Q.3) Analyze the causes for changes in the pattern of world trade. (2013) (20 marks)
Global trade has not accelerated to levels reached prior to the global financial crisis of 2008, but global trade is in the midst of a massive (albeit gradual) shift. Of particular importance to the changing landscape was the increasing role of Asia in global trade.
China will remain the world’s top exporter in 2030 while the US will fall from second to third place. Most notably, India will have risen from 13th place in 2014 to 2nd place by 2030; by 2050, India could be the world’s largest exporter
Following financial crisis, sharp divide in economic performance of high-income vs. emerging economies in world trade.
US, EU and Japan slow to recover, while emerging economies such as China have fueled global recovery.
Huge global export shock: 1992-2008 average annual growth rate in exports – China (18%) and India (14%).
During same period, low and middle-income countries saw share of global exports increase from 21 to 43%.
South-South trade driven by:
- urbanization and industrialization in China and India creating demand for raw materials
- lengthening of global production networks has resulted in increasing trade in parts and components
Consistent with middle-income countries accumulating human and physical capital pushing them out of labor intensive into more capital-intensive goods
Low-income countries such as Bangladesh and Vietnam are filling the space vacated by middle-income countries in labour intensive sectors.
China has increased supply of educated labor, attracted investment by multinational firms, and improved transport and communications – it likely has increasing comparative advantage in electronics.
Patterns of outsourcing: Outsourcing is obtaining key products from alternative, cheaper locations – often abroad – than original home-sources. In the past, out-sourcing took place to wherever the least cost supplier was located.
Patterns of foreign direct investment: Sometimes, facilities are built wherever labour and land costs are lowest, irrespective of distance from markets. At other times neighbour countries are preferred due to shared membership of regional trade blocs and agreements.
These changes are being driven partly by market opening, but mainly by transport, communications and information technologies.
Q.4) Locational significance of Singapore port to Asian economy. (15 marks)
From its establishment as a British trading post in the early 19th century to its growth into a global transhipment hub, the development of Singapore’s port has been marvelous.
Singapore was the first country in Southeast Asia with a container port, which has since grown to become one of the busiest and most connected in the world, with links to more than 600 ports across 120 countries worldwide. Annually, more than 130,000 ships call at Singapore.
Singapore’s strategic vision for its port has been about ensuring the 3 Cs of Connectivity, Capacity, and Competitiveness.
Connectivity is key for shippers, and Singapore offers a high level of connectivity as the primary transhipment hub in the region. By anchoring key shipping lines and alliances that ply the main shipping route from Asia to Europe, and establishing a strong complementary feeder network to smaller ports in the region, Singapore has built up a reliable and densely connected network.
Scale, and the availability of space to grow the port, are essential for retaining Singapore’s edge in connectivity and network strength.
Singapore has continually invested in technology and innovation to extract productivity gains and enhance our competitiveness.
Beyond the maritime sector, the port also supports other industries. As a hub port, Singapore is able to offer a high degree of connectivity and competitive shipping rates to an extensive range of players across the logistics supply chain.
Superior maritime connectivity supports the manufacturing sector by contributing to the ease and affordability of importing raw goods and exporting manufactured products. Access to the connectivity afforded by our port is a critical consideration in wholesale trade and logistics companies’ decisions to be located in Singapore.
Q.5) Discuss the role of WTO in determining the pattern of World Trade. (2010) (15 marks)
Reference
Answer
The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations.
By lowering trade barriers through negotiations among member governments, the WTO’s system also breaks down other barriers between peoples and trading economies.
At the heart of the system – known as the multilateral trading system – are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading economies, and ratified in their parliaments. Example – ASEAN, RCEP, SAFTA, etc.
The agreements provide a stable and transparent framework to help producers of goods and services, exporters and importers conduct their business.
WTO provides platform for various trade negotiations – telecommunications services, tariff free trade in IT products, financial services. Agriculture and services, negotiations and other work on non- agricultural tariffs, trade and the environment, WTO rules on anti-dumping and subsidies, trade facilitation, transparency in government procurement, intellectual property and a range of issues raised by developing economies.
Through GATT and GATS agreements, WTO members operate a non- discriminatory trading system that spells out their rights and their obligations. Each member receives guarantees that its exports will be treated fairly and consistently in other members’ markets. Each promises to do the same for imports into its own market. The system also gives developing economies some flexibility in implementing their commitments.
The WTO’s Intellectual Property Agreement contains rules for trade in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs and undisclosed information such as trade secrets – “intellectual property” – should be protected when trade is involved.