Final Proj Globle Trade

RESENT TRENDS IN GLOBAL TRADE
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PADMASHREE ANNASAHEB JADHAV BHARATIYA SAMAJ UNNATI MANDALS
B.N.N. COLLEGE, BHIWANDI
DIST. THANE 421 305
UNIERSITY OF MUMBAI
A PROJECT ON
RESENT TRENDS IN GLOBAL
TRADE
SUBMITTED BY
NEELAM EKNATH PATIL
ROLL NO. 120
IN PARTIAL FULFILMENT OF
THE REQUIRMENT FOR
THE AWARD OF THE DEGREE OF
M.COM IN MANAGEMENT
UNIVERSITY OF MUMBAI
UNDER GUIDENCE OF
PROF.S.PAWAR SIR


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PADMASHREE ANNASAHEB JADHAV BHARATIYA SAMAJ UNNATI MANDALS
B.N.N. COLLEGE, BHIWANDI
DIST. THANE 421 305

CERTIFICATE
This is to certify that, NEELAM EKNATH PATIL.ROLL NO.120 of
M.COM IN MANAGEMENT (Academic Year 2013-2014) has
successfully completed the project on RESENT TRENDS IN
GLOBAL TRADE and submitted the project report in partial
fulfillment of the requirement for the award of the M.COM
(MANAGEMENT) students of University of Mumbai.

Signature

I/C Principal Prof. U.D.KADAM

Course Co-coordinators Prof. SUWARNA RAWAL

Project Guide Prof. S.PAWAR SIR

External Examiner


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ACKNOWLEDGEMENT

I, MISS PATIL NEELAM (Roll No. 120) of MASTER OF COMMERCE,
studying in B.N.N COLLEGE, Bhiwandi, hereby that declare that the information
contained in the project titled RESENT TRENDS IN GLOBAL TRADE is
true and correct to the best of my knowledge & belief.

( NEELAM PATIL)


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DECLARATION

I am indebted to my project guide Prof. S.PAWAR SIR for helping me
out in the successful completion of my project report ,on RESENT TRENDS IN
GLOBAL TRADE I am thankful to my other teacher for providing me the
information as and when required.
I am extremely thankful to my family members for their constant
support.
Last, but not least, came my friends who discussed with me the various
issues in my project finally; I want to thank one and all who helped me directly or
indirectly through the project work.

(NEELAM PATIL)


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6

PROJECT ON,

RECENT TRENDS IN GLOBAL TRADE

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INDEX
SR.NO TOPIC NAME PAGE NO.
1 INTRODUCTION OF TRADE
HISTORY OF TRADE
9-18
2 RESEARCH METHODOLOGY
OBJECTIVES OF STUDY
SOURCES OF DATA
LIMITATION OF STUDY
19-20
3 RECENT TRENDS IN GLOBAL
TRADE
21-27
4 GLOBAL TRADE 28-30
5 INTERNATIONAL
DEVELOPEMENT
31-35
6 CHANGING PATTERN OF
GLOBAL TRADE
36
7 GLOBAL SUPPLY CHAIN
FINANCE
37-42
8 GLOBAL EXPANSION 43
9 CONCLUSION 44
10 REFERENCE 45


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HISTORY OF TRADE
Prehistory

Trade originated with human communication in prehistoric times. Trading
was the main facility of prehistoric people, who bartered goods and services from
each other before the innovation of the modern day currency. Peter Watson dates
the history of long-distance commerce from circa 150,000 years ago.
In the Mediterranean region the earliest contact between cultures were of
members of the species homo sapiens principally using the Danube river, at a time
beginning 35-30,000 BC.
Ancient history
Trade is believed to have taken place throughout much of recorded human history.
There is evidence of the exchange of obsidian and flint during the stone age.
Obsidian
Main article: Obsidian
New Guinea Trade in obsidian is believed to have taken place in New
Guinea from 17,000 BC. Mediterranean and Near East The earliest use of obsidian
in the Near East dates to the Lower and Middle Paleolithic.
HIH Prince Mikasa no Miya Takahito
Trade in the stone was investigated by Robert Carr Bosanquet in
excavations of 1901. Trade is believed to have first begun in south west of Asia.
Archaeological evidence of obsidian use provides data on how this material was

10

increasingly the preferred choice rather than chart from the late Mesolithic to
Neolithic, requiring exchange as deposits of obsidian are rare in the Mediterranean
region.
Obsidian is thought to have provided the material to make cutting utensils
or tools, although since other more easily obtainable material were available, use
was found exclusive to the higher status of the tribe using "the rich man's flint".
Obsidian was traded at distances of 900 kilometers within the region. Trade
in the Mediterranean during the Neolithic of Europe was greatest in this
material. Networks were in existence at around 12,000 BCE

Anatolia was the
source primarily for trade with the Levant, Iran and Egypt according to Zarins
study of 1990.Melos and Lipari sources produced among the most widespread
trading in the Mediterranean region as known to archaeology.
Lapis Lazuli
The Sari-i-Sang mine in the mountains of Afghanistan was the largest source
for trade. The material was most largely traded during the Kassite period of
Babylonia beginning 1595 BCE.
Later trade
Mediterranean and Near East
Ebla was a prominent trading centre during the third millennia, with a network
reaching into Anatolia and north Mesopotamia.

