IMT-16

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IMT-16

INTERNATIONAL TRADE

Notes:

a. Write answers in your own words as far as possible and refrain from copying from the text books/handouts.

b. Answers of Ist Set (Part-A), IInd Set (Part-B), IIIrd Set (Part – C) and Set-IVth

c. Submit the assignments in IMT CDL H.O. along with the assignments Question Papers for evaluation . (Case Study) must be sent together.

d. Only hand written assignments shall be accepted.

A. First Set of Assignments 5 Questions, each question carries 1 marks.

B. Second Set of Assignments 5 Questions, each question carries 1 marks.

C. Third Set of Assignments 5 Questions, each question carries 1 marks. Confine your answers to 150 to 200 Words.

D. Forth Set of Assignments Two Case Studies : 5 Marks. Each case study carries 2.5 marks

 SECTION - A

1. Discuss the major benefits and risks of international trade?

Ans. Exports in the UK are growing. The major catalyst was sterling’s weakness which meant that the demand for UK goods and services expanded greatly. What is interesting though, is the benefits are not just price driven. Earlier this year, we attended “International Giftware” which fills all 20 halls at the NEC Exhibition Centre just outside of Birmingham. We found international buyers purchasing UK goods because of

 2. Explain the various types of Non-Tariff Barriers of international trade.

Ans. NON-TARIFF BARRIERS
A non tariff barrier is any barrier other than a tariff that raises an obstacle to free flow of goods in overseas markets. Non-tariff barriers, do not affect the price of the imported goods, but only the quantity of imports. Some of the

Q 3. Critically discuss the major changes that have taken in global trade in the last decade.

Ans. Global economic integration is not a new phenomenon. Some communication and trade took place between distant civilizations even in ancient times. Since the travels of Marco Polo seven centuries ago, global economic integration—through trade, factor movements, and communication of economically useful knowledge and technology—has been on a generally rising trend. This process of globalization in

4. Explain the comparative cost advantage theory of trade with the help of an example.

Ans. Comparative advantage occurs when one country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries

Q 5. What is the importance of TRIPS in India?

Ans. the importance of TRIPS in Indiaà

It is an opportune moment for India and other developing countries to review and consolidate their strategies on intellectual property rights in the WTO. Recent developments relating to TRIPs have witnessed some important

SECTION – B

Q 1. Describe the factor endowments theory of Heckscher-Ohlin.

Ans. Relative endowments of the factors of production (land, labor, and capital) determine a country's comparative advantage. Countries have comparative advantages in those goods for which the required factors of production are

Q 2. Distinguish between FDI and FII.

Ans. Both FDI and FII are related to investment in a foreign country. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.

3. Explain the inward-oriented and outward oriented trade strategy.
Ans. World Bank has urged poor nations to adopt development strategies which emphasize export expansion, dismissing the caution against excessive trade dependence voiced by political economists. In re-examining the Bank's much-cited analyses which suggest that "outward-oriented" nations have experienced more rapid growth, this study uncovers three findings which challenge its apparent implications. First, nations characterized as following outward-oriented development do not trade

Q, 4. How is WTO different from GATT?

Ans. There are various bodies or agreements that have been made around the world in order to maintain peace and justice among the different countries. The main purpose of such bodies is to regulate talks, trade and other rules

Q 5. What is current account deficit? How can it be minimized?

Ans. In economics, a country's current account is one of the two components of its balance of payments, the other being the capital account. The current account consists of the balance of trade, net factor income (earnings on foreign investments minus payments made to foreign investors) and net

                                                            SECTION – C

Q.     1 Discuss the Doha Development Agenda of World Trade Organization.

Ans.  At the WTO’s Fourth Ministerial Conference held in Doha, Qatar, in November 2001, ministers recognized the central role that international trade can play in the promotion of economic development. Acknowledging the fact that the majority of WTO members are developing countries, they agreed to continue

Q.2 What are the objectives of ASEAN and SAPTA?

Ans.  The ASEAN Declaration states that the aims and purposes of the Association are:

1. To accelerate the economic growth, social

3 Explain the different stages of economic integration in formation of Regional Trade Agreements with examples.

Ans. Preferential trade agreements (PTAs) reduce or eliminate policy-imposed barriers

To the flow of goods, services, capital, labor etc. (Baier et al. 2008). It is possible to

View PTAs from three separate perspectives: economics, politics and commitment

Or credibility (Bagwell and Stagier 2002).

Q 4. How is IMF different from IBRD?

Ans. The International Monetary Fund and the World Bank were both created at an international conference convened in Breton Woods, New Hampshire, and United States in July 1944. The goal of the conference was to establish a framework for economic cooperation and development that would lead to a more stable and prosperous global economy. While this goal remains central to both institutions, their work is constantly evolving in response to new economic developments and challenges.

5. Describe the stages of issuing a letter of credit (L/C) for international payments.

Ans. The starting point of the letter of credit process is the agreement upon the sales terms between the exporter and the importer. Then they sign a sales contract. It is important to stress here that letters of credit are

CASE STUDY – 1

Q.1 On the basis of the case analyse the reasons for the countries to sign Regional Trading Arrangements (RTAs), especially after 1990.

Ans. RTAs act as an insurance against protectionism, particularly for small and developing countries. Small countries, it can be argued, conclude RTAs with large countries before they are excluded by other countries doing the same — a kind of first-mover advantage. But do developing countries benefit from these RTAs? Are these benefits economic in terms of market access?

Q. 2. Do you consider the regional trading arrangements (RTAs) as a threat to free trade? Give reasons.

Ans. the share of world trade in RTAs falls from 33% to about 20%. Finally, 85% of these RTAs are free trade agreements (FTAs) rather than Customs unions (CUs). In the former, countries retain their tariff-setting independence vies-a-vies non- RTA members. Last, most countries are members of multiple RTAs. This

CASE STUDY – 2

Q 1. Discuss the reasons for the differences in the performance of P&G in India and China.

Ans. The result was disastrous until the company learnt how to adapt products and marketing style of Japanese culture. P & G which entered the Japanese market in 1973 lost money until 1987, but by 1991 it became the second largest

Q 2. From the evidence given in the case, state the benefits and risks of investment by an MNC in foreign countries.

Ans. In the face of the growing economic, institutional and legal interlink ages between trade and foreign direct investment, should WTO member governments continue to resort to bilateral FDI arrangements? Or should they create a multilateral framework that recognizes these close linkages, and takes into account the interests of all the members of the WTO - developed, developing and least-developed alike.

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