at the end of each financial year. e) The export banks should offer both pre and post export financing to exporters. f) The banks should only finance SME exporting companies or cooperatives with at least 6 month...
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...Literature Review (Part1) Introduction to Export Finance Export constitute the edifice of citadel of a sound economy more particularly for a developing nation like India, which has been suffering from a persistent balance of payment (BOP) problem from more than a decade, reaching to a crisis proportion in June 1991. Therefore, thrust towards development of Indian economy has been promotion of exports. One of the major contributory factors for promotion of export trade is the availability of “Special Finance” both at pre and post-shipment stages. An exporter has not only to procure the raw materials either indigenous or imported for processing the same in finished goods and boarding them of ship/air, but also has to often allow credit terms to an overseas buyer. Delivery period in international trade transactions is normally longer compared to the domestic counterpart and correspondingly. The lead time for getting payment from the overseas buyer is more. The exporter has thus to be extra cautious to ensure that the overseas buyer is reliable one and payment for the goods/services sold/rendered will be realized expeditiously. Therefore, the issues involved in export finance primarily involve (i) availability of adequate and timely finance, (ii) provision of concessional credit on order to make the export internationally competitive, (iii) institutional support to protect the losses on account of default risks of the overseas buyers, and (iv) availability of special deferred...
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...Bulletin Volume 1, Number 1, 2005 © 2005 by the State Bank of Pakistan. All rights reserved. Reproduction is permitted with the consent of the Editor. OPINIONS Trade between India and Pakistan: Potential Items and the MFN Status Abid Qamar∗ During the last several years, opening up of trade between India and Pakistan has become the most sought after question at many policy forums and among concerned groups. The issue has gained particular importance after India granted the Most Favored Nation (MFN) status to Pakistan, to comply with the principles of World Trade Organization (WTO) regime in 1995, and Pakistan’s reluctance in reciprocating so far. It is believed that increased trade relationship can play a vital role in normalizing the political relationship between the two countries. This will, therefore, benefit millions of people living in both countries as the resources would be diverted from less desirable areas, such as defense spending, to poverty alleviation initiatives. Given the likely impact of trade liberalization between the two countries, the unavailability of any established estimate of potential trade and the items likely to be traded is unfortunate. With a view to come up with some estimates based on some methodology, however simple it is, this note attempts to find the potential of trade between the two countries by identifying the potential items. It estimates the scope for exports and savings by substituting our imports from the rest of the ...
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...The following essay addresses the issue of fair trade and basic fair trade business strategies of 50 sampled companies which operate around the world. The main emphasis is to assess which fair trade strategies and actions can be found in company reports and to identify best practice approaches. Based on these findings, I will be dealing with the question if the strategies can be worth adapting by German retailers. "Never before have had so many people so much in common, but never before have the things that divide them been so obvious.” Due to the fact that profit maximization and long-term maintenance of a business company are still the main business objectives global trade, free markets and globalization are the talks of today. At the same time organizations, institutions and governments share a vision of people of different nationalities and cultures which are able to trade resources across boundaries. However, it is not easy to maintain that when globalization does not favor those who want to trade fair-minded and reasonable. Besides there is a need for regulations when nation´s own global trading policies together with international corporations´ desire to increase their profits result in manipulated international trade pacts and agreements. Nevertheless fair trade is an effective way of development cooperation and for that reason millions of famers around the world symbolizes this way of participation in global trade relations, kids in school, healthy environment and...
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...International Trade Steven Harvey XECO/212 April 13, 2014 Timothy Simpson International Trade As we all know and have agreed on international trade is a vital part to the continuous growth of any country. International trade allows us to expand our markets for both goods and services that otherwise may not have been available to us. With international trade our market will have greater competition and therefore more competitive prices, which brings a cheaper product home to our consumer. I feel that initially we should begin trade with our neighbors for the simple facts that they are close to us and the cost of exporting and importing will be less expensive than it would be to do business with countries that are farther away, this is not to say that in the future we want do business with other countries. As we all know we have three neighboring countries that we share our borders with. They are Uthania, which thrives in agriculture with the production of mainly corn, soybeans, coffee, cocoa, and dairy and poultry products. Then we have Suntize which is a very popular tourist location and they specialize in the manufacturing of various electronics such as dvd players, computers, and etc. And last we have Alfazia they specialize in the growing of corn, rice, cotton, fruits, and vegetables. After analyzing the products each country specialize in and taking our specialties into consideration I feel as it would be in our advantage to start out producing and exporting cheese...