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A map of the Silk Road trade route between Europe and Asia. Materials used for
creating jewelry were traded with Egypt since 3000 BC. Long-range trade routes
first appeared in the 3rd millennium BC, when Sumerians in Mesopotamia traded
with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea
traders, traveling across the Mediterranean Sea, and as far north as Britain for
sources of tin to manufacture bronze. For this purpose they established trade
colonies the Greeks called emporia.
From the beginning of Greek civilization until the fall of the Roman
empire in the 5th century, a financially lucrative trade brought valuable spice to
Europe from the far east, including India and China. Roman commerce allowed its
empire to flourish and endure. The Roman empire produced a stable and secure
transportation network that enabled the shipment of trade goods without fear of
significant piracy.
In ancient Greece Hermes was the god of trade (commerce) and weights and
measures for Romans Mercurius also god of merchants, whose festival was

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celebrated by traders on the 25th day of the fifth month. The concept of free trade
was an antithesis to the will and economic direction of the sovereigns of the
ancient Greek states. Free trade between states was stifled by the need for strict
internal controls (via taxation) to maintain security within the treasury of the
sovereign, which nevertheless enabled the maintenance of a modicum of civility
within the structures of functional community life.
The fall of the Roman empire, and the succeeding Dark Ages brought
instability to Western Europe and a near collapse of the trade network in the
western world. Trade however continued to flourish among the kingdoms of
Africa, Middle East, India, China and Southeast Asia. Some trade did occur in the
west. For instance, Radhanites were a medieval guild or group (the precise
meaning of the word is lost to history) of Jewish merchants who traded between
the Christians in Europe and the Muslims of the Near East.
the Orient
Archaeological evidence (Greenberg 1951) of the first use of trade-marks are from
China dated about 2700 BC.
Central America
The emergence of exchange networks in the primitive societies of and near to
Mexico are known to have occurred within recent years before and after 1500 BC.
]

Middle Ages

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A map showing the main trade routes for goods within late medieval Europe.
During the Middle Ages, Central Asia was the economic center of the
world. The Sogdians dominated the East-West trade route known as the Silk
Road after the 4th century AD up to the 8th century AD,
with Suyab and Talas ranking among their main centers in the north. They were the
main caravan merchants of Central Asia.
From the 8th to the 11th century, the Vikings and Varangians traded as they sailed
from and to Scandinavia. Vikings sailed to Western Europe, while Varangians
to Russia. The Hanseatic League was an alliance of trading cities that maintained a
trade monopoly over most of Northern Europe and the Baltic, between the 13th
and 17th centuries.
The Age of Sail and the Industrial Revolution
Vasco da Gama pioneered the European Spice trade in 1498 when he
reached Calicut after sailing around the Cape of Good Hope at the southern tip of

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the African continent. Prior to this, the flow of spice into Europe from India was
controlled by Islamic powers, especially Egypt. The spice trade was of major
economic importance and helped spur the Age of Discovery in Europe. Spices
brought to Europe from the Eastern world were some of the most valuable
commodities for their weight, sometimes rivaling gold.
In the 16th century, the Seventeen Provinces were the centre of free trade,
imposing no exchange controls, and advocating the free movement of goods. Trade
in the East Indies was dominated by Portugal in the 16th century, the Dutch
Republic in the 17th century, and the British in the 18th century. The Spanish
Empire developed regular trade links across both the Atlantic and
the Pacific Oceans.

Danzig in the 17th century, a port of the Hanseatic League.
In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes
of the Wealth of Nations. It criticized Mercantilism, and argued
that economic specialization could benefit nations just as much as firms. Since
the division of labour was restricted by the size of the market, he said that
countries having access to larger markets would be able to divide labour more
efficiently and thereby become more productive. Smith said that he considered all

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rationalizations of import and export controls "dupery", which hurt the trading
nation as a whole for the benefit of specific industries.
In 1799, the Dutch East India Company, formerly the world's largest company,
became bankrupt, partly due to the rise of competitive free trade.

