International Trade for Industrial Development
"Trade began the exchange of
food, raw materials and handicrafts among primitive peoples. It may occur
within a given community (internal trade) or between members of different
communities (external or foreign trade)". Trade is an important stimulator
of economic growth. It enlarges a country's consumption capacities, increase
world output and provide access to scarce resource and worldwide markets for
products without which poor countries would be unable to grow. Trade is the
transfer of ownership of goods and services from one person to another.
Trade
tends to promote greater international and domestic equality by equalizing
factor prices, raising real incomes of trading countries and making efficient
use of each nation's and world resource endowment. Trade helps countries
achieve development by promoting and rewarding the sectors of the economy where
individual countries possess a comparative advantage, whether in terms of labor
efficiency or factor endowment. It also lets them take advantage of economies
of how much a country should trade in order to maximize its national welfare.
Trade between two traders is called
bilateral trade, while trade between more than two traders is called
multilateral trade.
Trade
exists for man due to specialization and division of labor, most people
concentrate and a small aspect of production, trading for other products. Trade
exists between regions because different regions have a comparative advantage
in the production of some tradable commodities or because different regions'
size allows for the benefits of mass production. As such, trade at market
prices between locations benefits both locations.
Trade
refers to the phenomenon of transactions and exchange is a basic component of
human activity throughout the world. According to traditional trade theory, if
each nation specializes in the production of the commodity of its comparative
advantage, world output will be greater and through trade, each nation will
share in the gain. Among the trade activities Border Trade is the foremost
activities of the country.
Border trade,
in general, refers to the flow of goods and services across the international
borders between jurisdictions. In this sense, it is a part of normal legal
trade that flows through standard export/import frameworks of nations. However,
border trade specifically refers to the increase in trade in areas where
crossing borders is relatively easy and where products are significantly
cheaper in one place than another, often because of significant variations in
taxation levels on goods such as alcohol and tobacco. As well as border trade
across land or sea borders, air travel with a low-cost carrier can be
worthwhile for a short international trip to the same high-value goods. Where
border trade is done for tax evasion it forms part of the underground economy
of both jurisdictions. Cross border trade means the buying and selling of goods
and services between businesses in neighboring countries, with the seller being
in one country and the buyer in the other country.
International Trade
International
trade is the exchange of capital, goods, and services across international
borders of territories. In most countries, such trade represents a part of
gross domestic product (GDP). International trade is not different from
domestic trade as the motivation and behavior of parties involved in a trade do
not change fundamentally regardless of whether trade is across a border or not.
The main difference is that international trade is typically more costly than
domestic trade. The reason is that a border imposes additional coast such as
tariff, times cost due to border delays and costs such as those associated with
country differences such as language, the legal system or culture. Trade is the
part of an essential tool to development a country's economy.
The
occurrence of transactions and exchange is a basic component of human activity
throughout the world. People regularly meet in the marketplace to exchange
goods, money or for other goods through simple barter transactions. A
transaction is an exchange of two things-something is given up in return for
something else.
Different
people have different abilities and resources and may want to consume goods in
different proportions. People usually find it profitable to trade the things
they possess in large quantities relative to their tastes or needs in return
for things they want more urgently. They usually finds it profitable to engage
in the activities for which they are best suited or have a comparative
advantage of their natural abilities or resource endowments. They exchange any
surplus of these home-produced commodities for product that others may be
relatively more suited to produce. The results of specialization based on
comparative advantage have long been applied by economists to exchange of goods
between nations.
Adam Smith explained the international differences in costs of production and price of different products. Countries specialize in a limited range of production activities for their advantage. They specialize in activities where the gains from specialization are larges. The concept of relative cost and price differences is basic to the theory of international trade. The principle of comparative advantage asserts that country will specialize in the export of the products that it can produce at the lowest relative cost.
The
neoclassical comparative advantage theory of free trade is a static model based
strictly on a one-variable factor, complete-specialization approach to
demonstrating the gains from trade. The Hecksher-Ohlin neoclassical factor
endowment trade theory also enables us to describe analytically the impact of
economic growth on trade patterns and the impact of trade on the structure of
national economics and on the differential returns on payments to various
factors of production.
If
domestic factor prices were the same, all countries would use identical methods
of production and would have the same relative domestic product price ratios
and factor productivities. The basis for trade arises not because of inherent
technological differences in
Labor
productivity for different commodities
between different countries but because countries are endowed with different
factor supplies. Given factor endowments relative factor prices will differ and
so will domestic commodity price ratios and factor combinations. Countries with
cheap labor will have a relative coast and price advantage over countries with
relatively expensive labor in commodities that make intensive use of labor.
Therefore they should focus on the production of these labor-intensive and
export the surplus in return for imports of capital-intensive goods.
On
the other hand, countries well endowed with capital with have a relative cost
and price advantage in the production of manufactured goods, which tend to
required relatively larger inputs of capital compared with labor. Thus, trade
serves as a vehicle for nations to capitalize on its abundant resources through
more intensive production and export of commodities that require larger inputs
of those resources while relieving its shortage of other resources.