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...cities within a country is called a trade. Through the trading process people of the respective countries or states gain a greater choice of products or services that otherwise would not be available to them. For example let’s take a look at United States and Finland. Although United States has vast forests, they can lack a certain quality that is in demand for the country, in this case the wood- based products from Finland might be of a certain quality that fills a gap in the U.S. marketplace (2008, John J. Wild). In order to fulfill the need U.S. would either purchase, sell, or exchange goods to fulfill there demand. In the olden days trade was done in a form of barter system. This is where commodities were exchanged rather then currency. Commodities that were being exchanged had equal values and were equally desirable to both parties (indianchild.com). In the modern world, money is used for exchange and the barter system is extinct. The concept of trade is centered on the simple activity of the exchange of goods and services. In relation to trade and world output, we must remember that world output almost always will influence the amount of international trade. If the world economic output decides to take a slump then it will cause the level of international trade to slow down. On the flip side if output increases then it will generate a larger amount of International trade (Associated Content, 2009). However, the primary reason why Trade and World Out put are closely related...
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...1)Profit seeking motive: An investment made at inception period with view to dispose off for a profit at subsequent stage cannot itself be regarded as business in nature. Other relevant factors will also contribute hand in hand together, in determining the badges of trade. This includes circumstances responsible for realisation, period of ownership and etc. 2)Acquisition method Inheritance Vs Acquisition. Acquisition with Goodwill Vs Acquisition with Negative Goodwill. 3)Income earning asset Vs income earning process Disposal of capital item can be viewed more towards capital in nature, whereas earning derived from the process of business (i.e.: rental income earned from leasing office tower) can be regarded more buy antibiotics online as business in nature. 4)Subject of the realisation Whether the item acquired or disposed off is more of personal consumption, or public commercial consumption and disposal. If the items are to be bought and sold in large quantity with commercial substance, in view of obtaining economic benefit from the realisation of item sold. Then, trade in nature is more relevant. 5)Length of ownership 6)The way in which cialis sale online the sales are concluded 7)Frequency of occurrence of similar transactions Vs One-off 8)Accounting treatment 9)Magnitude of receipt 10)Modification of the assets/additional work-in-progress attached to the products 11)Circumstances responsible for realisation 12)Method of financing 13)Compensation for breach...
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...find an English speaking vendor in India. China is currently the world’s biggest trading nation as of last year, measured by the sum of both exports and imports of goods. China’s exports and imports of goods last year came to a total of $3.87 trillion. India’s current GDP in PPP is 7,393,076 million. China’s current GDP in PPP is 18,030,932 million. Both China and India constitute unprecedented stories of economic development. They have already reached heavyweight status in the global economy due to the vibrant growth rates in the last decade. For many of the countries around the world, China is rapidly becoming the most important bilateral trade partner. At this rate, many European countries will be doing more individual trade with China than with European partners. Merchandise trade is a factor that is impacting global trade today. Both China and India’s merchandise exports are dominated by manufactures. The composition of these manufactures and the approach to their production...
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...International Trade Simulation The term international trade is defined as the economic interaction among different nations involving the exchange of exports and imports. The main principle of international trade is comparative advantage, which indicates that every country, no matter their level of development, can find something that it can produce cheaper than another country. The purpose of the International Trade Simulation is to show how countries interact with one another when exporting and importing. International trade depends on nations working together, while looking out for their own personal interests. When I began the International Trade Simulation my strategy was to acquire as much wealth as I could for my nation, South America. As the game progressed I began to switch strategies and began to acquire as many different goods as I could for my nation, so that I could offer the people of my nation an array of goods. The global economy at the beginning of my game was horrible and did not proceed to get much better as the game went on. Even though the global economy was bad I was still able to achieve my first goal of acquiring as much wealth as I could. I did this by exporting my goods at top dollar. I found that some countries would buy what I was exporting no matter what price I would ask for even though the global economy was poor, especially when I was exporting crude oil. This made sense to me because most countries depend of crude oil for their...
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