Berber trade with Timbuktu, 1853.
19th century
In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade
would benefit the industrially weak as well as the strong, in the famous theory
of comparative advantage. In Principles of Political Economy and
Taxation Ricardo advanced the doctrine still considered the most counterintuitive
in economics:
When an inefficient producer sends the merchandise it produces best to a
country able to produce it more efficiently, both countries benefit.
The ascendancy of free trade was primarily based on national advantage in
the mid 19th century. That is, the calculation made was whether it was in any
particular country's self-interest to open its borders to imports. John Stuart
Mill proved that a country with monopoly pricing power on the international

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market could manipulate the terms of trade through maintaining tariffs, and that
the response to this might be reciprocity in trade policy. Ricardo and others had
suggested this earlier. This was taken as evidence against the universal doctrine
of free trade, as it was believed that more of the economic surplus of trade
would accrue to a country following reciprocal, rather than completely free,
trade policies. This was followed within a few years by the infant
industry scenario developed by Mill promoting the theory that government had
the "duty" to protect young industries, although only for a time necessary for
them to develop full capacity. This became the policy in many countries
attempting to industrialize and out-compete English exporters. Milton Friedman
later continued this vein of thought, showing that in a few circumstances tariffs
might be beneficial to the host country; but never for the world at large.
[41]

20th century
The Great Depression was a major economic recession that ran from
1929 to the late 1930s. During this period, there was a great drop in trade and
other economic indicators.
The lack of free trade was considered by many as a principal cause of the
depression. Only during the World War II the recession ended in the United
States. Also during the war, in 1944, 44 countries signed the Bretton Woods
Agreement, intended to prevent national trade barriers, to avoid depressions. It
set up rules and institutions to regulate the international political economy: the
International Monetary Fund and the International Bank for Reconstruction and
Development (later divided into the World Bank and Bank for International
Settlements). These organizations became operational in 1946 after enough
countries ratified the agreement. In 1947, 23 countries agreed to the General
Agreement on Tariffs and Trade to promote free trade.

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During the early years of the Cold-war, the United States of America
and the then Soviet USSR were engaged in talks to exchange two captured
military personnel, a "trade" carried out during 1962 (Polmar p. 142).
Free trade
Free trade advanced further in the late 20th century and early 2000s:
1992 European Union lifted barriers to internal trade in goods and labour.
January 1, 1994 the North American Free Trade Agreement (NAFTA) took
effect
1994 The GATT Marrakech Agreement specified formation of the WTO.
January 1, 1995 World Trade Organization was created to facilitate free
trade, by mandating mutual most favored nation trading status between all
signatories.
EC was transformed into the European Union, which accomplished the
Economic and Monetary Union (EMU) in 2002, through introducing the
Euro, and creating this way a real single market between 13 member states
as of January 1, 2007.
2005, the Central American Free Trade Agreement was signed; It includes
the United States and the Dominican Republic.

Protectionism
Protectionism is the policy of restraining and discouraging
trade between states and contrasts with the policy restrictive quotas of free
trade. This policy often takes of form of tariffs and. Protectionist policies were
particularly prevalent in the 1930s, between the great depression and the onset
of World War II.

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Religion
Muslim teachings encourage trading (and condemn usury or interest). By
trade the whole society get benefits but interest makes the rich richer and the
poor poorer.
Judeo-Christian teachings encourage traders to avoid dishonest gain.
[citation needed]

Development of money
History of money

A Roman denarius.
The first instances of money were objects with intrinsic value. This is
called commodity money and includes any commonly available commodity
that has intrinsic value; historical examples include pigs, rare seashells, whale's
teeth, and (often) cattle. In medieval Iraq, bread was used as an early form of
money. In Mexico under Montezuma cocoa beans were money. Currency was
introduced as a standardized money to facilitate a wider exchange of goods and
services. This first stage of currency, where metals were used to represent
stored value, and symbols to represent commodities, formed the basis of trade
in the Fertile Crescent for over 1500 years.

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RESEARCH METHODOLOGY
Research methodology is a careful investigation for inquiring in a
systematic method and finding solution of a problem. It comprises the defining and
redefining of problem collection and evaluating data, making detection and
reaching conclusion. This research consists of following element.
Objectives of study
Sources of data
Research design
Sample design

Objectives of study

To analysis overview of global trade.
To understand the various theories include in project.
To study recent trends in global trade.
To analysis global supply chain.
Sources of data
a. Primary data
b. Secondary data-

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Secondary data are those, which have already been collected by some
other purpose and published. Secondary data are the shape of finished products.
External Data, was generated from magazines ,research books and internet .In this
study secondary data is collected .it is collected through internet ,magazines and
books.
Limitations of the study

The following limitations have been found by the team
The research study has been done from a selective material on the internet.
Only selective journals, papers and articles have been put to use because of
the time factor.
There is the possibility of further updating of this research paper because of
limited sources.