The
factor endowment theory is based on two crucial propositions:
(1) Different
products require productive factors in different relative propositions.
(2) Countries
have different endowments of factors of production. Some countries have little
capital and much labor and are designated labor-abundant countries.
The
neoclassical factor endowment theory makes the important prediction that
international real wage rates and capital costs will gradually tend toward
equalization. Within countries, the factor endowment theory predicts that the
economic returns to owners of the abundant resources. Finally, by enabling
countries to move outside their production possibility frontiers and secure
capital as well as consumption goods from other parts of the world, trade is
assumed to stimulate economic growth. Trade also enables a nation to obtain the
domestically expensive raw materials and other products. Thus, it can create
the conditions for a more broadly based and self sustaining growth of its
industrial output.
International Trade Policy
A
tariff, the simplest of trade policies, is a tax levied when a good is
imported. Specific tariffs are levied as a fixed charge for each unit of goods
imported. The effect of the tariff is to raise the cost of shipping goods to a
country. The important of tariffs has declined in modern times, because modern
governments usually prefer to protect domestic industries through a variety of
nontariff barriers, such as import quotas and export restraints.
A
tariff raises the price of a good in the importing country and lowers it in the
exporting country. Therefore, as a result these price changes, consumers lose
in the importing country and gain in the exporting country. Producers gain in
the importing country and lose in the exporting country and lose in the
exporting country. In addition, the government imposing the tariff gains
revenue. To compare these costs and benefits, it is necessary to quantity them.
The
method for measuring costs and benefits of a tariff depends on the two concepts
common to much microeconomic analysis: consumer and producer surplus.
Consumer
surplus measure the amount a consumer gains from a purchase by the difference
between the price the consumer actually pays and the price the consumer would
have been willing to pay. Producer surplus is an analogous concept. In the
modern world most government intervention in international trade takes other
forms, such as export subsidies, import quotas. An export subsidy is a payment
to a firm or individual that ships a good abroad. When the government offers an
export subsidy, the shippers will export the good up to the point where the
domestic price exceeds the foreign price by the amount of the subsidy.
An
import quotes is the direct restriction on the quantity of some good that may
be imported. The restriction is usually enforced by issuing licenses to some
group of individuals or firms. A variant on the import quota is the voluntary
export restraint (VER), also known as a voluntary restraint agreement (VAR). A
VER is a quota on trade imposed from the exporting country side instead of the
importer's.
There
are many other ways in which governments influence trade. They are:
(1) Export
credit subsidies which like are export subsidies except that it takes the form
of a subsidized loan to the buyer.
(2) National
procurement is the purchases by the government or strongly regulated firms
which can be directed toward domestically produced goods even when these goods
are more expensive than imports.
(3) Red-tape
barriers mean sometimes a government wants to restrict import without doing so
formally.
Free trade
"Few
countries have anything approaching completely free trade. The efficient case
form free trade is simply the reserve of the cost-benefit analysis of a tariff.
The additional gain from free trade is the economies of scale. Free trade
offers more opportunities for learning and innovation than are provided by a
system of "managed" trade, where the government largely dictates the
pattern of imports and exports. A political argument for free trade reflects
the fact that a political commitment to free trade may be a good idea in
practice even though there may be better policies in principle
Brief Review of Trade Theories
The Mercantilists' Views on Trade
Mercantilism
is development from an economic at the seventeenth and eighteenth centuries.
The mercantilists maintained that the way for a nation to become rich and
powerful was to export more than it imported. The export surplus would be
settled by an inflow of bullion, precious metals, gold and silver. The more
gold and silver a nation had the richer and more powerful it was. Thus, the
government had to do all on its power to stimulate the nation's exports and
discourage and restrict imports. The mercantilists measured the wealth of a
nation by the stock of precious metals, gold and silver. The mercantilists'
desire for the accumulation of precious metal. With more gold, rulers could
maintain larger and better armies and consolidate their power and improved
armies and improved armies and navies also made to acquire more colonies.
Absolute Advantage
The
theory of absolute advantage was developed by Adam Smith. According to Adam
Smith, trade between two nations is based on absolute advantage. When one nation is more efficient than another
nation in the production of another good. But nations can gain by each
specializing in the production of the commodity of its absolute advantage and
exchanging part of its output with the other nation for the goods of its
absolute advantage. By this way, resources are utilized in the most efficient
manner between the two nations. Through trade, total output and welfare of all
individuals are maximized. Adam Smith believed that all nations would gain from
free trade and strongly advocated a policy of laissez-faire. Free trade would
cause world resources to be utilized most efficiently and would maximize world
welfare.
