Week9: South Africa

South Africa is a country in southern Africa. It has the largest economy in Africa and the 28th-largest in the world. The economy of South Africa is ranked as an upper-middle income economy by the World Bank. 

 
South Africa is considered as an emerging economy. It is because the affordability and availability of capital. Additionally, it has sophisticated financial market and effective business tax rate. The South African rand is the most actively traded emerging market currency in the world. The Gross Domestic Product in South Africa expanded 1.3 percent in the second quarter of 2011.

 

However, South Africa is falling behind other emerging markets, such as India and China because of several factors. For example, the country is relatively small, without the advantage of a huge domestic customer base. Also, it has had for decades an unusually low rate of saving and investment, partly because of political uncertainties. Moreover, a strong and unstable currency deters investors and makes its exports less competitive. In conclusion, South Africa has potential but still have to upgrade some weak points.

Week8: ASEAN

The Association of Southeast Asian Nations (ASEAN) is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967.

To improve ASEAN performance, 
every country should collaborate within the organization to develop and integrate their statistical data to help sharpen policy making and planning, as well as to boost development in the region. Because the members are small countries, they all want to increasing standards of living of their people.

The aims and purposes of ASEAN are: 

1. To accelerate the economic growth, social progress and cultural development in the region.

1. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries.
2. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields.
3. To provide assistance to each other in the form of training and research facilities.
4. To collaborate more effectively for the greater utilisation in every aspects.
5. To promote Southeast Asian studies.
6. To maintain close and beneficial cooperation with existing international and regional organizations.

Week7: Port and Transport Issue

From the field trip that I went to Moran Shipping Agencies, Inc., it expands my perspective in shipping. Mr. Jason E. Kelly, executive vice president, made me understand more clearly about the important of shipping agency toward international companies and global trade.

Moran Shipping Agencies, Inc. was founded by James F. Moran in 1937 as a Rhode Island based corporation operating in Providence. After he died in 1959, Edward Moran succeeded his brother in the ownership of the business. Managing a shipping agency is a complicated task, to achieve organizational goals and ensure that shipping operations are running smoothly, an effective management approach is necessary. In 1974, Black family acquired ownership and worked in all aspects of the business. During 80’s and 90’s, Moran continued their expansion across the US Gulf and continued the efforts of expanding its presence throughout North America. The Company now has 20 full service offices serving nearly 100 ports in North America.

Shipping agencies play a major role in the transportation of goods from one country to the other. Transporting essential commodities from the country of manufacture to various ports around the world, shipping agencies are an essential part of any country’s economy. Shipping agencies provide that will benefit the clients. For example, Moran offers major clients secure access to the Company’s data base enabling them to review historical documents and current information on all voyage accounts. Moreover, Moran agents have served on various committees and have been utilized as consultants for the Department of Homeland Security. As such, Moran offers clients advice and services in this area, as well.

Week6: International Sugar Agreement

The International Sugar Organization is an intergovernmental organization, based in London, the 86 member (the European Union and 59 other countries) states of the ISO represent:

• 83% of world sugar production
• 69% of world sugar consumption
• 95% of world exports
• 47% of world imports 

Since 1953 there have been various attempts to raise and stabilize world sugar prices through international agreement. The latest agreement in 1977 established export quotas for its parties and intervention stocks in order to withdraw sugar from the market when prices were low. Like most of the previous ones, this agreement ended in failure. This failure was due in part to the fact that the European Union - one of the largest exporters - refused to sign the agreement. The agreement expired in 1984 and no further agreement on price-stabilizing measures has been achieved. 

The 1992 International Sugar Agreement merely establishes a framework for conducting market analyses and exchanging information. The International Sugar Organization has the role of promoting the sugar industry, particularly in the developing countries, and improving the transparency of the market by publishing statistics on sugar production and trade and world market analyses.

The objectives of the International Sugar Agreement, 1992 are;

(a) To ensure enhanced international cooperation in connection with world sugar matters and related issues;

(b) To provide a forum for intergovernmental consultations on sugar and on ways to improve the world sugar economy;

(c) To facilitate trade by collecting and providing information on the world sugar market and other sweeteners;

(d) To encourage increased demand for sugar, particularly for non-traditional uses.

Week4: Tariffs of Product Between US and China

From the articles, the topic is about trade relationship between US and China. In Sept 2009, President Obama imposed a 35 percent tariff on tires imported from China. In response, China’s Ministry of Commerce announced to impose anti-dumping tariffs on imports of chicken feet sent from the United States to China.