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CURRENT TRENDS IN GLOBAL TRADE

Doha rounds
The Doha round of World Trade Organization negotiations aims to
lower barriers to trade around the world, with a focus on making trade
fairer for developing countries. Talks have been hung over a divide between the
rich developed countries, represented by the G20, and the major developing
countries. Agricultural subsidies are the most significant issue upon which
agreement has been hardest to negotiate. By contrast, there was much agreement
on trade facilitation and capacity building .The Doha round began in Doha, Qatar,
and negotiations have subsequently continued in: Cancun,
Mexico; Geneva, Switzerland; and Paris, France and Hong Kong.
China
Beginning around 1978, the government of the People's Republic of
China (PRC) began an experiment in economic reform. In contrast to the
previous Soviet-style centrally planned economy, the new measures
progressively relaxed restrictions on farming, agricultural distribution and,
several years later, urban enterprises and labor. The more market-oriented
approach reduced inefficiencies and stimulated private investment, particularly
by farmers, that led to increased productivity and output. One feature was the
establishment of four (later five) Special Economic Zones located along the
South-east coast.
The reforms proved spectacularly successful in terms of increased output,
variety, quality, price and demand. In real terms, the economy doubled in size
between 1978 and 1986, doubled again by 1994, and again by 2003. On a real

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per capita basis, doubling from the 1978 base took place in 1987, 1996 and
2006. By 2008, the economy was 16.7 times the size it was in 1978, and 12.1
times its previous per capita levels. International trade progressed even more
rapidly, doubling on average every 4.5 years. Total two-way trade in January
1998 exceeded that for all of 1978; in the first quarter of 2009, trade exceeded
the full-year 1998 level. In 2008, China's two-way trade totaled US$2.56
trillion.
In 1991 the PRC joined the Asia-Pacific Economic Cooperation group, a
trade-promotion forum. In 2001, it also joined the World Trade Organization.

GLOBAL TRADE TRENDS
Long-term trends in value and volume of merchandise exports, 1950-2010
(Index numbers, 2000=100)

Source: UNCTAD secretariat calculations, based onUNCTADstat and CPB
Netherlands Bureau of Economic Policy Analysis, World trade database

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In the context of the global crisis international merchandise trade registered its
greatest plunge since the Second World War: Between the fall of 2008 and the
spring of 2009 global trade collapsed by 20 per cent in volume. Having initially
rebounded sharply beginning in mid 2009, growth in international merchandise
trade then slowed again in the course of 2010. While regaining its pre-crisis peak
level in that year, the global crisis appears to have left a marked impact on the
dynamism of global trade, keeping the volume of global trade well below its pre-
crisis growth trajectory(Chart) with global prospects dimming by year-end 2011.
Apart from remaining unfinished, the trade recovery has also been rather
uneven. By the end of 2011, in developed countries as well as in South-East
Europe and the Commonwealth of Independent States (CIS), where the trade
collapse had been sharpest, merchandise trade in volume terms has yet to even
reclaim its pre-crisis level. By contrast, the volume of both imports and exports in
most groups of developing countries had already exceeded their pre-crisis peak in
the course of 2010, with East Asia, China in particular, leading the expansion.
The global crisis and uneven trade recovery have reinforced the ongoing
shift in balance in the world economy, featuring the relative decline of developed
countries (Chart). In 2010 the value of total merchandise exports from all
countries of the world was $15 trillion (in current United States dollars), of which
the share of developed countries was 54 percent, down from 60 percent in 2005.
As the worlds leading merchandise exporter since 2009, Chinas share of world
exports climbed to 10 per cent in 2010, ahead of the United States (8 per cent),
Germany (8 per cent), and Japan (5 per cent) (Table). On the import side, the
ranking still shows the United States in first place (13 per cent), followed by China
(9 per cent), Germany (7 per cent), and Japan (4.5 per cent) (Table).


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Share of South-South merchandise trade, 1995-2010
(Percentage of total trade in developing economies)

Source: UNCTAD secretariat calculations, based onUNCTADstat
Note: South-South trade is also known as intra-trade of developing economies.
The shifting global balance is also visible in the changing distribution of exports by
destination, featuring the rising importance of trade among developing countries.

The rise in South-South trade has been especially pronounced in East Asia
and is linked to the gain in prominence of global supply chains.While developing
countries as a whole have become the key driving force behind global trade
dynamics in the 2000s, and especially so since the recovery from the global trade
collapse in 2008-2009, contributing 54 per cent to the overall rebound from it,
performance varies considerably between regions and countries within the
aggregate. Especially successful were developing economies in Asia. In general,
progress in least developed countries (LDCs) and other low-income economies,
after having fallen behind since the 1960s, has picked up somewhat, as they could
recapture some of the lost ground since the mid-2000s. Helped by improvements in

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commodity prices, the export share of the LDCs, the majority of which are in sub-
Saharan Africa and commodity-dependent, rose from 0.6 percent in 2001 to 1.1
percent in 2010 (Chart). Yet commodity price increases have been a mixed
blessing even to LDCs, proving harmful rather than beneficial to some. Especially
low-income, food-deficit countries that had suffered severely in the food crisis of
2007-2008 were again affected negatively in 2010-2011.