Comparative Advantage
The
law of comparative advantage was developed by David Ricardo, if one nation is
less efficient than the other nation in the production of the both commodities,
there is still a basic for mutually beneficial trade. The first nation should
specialize in the production of and export the commodity in which its absolute
disadvantage is smaller and import the commodity in which its absolute
disadvantage is greater. Therefore, one nation's absolute advantage is greater
in one commodity. The other nation's absolute disadvantage is smaller in the
other commodity, so its comparative advantage lies in other commodity.
According to the law of comparative advantage, both nations can gain when the
one nation specializes in the production of one commodity and exports some of
it in exchange for other nation's commodity. So, one nation has a comparative
advantage in the other good. Thus, in a two nation of two commodity world, it
is determined that one nation has a comparative advantage in one commodity and
the other nation must necessarily have a comparative advantage in the other
commodity.
Border Trade in Myanmar and Its
Neighboring Countries
Border
trade is defined as the trade between the people of two countries resided
adjacently selling their commodities and purchasing their required items
produced locally by using either currencies of the countries or hard currencies
for local consumption. The trade between the businessmen of two neighboring
countries conducts across border by using either currency permitted by the
governments of hard currencies, for commercial purpose according to the
practice of international trade.
The border trade of Myanmar with its neighbors had originated since hist
orical time by the people resided in the border areas traditionally traded their commodities one another and which has eventually expanded to the level not only for the purpose of exchanging goods for those in the border regions but also for use of the people in both countries as a whole.
There
are five countries bordering Myanmar with twelve border trade points that
include Myawaddy on the Thai border and Muse on the China border. Among the
five bordering countries only Thailand and China are involved in the Greater
Mekong Sub-region (GMS) where Myanmar is a member country. The border areas
with China include the province of Yunnan and Guangxi which are land-locked and
the route to external trade happens to the Myanmar border. Therefore, Myanmar
lies in strong strategic position especially for these land-locked provinces of
China.
Myanmar
is mainly an exported of agricultural and other primary products while its
import consists largely of manufactured goods. The main exportable products are
agricultural products, animal's products, fishery products, minerals, forest
products, finished goods and others and the main import products are capital
goods, intermediated goods and consumer goods. Myanmar's export to China mostly
wood, gemstones and fruit and nuts and import iron, steel, construction materials, machine
and machine tools, fertilizer, raw materials and household utensils.
Myanmar's
mainly export commodities to Thailand are maize, fish, and forest products and
import commodities are mineral, fertilizers and tires during 2007-2008 to
2011-2012. Likely, Myanmar's major import from India are agricultural products,
primary and semi-finished iron and steel, pharmaceuticals while exports consist
of pulses and beans, wood and wood products. The major export commodities from
Myanmar to Bangladesh are marine products, beans and pulses, and kitchen crops
and import commodities from Bangladesh are pharmaceuticals, ceramic, cotton
fabric, raw jute, kitchenware, and corm
TheTOTAL VOLUME of INTERNATIONAL Trade in Myanmar
TabLe 8.2
(Million US Dollar)
Year
|
Export
|
Import
|
Trade deficit
|
2005-2006
|
3557.21
|
1984.41
|
-1572.8
|
2006-2007
|
5232.68
|
2939.73
|
-2295.95
|
2007-2008
|
6401.70
|
335.42
|
-3047.99
|
2008-2009
|
6778.85
|
4543.45
|
-2235.4
|
2009-2010
|
7586.94
|
4181.40
|
-3405.54
|
2010-2011
|
8861.01
|
6412.73
|
-2448.28
|
2011-2012
|
9097.00
|
9053.78
|
-43.22
|
2012-2013
|
8977.00
|
9068.9
|
91.5
|
2013-2014
|
11204.00
|
13759.5
|
255.5
|
2014-2015
|
12523.7
|
16633.2
|
4109.5
|
2015-2016
|
12900.00
|
17000.00
|
4100.00
|
SOURCES-WEEKLY ELEVEN
JOURNAL ON 12-10-2015 PAGE-5
TOTAL Volume OF INTERNATIONAL TRADE
Myanmar
international trade or import or
export have been increasing year
by year in
table 8.2the volume increased
from 2005 -2006
to 2015.the total
volume of f
export were higher
than that of import from
2005 to 2010
but the total volume of import were
higher than that of
export from 2011-12
to 2015-2016. In
others words , Myanmar had surplus in
international trade from 2005
to 2010 but
Myanmar international trade
has trade deficit
from 2001 to
2015 .the lowest
volume of total
export is 35557.21
million dollars in
2005 -2006 and
the highest volume
of total export
is 12900.00 million
dollars in 2015 -2016.-11. Surplus in international
trade from 2005 to 2010
but Myanmar international
trade has trade
deficit from 2001
to 2015 .the
lowest volume of
total export is
35557.21 million dollars
in 2005 -2006
and the highest
volume of total
export is 12900.00
million dollars in
2015 -2016.-11.
//kyisinplb.blogspot.com/2015/10/yangon-keizai-daigaku-no-shaonkai.html
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