SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT

• Managers operating in international • 1. 2. 3. 4. 5.
markets should learn about various international institutions and trade groups. The institutions under UN include : The World Trade Organization. The World Bank Group. International Monetary Fund (IMF). UN Conference on Trade and Development (UNCTD). International Trade Centre (ITC).

SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT

• International Economic Institutions: • Under the UN system, a number of
international economic organizations have been set up to facilitate and promote trade by way of multilateral framework.

SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT The World Bank Group: • The World Bank Group consists of five closely associated institutions: 1. International Finance Corporation (IFC). . International Centre for Settlement of Trade Disputes (ICSTD). International Bank for Reconstruction and Development (IBRD). 4. 3. 5. 2. Multinational Investment Guarantee Corporation (MIGA). International Development Agency (IDA).

• • . Membership 184 countries. Objective : To reduce poverty in middle-income and credit worthy poor countries by promoting sustainable development through loans. By 2003. cumulative lending of US$ 394 billion. Its board has 5 appointed and 19 elected executive directors. guarantees. and (non-lending) analytical and advisory services.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The International Bank for Reconstruction and • • • Development: Established in 1945.

Contributions to IDA enable the World Bank to provide approximately $ 6 to 9 billion a year in highly concessional financing to the world’s 81 poorest countries. Cumulative commitments of US$ 151 billion till 2003. • • . Present membership – 165. India has been one of the top IDA borrowers.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The International Development Association • • • (IDA): Established in 1965.

long-term loans. and advisory services to its clients. structured finance and risk management products. • IFC promotes economic development through the private sector (w/o accepting government guarantee).SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The International Finance Corporation (IFC): • Established in 1956 & at present has 176 members.5 billion. • It provides equity. • Commitments till 2003 US$ 23. .

shareholder loan guarantees with minimum maturity period of three years. war and civil disturbance. • Cumulative guarantee issue of US$ 394 billion till 2003. such as expropriation. • Helps to promote FDI in developing countries by providing guarantees to investors against non-commercial risks. . and breach of contract. currency inconvertibility and transfer restrictions. • Organizes for co-insurance & re-insurance with private investment insurance schemes. shareholder loans. In 1988 & has at present 164 members.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The Multilateral Investment Guarantee Agency (MIGA): • Estd. • Types of foreign investments that can be covered include equity.

159 cases were registered with ICSID.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The International Centre for Settlement of Investment Disputes (ICSID): • Established on 14th Oct. • Objective: To establish an institutional mechanism especially designed to facilitate the settlement of investment disputes between governments and foreign investors to help promote increased flow of international investment. but once consented to arbitration by parties. . 1966. • It has an administrative council (chaired by the World Bank’s president) and a secretariat. • By 2003. it can not be withdrawn. • Approaching to ICSID is voluntary.

SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • • • 1. Promoting exchange stability. 2. and Helping members to overcome balance of payment difficulties. Facilitating the expansion and balanced growth of international trade. Assisting in the establishment of a multilateral system of payments. New Hampshire. 5. US. International Monetary Fund (IMF): Formed at UN Conference in July 1944 held at Bretton Woods. . 4. Main Responsibilities: Promoting international monetary cooperation. 3.

output. employment.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Main Functions of IMF: • Surveillance: • It is the regular dialogue and policy advice that the IMF offers to each of its members. • Looks at macro economic performance – total spending. . • Annual appraisal of economic situation of member countries & discussion with authorities. and country’s balance of payment with the rest of the world. inflation.

monetary and exchange rate policies.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Main Functions of IMF: contd. statistics. • IMF has 184 countries membership and is run by Board of Governors who meet once annually.. and also recoveries affecting balance of payments. • The annual expenses of running the Fund are met mainly by the difference between interest receipts (on outstanding loans) and interest payments (on quota ‘deposits). • Technical Assistance: • Free technical assistance is offered in fiscal policy. banking and financial system supervision and regulation. .

US$. IMF could allocate SDR periodically to members when need arose. • The SDR is an international reserve asset • • • • introduced by the IMF in 1969. The main reserve assets were gold & US$. Daily value of SDR is determined based on values of the Euro. as necessary. Allocations so far US $ 29 billion to member countries. • Special Drawing Right (SDR). and cancel. . Pound Sterling.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Main Functions of IMF: contd…. Japanese Yen.

early warning. trade points. harmonization of customs procedure.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The United Nations Conference on Trade and • • • • Development (UNCTAD): Established in 1964.have been found extremely useful by the developing countries. etc. debt management programs. UNCTAD has played a valuable role in educative. database on trade information. Aimed at creating development-friendly integration of developing countries into the world economy. UNCTAD’s technical cooperation programs in trade efficiency. . and watchdog functions vis-à-vis developing countries’ interests in the working of the WTO.

To serve as a key instrument in attaining the agreed 2. The resources of the Common Fund are derived from subscription of shares of directly contributed capital paid in by member countries. • Objectives: 1. • .SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Common Fund for Commodities: • Established in 1989. objectives for the integrated program for commodities adopted by UNCTAD and To facilitate the conclusion and functioning of ICAs (international commodity agreements). particularly concerning commodities of special interest to developing countries.

particularly of developing countries. 2004.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • UNCTAD-XI (The Spirit of Sao Paulo): • Held at Sao Paulo. Brazil. • Focus: “Enhancing coherence between national strategies and the global economic processes towards economic growth and development. • India has contributed US$ 1. . • India wants UNCTAD to focus on problems faced by LDCs in international trade.00L to UNCTAD Trust fund. • It stressed on strengthening international cooperation in transport and trade facilitation so as to increase efficiency among member countries and prepared a roadmap for 2004-08. 13-18 June.