Highlights
As trade flows have generally grown faster than income since the Second World
War, countries openness and their exposure to external developments have
increased;
Global trade collapsed in the global crisis of 2008-2009, recovery remains
unfinished and uneven; the global crisis appears to have left a marked impact on
the dynamism of global trade;
The global crisis has also brought the long-run trend of rising global integration
through trade to a halt, at least temporarily;
The global crisis and uneven trade recovery have reinforced the ongoing shift in
balance in the world economy, featuring the relative decline of developed
countries;
The shifting global balance is also visible in the changing distribution of exports by
destination, featuring the rising importance of trade among developing countries;
The rise in South-South trade has been especially pronounced in East Asia;
LDCs have generally participated in these trends to a lesser extent but recovered
some lost ground in recent years;
Related to commodity price developments; many countries have experienced
sizeable terms-of-trade changes since 2002, with both winners (especially oil and

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metal exporters) and losers (especially food-deficit countries) among developing
countries including LDCs;
Global governance reform needs to make further progress.
Evolution of world trade and global gross domestic product, 19812013
In 1981, the European Union had the highest share in both global
GDP and world exports with 27.8 per cent and 40.9 per cent, respectively. At the
same time, China's share in world exports registered around 1 per cent and its share
in global GDP was 2.4 per cent. Fifteen years later, in 1996, China doubled its
exports share to 2.6 per cent, whereas developing Africa lost its world exports
share, which plunged from 4.7 per cent to 2.3 per cent. In 2010, China's share in
world exports stood at 9.2 per cent, a few percentage points below that of the
United States (9.6 per cent), but with a stark contrast in trade balance. In the period
19812010, the European Union lost shares in both global GDP and world exports,
but it still holds the lion share (25.8 per cent and 35.5 per cent, respectively). Trade
data show that China is on its way to becoming the top merchandise and services
exporter.

Trade


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Trade also called goods exchange economy is the transfer
the ownership of goods from one person or entity to another by getting something
in exchange from the buyer.
Trade is sometimes loosely called commerce or financial transaction or
barter. A network that allows trade is called a market. The original form of trade
was barter, the direct exchange of goods and services. Later one side of the barter
were the metals, precious metals , coins), bill, paper money. Modern traders
instead generally negotiate through a medium of exchange, such as money. As a
result, buying can be separated from selling, or earning. The invention of money
(and later credit, paper money and non-physical money) greatly simplified and
promoted trade. 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, in which most
people concentrate on 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 commodity, or because different
regions size allows for the benefits of mass production. As such, trade at market
prices between locations benefits both locations.
Retail trade consists of the sale of goods or merchandise from a very fixed
location, such as a department store, boutique or kiosk, or by mail, in small or
individual lots for direct consumption by the purchaser. Wholesale trade is defined
as the sale of goods that are sold merchandise to retailers, to industrial,
commercial, institutional, or other professional business users, or to other
wholesalers and related subordinated services. Trading is a value added function of

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the economic process of a product finding its market, where specific risks are to be
borne by the trader, affecting the assets being traded which will be mitigated by
performing specific functions.
Trading can also refer to the action performed by traders and other market agents
in the financial markets.

GLOBAL TRADE

Type e-marketplace
Industry International trade
Founded 2008
Headquarters New York City, United States & Paris,
France
Area served Worldwide
Website http://www.globaltrade.net
Global Trade is run by FITA Online, the online global trade services
division of the Federation of International Trade Associations (FITA), together

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with partners the United States Commercial Service, UK Trade &
Investment, Hong Kong Trade Development Council (HKTDC), Thomas
Net, Alibaba.com, Kompass and other import/export partner organizations.
Global Trade Import Export
GlobalTrade.net is a knowledge resource where experts in international trade can
post their expert content; an editing team vets all content posted. Content includes
more than 14000 global trade / import export market surveys, experts' analyses,
tips, white papers, country profiles, experts views, webinars, news flows, video
tutorials and presentations. As well as publishing expert content, GlobalTrade.net
contains a free database of international trade service providers that are useful to
importers and exporters. Among the listed global trade service providers :
international marketing consultants, import-export companies, trade finance
companies, banks, freight forwarders, quality control firms, lawyers, accountants,
customs brokers, international trade instructors and insurance providers for their
international operations. GlobalTrade.net allows international trade service
providers to create a profile and to facilitate contact with the global trade market.
GlobalTrade.net was launched on November 15, 2010.
Import-Export Partner Organization
.

TABID (Turkish American Business Improvement & Development Council)
ELAN (Export Legal Assistance Network)
NASBITE International (National Association of Small Business International
Trade Educators)
OWIT (Organization of Women in International Trade)
NEXCO (National Association of Export Companies)
VITA (Valley International Trade Association)

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World Trade Center New Orleans
FITT (Forum for International Trade Training)
Import-Export Information
Professional Services for Importers and Exporters
Any international trade service provider can create a profile and join the global
database. Professionals are able to select experts such as international marketing
consultants, import/export companies, trade finance companies, banks, freight
forwarders, quality control firms, lawyers, accountants, customs brokers,
instructors and insurance providers for their global operations.
B2B Service Websites
Dynamic B2B services spanning many categories are offered by businesses such as
Company (operating in France and select European countries), Buyer Zone (USA)
and Quin Street (USA). With all such marketplaces, however, leads are only
offered domestically. Although Companies is active in multiple European
countries they only operate through only one site per country.


