Ministry of education and science of Republic of Kazakhstan

Academician E.A. Buketov Karaganda state university

Economic faculty

Chair “Economics and International Business”

Zhartay Zh.М.,

Master of economic sciences, teacher

LECTURE

on

«International Trade and World Goods Markets»

Specialty: 5B051300 «World economy»

(15 lectures)

Karaganda

2013

Theme 1. The essence and role of international trade in the world economy

1. Concept and essence of international trade. Commodity and geographical structure of international trade. Subjects and objects, types of international trade. Concept of the international trade system and mechanism of its functioning.

2. International Job Specialization (IJS). A type of IJS and it’s the factors. Specialization and cooperation within the international job specialization as a basis of international trade.

3. World market. The opened and closed economy. Structure of the world economy and various securities of the countries with production resources.

1. Concept and essence of international trade. Commodity and geographical structure of international trade. Subjects and objects, types of international trade. Concept of the international trade system and mechanism of its functioning

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 (Silk Road, Amber Road), it’s 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.

International economics is concerned with the effects upon economic activity of international differences in productive resources and consumer preferences and the institutions that affect them. It seeks to explain the patterns and consequences of transactions and interactions between the inhabitants of different countries, including trade, investment and migration.

• International trade studies goods-and-services flows across international boundaries from supply-and-demand factors, economic integration, international factor movements, and policy variables such as tariff rates and trade quotas.

• International finance studies the flow of capital across international financial markets, and the effects of these movements on exchange rates.

• International monetary economics and macroeconomics studies money and macro flows across countries.

• International political economy from international relations studies issues and impacts from for example international conflicts, international negotiations, and international sanctions; national security and economic nationalism; and international agreements and observance.

The economic theory of international trade differs from the remainder of economic theory mainly because of the comparatively limited international mobility of the capital and labour. In that respect, it would appear to differ in degree rather than in principle from the trade between remote regions in one country. Thus the methodology of international trade economics differs little from that of the remainder of economics. However, the direction of academic research on the subject has been influenced by the fact that governments have often sought to impose restrictions upon international trade, and the motive for the development of trade theory has often been a wish to determine the consequences of such restrictions.

The branch of trade theory which is conventionally categorized as "classical" consists mainly of the application of deductive logic, originating with Ricardo’s Theory of Comparative Advantage and developing into a range of theorems that depend for their practical value upon the realism of their postulates. "Modern" trade theory, on the other hand, depends mainly upon empirical analysis.

2. International Job Specialization (ijs). Types of ijs and its the factors. Specialization and cooperation within the international job specialization as a basis of international trade

The International Labour Organization (ILO) is a United Nations agency dealing with labour issues, particularly international labour standards anddecent work for all. Almost all (185 out of 193) UN members are part of the ILO.

In 1969, the organization received the Nobel Peace Prize for improving peace among classes, pursuing justice for workers, and providing technical assistance to developing nations.

The ILO registers complaints against entities that are violating international rules; however, it does not impose sanctions on governments.

Unlike other United Nations specialized agencies, the International Labour Organization has a tripartite governing structure — representing governments, employers and workers (usually with a ratio of 2:1:1). The rationale behind the tripartite structure is creation of free and open debate among governments and social partners.

The ILO secretariat (staff) is referred to as the International Labour Office.

The Governing Body decides the agenda of the International Labour Conference, adopts the draft programme and budget of the organization for submission to the conference, elects the director-general, requests information from member states concerning labor matters, appoints commissions of inquiry and supervises the work of the International Labor Office.

Juan Somavía was the ILO's director-general since 1999 until October 2012, when Guy Ryder was elected as his replacement.

This guiding body is composed of 28 government representatives, 14 workers' representatives, and 14 employers' representatives.

Ten of the government seats are held by member states that are nations of "chief industrial importance," as first considered by an "impartial committee." The nations are Brazil, China, France, Germany, India, Italy, Japan, the Russian Federation, the United Kingdom and the United States. The terms of office are three years.

The ILO organizes the International Labor Conference in Geneva every year in June, where conventions and recommendations are crafted and adopted. Also known as the parliament of Labour, the conference also makes decisions about the ILO's general policy, work programme and budget.

Each member state has four representatives at the conference: two government delegates, an employer delegate and a worker delegate. All of them have individual voting rights, and all votes are equal, regardless of the population of the delegate's member state. The employer and worker delegates are normally chosen in agreement with the "most representative" national organizations of employers and workers. Usually, the workers' delegates coordinate their voting, as do the employers' delegates. All delegates have the same rights, and are not required to vote in blocs.

As of 2012, 185 countries in the UN are members of the ILO. The constitution of the ILO offers that any nation which has a membership in the UN can become a member of the ILO. To gain membership, a nation must inform the Director General that it accepts all the obligations of the ILO constitution.

Members from the ILO under the League of Nations were automatically added when the organization's new constitution came into effect after World War II. In addition, any original member of the United Nations and any state admitted to the U.N. thereafter may join. Other states can be admitted by a two-thirds vote of all delegates, including a two-thirds vote of government delegates, at any ILO General Conference.

Non-members are: Andorra, Monaco, Liechtenstein, Bhutan, North Korea, Micronesia, Nauru, Tonga, Cook Islands, Niue, Vatican City and the states with limited recognition.

Establishment

The ILO was established as an agency of the League of Nations following the Treaty of Versailles, which ended World War I.

VanDaele (2005) argues that in 1919 a pioneering generation of scholars, social policy experts, and politicians designed an unprecedented international organizational framework for labor politics. The founders of the ILO had made great strides in social thought and action before 1919. The core members all knew one another from earlier private professional and ideological networks, in which they exchanged knowledge, experiences, and ideas on social policy. Prewar "epistemic communities", such as the International Association for Labour Legislation (IALL), founded in 1900, and political networks, such as the Socialist Second International, were a decisive factor in the institutionalization of international labor politics. In the post–World War I euphoria, the idea of a "makeable society" was an important catalyst behind the social engineering of the ILO architects. As a new discipline, international labour law became a useful instrument for putting social reforms into practice. The utopian ideals of the founding fathers—social justice and the right to decent work—were changed by diplomatic and political compromises made at the Paris Peace Conference of 1919, showing the ILO's balance between idealism and pragmatism.