CURRENT ISSUE ON ECONOMIC DEVELOPMENT AND PLANNING

1. CURRENT ISSUE ON ECONOMIC DEVELOPMENT AND PLANNING ECN 4169 TRADE AND DEVELOPMENT

2. GROUP’S MEMBERS • MOHD FITRI BIN MOHD ALI 133426 • ASMAWATI BINTI ABDUL HALIM 131979 • NORASMAH BINTI AB. RAZAK 133028 • NOOR SUHANA BINTI AHMAD 133068 • NORHAFIZA BINTI SAHAK 132272 • RAFEAH BINTI ISA 132312

3. INTRODUCTION • Trade is a key factor in economic development. A successful use of trade can boost a country’s development. • The importance of trade as a factor for development and growth is becoming more evident. If accompanied by the proper policies and if use correctly, trade policies can provide opportunities for promoting economic development.

4. UNCTAD • UNCTAD ( United Nations Conference on Trade and Development ). • Established in 1964, UNCTAD promotes the development –friendly integration of developing countries into world economy. • Malaysia is one of the UNCTAD’s member and also member of Trade and Development Board.

5. The main activities of UNCTAD are in; 1. Trade and Commodities 2. Investment, technology and enterprise development. 3. Macroeconomic policies, debt and development financing. 4. Transport, customs and information technology.

6. UNCTAD has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, ensuring domestic policies and international action are mutually supportive in bringing about sustainable development.

7. Trade among Developing Countries • Many developing economist have argued that developing countries should orient their trade more toward one another. • Their arguments usually entail 4 basic points: 1. There are relative comparative-advantage change to South-South as opposed to North-South trade.

8. 2. There are greater dynamic gains to be realized from such trade . 3. Export instability resulting from fluctuations in developed country economic activity can be reduced. 4. Greater collective self-reliance will be fostered.

9. Trade Policies of Developed Countries • The prospects for future LDC trade and foreign-exchange expansion depend on the domestic and international economic policies of developed countries. • Developed countries economic and commercial policies are most important from the perspective of future LDC foreign-exchange earnings in 3 major areas:

10. 1. Tariff and non-tariff barriers to LDC exports. 2. Adjustment assistance for displaced workers in developed-country industries damage by free access of labor-intensive, low-cost LDC exports. 3. The general impact of rich-country domestic economic policies on developing countries.

11. ECONOMIC INTEGRATION • Economic integration occurs whenever a group of nations in the same region join together to form an economic union or regional trading bloc by raising a common tariff wall against the product of non-member countries while freeing international trade among members. • Two-long term dynamic arguments for integration.

12. i. Trade Creation Occur when common external barriers and internal free trade lead a shift to production from high to low cost member states. ii. Trade Diversion Occur when the erection of external tariff barriers causes production and consumption of one or more member state to shift from lower-cost nonmember sources of supply to higher-cost member producers.

13. Integration level • The multilateral • The bilateral level • Autonomous measures

14. a) The Multilateral Level • Trade can contribute positively to the Millennium Development Goals, through its impact on economic growth. The World Bank estimated that a pro-poor outcome of the current Doha Development Agenda (DDA) could increase global income by up to £300 billion, with half accruing to development countries.

15. However, the world’s poorest countries have not always been able to fully benefit from the trade opportunities offered by the multilateral trading system. • The DDA aims at improving market access and establishing rules, that help promote development and increase developing countries’ opportunities to take advantage from further trade liberalization.

16. With this aims, there are several pro-development proposals in Geneva: a) Market access b) Agriculture c) Services d) Trade Facilitation e) Special and different treatment f) Capacity building

17. b) The Bilateral Level • The development dimension is reflected in bilateral trade relation. For example, the EU with developing countries. • The example is the Economic Partnership Agreements (EPA) which are being negotiated between the EU and African, Caribbean and Pacific (ACP) countries.

18. EPAs are an instrument for development by strengthening regional integration and improving the business environment in a credible and sustainable way. • The objective of EPAs is not to open markets but rather build markets.

19. c) Autonomous measures • In additional to the multilateral and bilateral level, most of the countries operated unilateral preferential market access schemes under the Generalized System of Preferences (GSP) to provide developing countries with an added advantage an their market.

20. THE DEVELOPING COUNTRIES IN GLOBALIZATION • In 2006, the export by developing countries are, export of goods (17.6%) and services (12.9%),but at a less sustained pace than in the previous two years; • In 2005, intraregional trade rose to two thirds of the total trade of the European Union (EU), to 26% of the trade of the Association of Southeast Asian Nation (ASEAN), to 13% for the Southern Common Market (MERCOSUR), and only 9% for the Economic Community of West African States (ECOWAS).

21. South-South trade is increasing, mainly owing to flows to or from Asia, and particularly among Asian countries: • In 1995, of the total of $1,400 billion in exports to the countries of the South, 40% came from other developing countries, including 2% from Africa, 5% from America and 33% from Asia. Ten years later, the situation is practically identical for Africa (3%) and remains unchanged for America (5%), while Asia now accounts for 45% of exports to developing countries.

22. The boom in exports to Asia is taking place particularly in the context of trade among the countries of the region, that accounted for 53% of exports to Asia in 2005 as compared with 41% in 1995; the African and American continents account for only 2% of the Asian market (1% in 1995), essentially owing to trade in commodities.

23. With a 5.2% annual average increase in per capita GDP in real terms from 2000 to 2006, Asia stands out clearly from other developing countries (4.0%) and the world (1.8%).

24. CONSCLUSION • International trade played a major role in transmitting the slowdown in the industrial world to developing countries. • Government policies have played an important role in fostering regional integration. • Co-operation and integration in trade may become important in the light of broader developments in the global economy.