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INTERNATIONAL DEVELOPEMENT

.
International development or global development

is most used in a holistic
and multi-disciplinary context of human development the development of
greater quality of life for humans. It therefore encompasses foreign
aid, governance, healthcare, education, poverty reduction, gender
equality, disaster preparedness, infrastructure, economics, human
rights, environment and issues associated with these. International development
is different from simple development in that it is specifically composed of
institutions and policies that arose after the Second World War. These
institutions focus on alleviating poverty and improving living conditions in
previously colonized countries.
which will be able to carry on indefinitely with no further international
involvement or support, whether it be financial or otherwise.
History
Although international relations and international trade have existed for many
hundreds of years, it is only in the past century that international development
theory emerged as a separate body of ideas.
[5]
More specifically, it has been
suggested that 'the theory and practice of development is

32

inherently technocratic, and remains rooted in the modernist period of political
thought that existed in the immediate aftermath of the Second World War'.
Throughout the 20th century, before the concept of international development
became a common word, four aspects were used to describe the idea:
political and economic liberalism, and the significance of "free markets"
social evolution in extremely hierarchies environment
Marxist critiques of class and imperialism
anti-colonial take on cultural differences and national self-determination
Post World War II[
The second half of the 20th century has been called the 'era of
development'. The origins of this era have been attributed to:
the need for reconstruction in the immediate aftermath of World War II;
the evolution of colonialism or "colonization" into globalization and the
establishment of new free trade policies between so-called 'developed' and
'underdeveloped' nations.
the start of the Cold War and the desire of the United States and its allies to
prevent the Third World from drifting towards communism.
International Development in its very meaning is geared towards colonies that
gained independence. The governance of the newly independent states should
be constructed so that the inhabitants enjoy freedom from poverty, hunger, and
insecurity.


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Theories
Development theory
There are a number of theories about how desirable change in society is best
achieved. Such theories draw on a variety of social scientific disciplines and
approaches, and include historical theories such as:
Modernization Theory
Dependency Theory
World Systems Theory
Millennium Development Goals
In 2000, United Nations signed the United Nations Millennium Declaration,
which includes eight Millennium Development Goals to be achieved by 2015
or 2020. This represented the first time that a holistic strategy to meet the
development needs of the world has been established, with measurable targets
and defined indicators.
Participation[
The concept of participation is concerned with ensuring that the intended
beneficiaries of development projects and programmes are themselves involved in
the planning and execution of those projects and programmes. This is considered
important as it empowers the recipients of development projects to influence and
manage their own development - thereby removing any culture of dependency. It is
widely considered to be one of the most important concepts in modern
development theory. The UN System Network on Rural Development and Food
Security describes participation as:

34

one of the ends as well as one of the means of development
UN System Network on Rural Development and Food Security.
Local participants in development projects are often products of oral
communities. This has led to efforts to design project planning and
organizational development methods, such as participatory rural appraisal,
which are accessible to non-literate people.
Sustainability

A sustainable approach to development is one which takes account
of economic, social and environmental factors to produce projects and
programmes which will have results which are not dependent on finite
resources. Something which is sustainable will not use more natural than the
local environment can supply; more financial resources than the local
community and markets can sustain; and will have the necessary support
from the community, government and other stakeholders to carry on
indefinitely.
It is one of the key concepts in international development, and is critical in
removing dependency on overseas aid.


35

Measurement[

The judging of how developed a country or a community is highly
subjective, often highly controversial, and very important in judging what
further development is necessary or desirable.
There are many different measures of human development, many of them
related to the different sectors above. Some of them are:
National GDP
Literacy rates
Life expectancy
Human Development Index
Gini coefficient
Human Security Index see external link and mention on Human
security
Per capita income
Maternal survival rate
HIV infection rates
Number of doctors per capita
An interesting way of seeing development in Third World countries is
through modernization. This includes electronification of households and
increases in phone plans.

36

THE CHANGING PATTERN OF TRADE

The global economy has grown continuously since the Second World
War. Global growth has been accompanied by a change in the pattern of trade,
which reflects ongoing changes in structure of the global economy. These changes
include the rise of regional trading blocs, deindustrialization in many advanced
economies, the increased participation of former communist countries, and the
emergence of China and India.
Changes in the global economy
The main changes in the global economy are:
1. The emergence of regional trading blocs, where members freely trade
with each other, but erect barriers to trade with non-members, has had a
significant impact on the pattern of global trade. While the formation of
blocs, such as the European Union and NAFTA, has led to trade
creation between members, countries outside the bloc have suffered
from trade diversion.
2. Like several advanced economies, the UK's trade in manufactured
goods has fallen relative to its trade in commercial and financial services.
Many of these advanced economies have experienced deindustrialization,
with less national output generated by their manufacturing sectors.
3. The collapse of communism led to the opening-up of many former-
communist countries. These countries have increased their share of world
trade by taking advantage of their low production costs, especially their low
wage levels.