• The GSP offers developing countries tariff reductions or in some cases duty-free concessions for their manufactured exports and certain agricultural exports as well.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The Generalized System of Preferences (GSP):1968 • It is a non-contractual instrument by which industrialized (developed) countries unilaterally and on the basis of nonreciprocity extend tariff concessions to developing countries. • Its aim is to grant the developing countries tariff preference over the developed countries. . thus allowing their exports easier access to the market.

• Scheme extended with minor modifications to 2005.5% on the MFN tariff rate. . For ‘sensitive’ products flat tariff concession of 3. • Follows mechanism of graduation (gradual withdrawal of tariff concessions.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • • • • THE EU GSP SCHEME: Revised scheme for 2002-04. • Eligibility based on 3 years’ annual performance. Duty-free access to all ‘non-sensitive’ products.

SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Special Incentive Scheme: (of EU) • The tariff concessions are to be doubled for countries that can demonstrate adherence to environmental and social conditions. • Provision for ‘special arrangements for combating drug trafficking’ to 11 countries and Pakistan. • Customs duty on the specified products is entirely exempted for these countries. .

• Most textiles. work gloves and other leather garments. and electronic goods are excluded from the scheme. luggage. steel. But…. . footwear.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The US GSP Scheme:1976 • Preferential duty-free entry for more than 4650 products from approximately 140 designated countries and territories. glass. handbags. • The scheme is meant to be non-reciprocal and non-discriminatory. watches.

• • • • • (Base G77 meetings). 16th session held at Geneva in Dec. and direct trade measures including medium and long-term contracts and sectoral agreements. Concessions are to be negotiated step-by-step.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The Global System of Trade Preferences (GSTP) among developing countries: • Estd. In 1988 to promote intra-developing country trade. It lays down rules. and trade concessions among the members of G77.2003. Covers tariff and non-tariff measures. . At present has 43 members have ratified 2003 agreement. principles. improved upon. and extended in successive stages.

. • It derives its fundamentals of protecting IP from Paris (1883) and Berne (1886) conventions. • To protect the rights of creators and owners of intellectual property worldwide and that inventors and authors are recognized and rewarded for their ingenuity. • It works in tandem with TRIPS agreement provisions.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The World Intellectual Property Organization (WIPO): • Established in 1970. but the subsequent treaties have widened and deepened the system of protection.

• Headquartered in Geneva & funded equally by the UN and the WTO. HRD. and Need assessment. • Works for : Product and market development. trade information.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • The International Trade Center(ITC): • Created by GATT in 1964 • Directly responsible for implementing UNDPfinanced projects in developing countries and economies in transition related to trade promotion. . program design for trade promotion. development of trade support services. International purchasing and supply management.

SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Conceptual Framework of International Economic Integration: Political Union Economic Union Common Market Free Trade Area Preferential Trade Increasing Agreement (Tariff Concessions on select items) Integration Free Trade Among Members Common External Trade Policy Harmonization of economic policies Complete political and economic integration .

• RTAs are an important exception under Article 14 of the GATT to the MFN rule of WTO agreements. • Under WTO (after 1995) – 130 RTAs.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Growth of Regional Trading Agreements: • 1948-1994: 124 RTAs relating to trade in goods. • Formation of RTAs has increased intra-group trade significantly between 1980 and 2002. .

Saudi Arabia.9% among the SAARC countries . Qatar. Uruguay. Bolivia Gulf Cooperation Council (GCC) Bahrain. Oman. Cooperation(APEC) Association of South East Asian Nations (ASEAN) Established May.7% 3.9% to 73. Kuwait.8% 1989 08-08-1967 57. Paraguay. and UAE.8% to 3.6% 33.0% to 5. Asia Pacific Ecoc. Chile.5% 4.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • Summary of Major Regional Trading Blocks: Regional Trading Blocks The European Union NAFTA MERCOSUR (Brazil.6% to 56% 11. 1950 01-01-1994 1991 25-05-1981 Growth in intra-group trade (1980-2002) 61% to 66. Argentina.6% to 17.

SAARC Preferential Trading Agreement (SAPTA) Apr.1993. Framework Agreement on Comprehensive Economic . 7. Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation (BIMST-EC) in 1994 Thailand. 5. Framework Agreement for establishing free trade between India and Thailand (Dec. 2003). 1. 4. 3.1988). India’s Participation in RTAs: Co-operation between ASEAN and India (8 Oct. Indo-Sri Lanka Free Trade Agreement (Dec. 2002) Bilateral Preferential Trade Agreement with Afghanistan (March 2003). 6.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • 2. Bangkok Agreement (1975).

Implementation. . Free trade within 10 years. South Asian Free Trade Agreement (SAFTA). 2. Special provisions. Supersedes SAPTA. Highlights of the Agreement: Trade Liberalization Program (TLP) Trade facilitation. In force from 01-01-2006.SCANNING THE INTERNATIONAL ECONOMIC ENVIRONMENT • • • • • 1. 5. On 04-01-2004 at Islamabad. Estd. 4. Institutional Mechanism. 3.

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