 

Although the aim of President Obama’s new measures is to protect the domestic economy and jobs, I highly doubt this will benefit either one in the long run. By enacting this new tariff Obama is hurting the already cash strapped consumers; reducing supply of cheaper imported tires will result in price increases and hence disadvantage consumers. Consumers had determined that the Chinese products are not only acceptable, but also provide better value for the money spent. Moreover, the United States used to be China’s most vital trade partner, however the US has lost its status and now Europe is China’s largest trading partner. Should a trade war erupt US will have the short end of the stick, and the American economy could see a much steeper economic decline.

I do not necessarily agree with China’s labor laws or believe the Chinese have the best products, but government intervention in the free market is almost never a good idea.  It’s simply a matter of survival of the fittest, let the free market and consumers decide who provides the best value. Intervening in this process will have dangerous consequences. Obama’s protectionism measures will eventually isolate the US, potentially causing trade wars and lead the US economy to a potential depression.

Week3: Are All Barriers on Trade Intentional?

From the title “Terrorist Attack Results in Added Costs and Slowdowns for US Freight System” in the textbook, it shows that unintentional outside factor have an impact on international trade such as the incident of the terrorist attacks on September 11, 2001. It created new kind of trade barrier which is US border security that makes it hard to trade between US and other countries.

The main focus that I will talk is oil price. Oil is conquering new heights every day. It is the single largest commodity affecting world economy today. Oil has a larger impact, especially when it comes to international trade; in a globalized world. As transportation costs had a major hand in the success of globalization, the increase in oil price has disrupted this pillar of globalization. Transportation costs are increasing worldwide due to fuel price increase and it might increase to such an extent that it may not become economically plausible for a country to buy or sell goods outside. The transportation costs may become the deciding factor of the final price of goods and hence would account for an obvious collapse of the cost advantage that nations enjoyed previously.

For Thailand, although Thai exports in 2011 are expected to increase steadily, there are several key risk factors such as the appreciation of the baht and an increase in interest rates which create an impact on Thailand’s international trade. Fuel price is one of the factors because higher oil prices will also increase production and transportation costs.

Week2: Detroit's Big Three Face Obstacles in Restructuring

The 'Big Three' automobile manufacturers that we talk about are Ford Motors, General Motors and Chrysler. In the past, they controlled more than 90 percent of the US market. As time went by, their market share has greatly diminished because of foreign competition, mostly Japanese companies. This problem forces “the big three” to alter price policies, production methods, work rules, compensation levels, and product quality.

The topic that will be focus is healthcare benefit. The American auto industry is one of the last bastions of generous benefits that were once part of many employers' largess: fully paid health insurance, retiree medical coverage and pensions. In my opinion, I think paying a portion of healthcare benefits make it hard for “the big three” to compete with foreign competitive. Healthcare benefits will limit the company from reduce their products’ price. Also, it is a huge portion of company cost and can’t fix or decrease it easily. Moreover, "It is a well-known fact that the U.S. automobile industry spends more per car on health care than on steel," says Lee Iacocca, the retired chairman of Chrysler who in the early 1990s advocated a national health care program as a solution.

To improve the comparative advantage of US car manufacturers;

First, they should import the necessary technology for manufacturing, build labor and management skills, and develop a home market for US vehicles. A compilation of elements, such as low-cost skilled labor and cheap raw materials, will help US modify their manufacturing processes. 

Secondly, they should emphasize on exporting automobiles to the rest of the world. The success will directly relate to the automobile manufacturers' ability to achieve gains in labor productivity through new manufacturing processes. In order to keep their employees' goals consistent with company productivity goals, they should offer annual bonuses and incentives to employees based on productivity gains and company profitability reinforced this strategy. Also, Automobile manufacturers should begin benchmarking their products after manufacturers in other countries.

Week1: How open to openess are you?

Since ancient times, we have been receptive to influences and ideas from outside – from India, from China, from the West. With our long-standing tolerance for diversity and openness, all levels of Thai society are experienced in adapting to cross-pressures from abroad. We recognized early on that survival depended not upon closing ourselves off from the rest of the world, but upon absorbing external influences and making them our own. Our policies, be they in trade or other matters, have always been open. 

Thai economy is export-dependent, with exports of goods and services equivalent to nearly 70% of GDP in 2010. We relied largely on external demand from the United States and other foreign markets since recovery from the 1997-1998 Asian financial crisis and "openness" has become necessary for Thailand. 

Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. To attract additional foreign investment, the government has promised to look for ways to expand investment opportunities, focusing more on green technology/manufacturers.