37

GLOBAL SUPPLY-CHAIN FINANCE

Global supply-chain finance refers to the set of solutions available
for financing specific goods and/or products as they move from origin to
destination along the supply chain. It is related to a quickly growing use of a
battery of technologies and financial business practices that allow for dynamic
payables discounting.
A global supply chain refers to the network created among different
worldwide companies producing, handling, and distributing specific goods and/or
products.
Overview
With the supply chain lengthening as a result of globalization and offshore
production, many US companies have experienced a reduction
of capital availability. In addition, the pressure faced by U.S. companies to
improve cash flow has resulted in increased pressure on their overseas suppliers.
Specifically, non-US suppliers receive pressure in the form of extended payment
terms or increased working capital imposed on them by large US buyers. The
general trend toward open account from letters of credit has further contributed to
the problem.
As a result, there is a need for global supply chain finance (GSCF) solutions.
The market opportunity for a GSCF solution is significant. The total worldwide
market for receivables management is US$1.3 trillion. Payables discounting
and asset-based lending add an additional US$100 billion and $340 billion,

38

respectively . Only a small percentage of companies are currently using supply
chain finance techniques, but more than half have plans or are investigating options
to improve supply chain finance techniques.
While buyers are extending payment terms to their suppliers, the suppliers
often have limited access to short-term financing and, therefore, a higher cost of
money. This cost-shifting to suppliers results in a financially unstable and higher-
risk supply base. Overall, the benchmark report showed that companies should be
pursuing three key areas of improvement: GSCF financing; GSCF technology; and
GSCF visibility.
Benefits of GSCF
The role of GSCF is to optimize both the availability and cost of capital within
a given buyer-supplier supply chain. It does this by aggregating, packaging, and
utilizing various information generated during supply chain activities and matching
this information with the physical control of goods. The coupling of information
and physical control enables lenders to mitigate financial risk within the supply
chain. The mitigation of risk allows more capital to be raised, capital to be
accessed sooner or capital to be raised at lower rates.
The need to increase capital or inject capital into the supply chain more
quickly is being caused by several factors:
1.) Market trends with respect to the global supply chain have caused companies to
demand an integrated approach/solution to physical and financial supply chain
challenges: a.) Buyers are looking to optimize their balance sheet by delaying
inventory ownership. b.) Suppliers are looking to obtain funds earlier in the supply
chain at favorable rates, given buyers desire to delay inventory ownership.
c.) middle-market companies are looking to monetize non-US domiciled inventory

39

to increase liquidity. d.) There is wide interest in integrated supply chain finance
solutions.
2.) Globalization of the United States and Western Europes manufacturing bases
has resulted in fewer domestic assets that can be leveraged to generate working
capital.
3.) Most small and medium suppliers to US and European businesses are located in
countries that lack well-developed capital markets. Without access to efficient and
cost-effective capital, production costs increase significantly or the suppliers go out
of business.
4.) Letters of credit, a long-standing method of obtaining capital for suppliers
in less developed countries, are on the decline as large buyers are forcing suppliers
to move to open account.
5.) There is a desire to ensure stability of capital as supply chains elongate.
Another Asian financial crisis (such as the one in 1997) would severely disrupt US
buyers supply chains by making capital unavailable to their suppliers.
Market growth
Market experts estimate that only 10% of the global available marketplace has
been satisfied with Supply Chain Finance solutions, revealing a large potential
market for growth. The market is expected to continue to expand strongly in the
coming years at a rate of approximately 20-30% per annum and 10% per annum by
2020.
[8]
The highest growth of supply chain finance programs currently originates
from the US and Western Europe. Asia - India and China in particular, are
considered the markets with most potential in the coming years.
The driving forces behind the rapid growth of supply chain finance programs are:

40

Globalization has increased the risk in supply chains and the impact on the
financials of corporations.
Working Capital Management has risen at the top of the CFOs and Treasurers
agendas.
Strong interest from suppliers regarding the provision of liquidity and enabling
lower financing costs.
Further growth potential - Challenges
Although Supply Chain Finance is experiencing significant growth in demand,
financial institutions are focused mainly on the large buyer side of the trade
equation. As structured solutions have been traditionally engineered and provided
by banks specifically for large international trading companies, they do not use
common foundations. In order for Supply Chain Finance to take off on a broad
scale, a fresh impetus is needed. A tipping point could easily be reached by
solving the following challenges.
On-boarding of Supplier. Current Supply Chain Finance programs require the
buyers trading partners - the suppliers - to be enlisted on the buyers Supply
Chain Finance portal. The multitude of such platforms generates operational
issues for suppliers wishing to benefit from various Supply Chain Finance
offerings via their buyers funders.
Know-Your-Customer (KYC). Most funders require KYC checks to be
performed on suppliers being enlisted as new trading partners. This procedure
not only increases the total processing cost, but it also puts the business case
for all parties including the service provider, funder, buyer and ultimately the
supplier at risk.

