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World T rade Organisation (WTO)

World T rade Organisation (WTO). International body responsible for negotiating trade agreements and ‘policing’ the rules of trade to which its 158 members sign up. Trade disputes between members are settled by the WTO W orld Trade Organisation

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World T rade Organisation (WTO)

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  1. World Trade Organisation (WTO) • International body responsible for negotiating trade agreements and ‘policing’ the rules of trade to which its 158 members sign up. • Trade disputes between members are settled by the WTO • World Trade Organisation • GATT (General Agreement on Tariffs and Trade) • DOHA Negotiations on reform of international trade Emphasis on allowing developing countries to secure a fair share of world trade

  2. ASEAN • Association of South East Asian Nations • ASEAN • A regional trading bloc (countries that form an economic ‘club’ based on abolishing barriers to trade) • Founded in 1967 • Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam

  3. North American Free Trade Agreement (NAFTA) • NAFTA • A tri-lateral trade bloc between Canada, Mexico and the United States • Came into force in 1994 • Eliminates barriers to trade and investment Objectives • Some economists argue it has been beneficial in combating poverty in Mexico (e.g. through lower food prices where tariffs removed) – others suggest that it has had a negative impact on Mexican farmers who can’t compete with cheap US imports and has increased inequalities

  4. Heckscher-Ohlin Theory • Theory that a country will specialise in and exportproducts produced using factors of production that are abundant … • and import products whose production requires the use of scarce factors. • Builds on Ricardo’s theory of comparative trade • e.g. Zambia – comparative advantage in resources such as copper • China – comparative advantage in manufacturing and infrastructure • Trade copper in return for cheap toys, bicycles and new roads

  5. Prebisch-Singer hypothesis • Argument that countries exporting primary commodities will experience deteriorating terms of trade in the long run (in other words, their goods become cheaper than the manufactured ones they import) • One reason = income elasticity of demand greater for manufactured goods than primary commodities = as incomes rise demand rises more for manufactured goods than primary commodities (incl. food) • This will trap them in a low level of development as more exports will be needed to be sold to buy the same volume of imports (e.g. manufactured goods) • Commodities boom has seen terms of trade improve for primary commodities, although over many decades previously the hypothesis has seemed correct • Solving poverty in Africa - Tutor2u

  6. Dutch Disease • Apparent relationship between a country’s: • Increase in exploitation of natural resources for export • Decline in their manufacturing sector • An increase in revenues from natural resources = strengthened currency = other exports become more expensive (SPICED) = less competitive manufacturing sector • Can result from any inflow of a large amount of foreign currency (including aid) • Term comes from decline of Dutch manufacturing following discovery of large natural gas field in 1959 • Avoid by other measures boosting manufacturing / not bringing all revenues into country at once

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