41

Available Capital and Liquidity. With 90% of liquidity in Supply Chain
Finance programs provided by large, global commercial banks, there is a large
amount of trade assets, which cannot be covered by such financial institutions.
Further regulations such as Basel III might impact the risk appetite and funding
capacity of banks and make it more attractive for non-bank funders to step in
and support Supply Chain Finance facilities. Limited to large buyers. Todays
Supply Chain Finance offerings are mainly addressing the large buyers with
sound credit ratings whereas the real Supply Chain Finance opportunity extends
to large suppliers too, in particular in terms of payment assurance and risk
mitigation.
Proprietary legal documentation. Current Supply Chain Finance offerings
use proprietary legal documentation, which makes the signingof non-standard
agreements a costly, complex and time consuming process forcorporate clients
and their suppliers. Therefore, the market is currently facing challenges related
to the absence of interoperability and legal standards.
Standardized product definitions. The naming and definitions of the various
Supply Chain Finance solutions vary from one market player to the other,
which makes it difficult for corporations to compare offerings and consider
switching from one provider to another.
Market players
Supply Chain Finance practices have been in place for over adecade. Three
distinctive Supply Chain Finance structures have crystallized.
Buyer managed platforms. In this structure the buyer owns and runs the
Supply Chain Finance platform. Some large retailers such as Carrefour

or Metro Group are using this structure and managing the finance program,
supplier on boarding, and liquidity themselves.

42

Bank proprietary platforms. The Supply Chain Finance structure is managed
by large commercial banks providing the technology platform, services and
funding. This structure is used by several large buying organizations such
as Carlsberg, Boeing, Marks & Spencer and Proctor & Gamble.
Multi-bank platforms. The structure that has exhibited the strongest growth
rate is represented by independent third party supply chain finance providers
offering multi-bank platforms. This structure separates the entities, which
manage the platform a specialized service provider such as Prime Revenue
and the funding partner, which provides liquidity and takes the credit risk.
Based on the fact that funding in Supply Chain Finance is uncommitted, no
bank can fund in every jurisdiction or currency and due to the general
limitations in terms of credit risk appetite. companies such banking platform is
managing the largest Supply Chain Finance programs in the world.


43

GLOBAL EXPANSION
International trade as a growth opportunity
A tool for hollow corporations
International franchising
Resources
o Get advice from experts
o Online resources
o U.S. Government resources
o Non government resources

Merchandise trade
Merchandise trade only include trade in goods, not services nor capital transfers
and foreign investments. Official merchandise trade statistics measure the level,
month-over-month and year-over-year changes in total trades, exports and imports.
Balance of merchandise trade is equaled to total exports minus general imports.
Exports are defined as total exports which include 1. Domestically produced goods
and 2. Re-exports, that are re-exporting of goods which are imported and
warehoused in U.S. General imports constitute of imports for immediate
consumption channels and warehouses. Merchandise trade is reported in current
U.S. dollars with no inflation adjustments.
[1]
Merchandise trade report is published
by the U.S. Department of Commerce, Bureau of the Census and Foreign Trade
Division (FTD).

44

CONCLUSION
International trade is the exchange of capital, goods,
and services across international borders or territories. In most countries, such
trade represents a significant share of gross domestic product (GDP). While
international trade has been present throughout much of history (see Silk
Road, Amber Road), its economic, social, and political importance has been on the
rise in recent centuries.
Industrialization, advanced transportation, globalization, multinational
corporations, and outsourcing are all having a major impact on the international
trade system. Increasing international trade is crucial to the continuance
of globalization. Without international trade, nations would be limited to the goods
and services produced within their own borders.
International trade is, in principle, not different from domestic trade as the
motivation and the 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 typically imposes additional costs such as tariffs, time
costs due to border delays and costs associated with country differences such as
language, the legal system or culture.
Another difference between domestic and international trade is that factors
of production such as capital and labor are typically more mobile within a country
than across countries. Thus international trade is mostly restricted to trade in goods
and services, and only to a lesser extent to trade in capital, labor or other factors of
production. Trade in goods and services can serve as a substitute for trade in
factors of production.

45

REFERENCE
WEBIOGRAPHY
WWW.GOOGLE.COM
WWW.GLOBAL TRADE.COM
WWW.INTERNATIONAL TRADE.COM

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