• THE OVERVIEW OF GLOBAL ECONOMY: IMPORTS AND EXPORTS AND INTERNATIONAL TRADE

    05-05-2013by Admin
    Economy - overview The international financial crisis of 2008-09 led to the first global recession since 1946 and presented the world with a major new challenge: determining what mix of fiscal and monetary policies to follow to restore growth and jobs, while keeping inflation and debt under control. Fiscal stimulus packages put in place in 2009-12 required most countries to run large budget deficits. Treasuries issued new public debt - totaling $7.6 trillion since 2008 - to pay for the additional expenditures. To keep interest rates low, most central banks monetized that debt, injecting large sums of money into their economies - between December 2008 and December 2012 the global money supply increased by more than 35%. Governments now are faced with the difficult task of spurring current growth and employment without saddling their economies with so much debt that they sacrifice long-term growth and financial stability. And when economic activity picks up, central banks will face the difficult task of containing inflation without raising interest rates so high they snuff out further growth.
    Fiscal and monetary data for 2012 are currently available for 180 countries, which together account for 98.5% of World GDP. Of the 180 countries, 85 pursued unequivocally expansionary policies, boosting government spending while also expanding their money supply faster than the world average of 6%; 47 followed restrictive fiscal and monetary policies, reducing government spending and holding money growth to less than the 6% average; and the remaining 48 followed a mix of counterbalancing fiscal and monetary policies, either reducing government spending while accelerating money growth, or boosting spending while curtailing money growth.
    In 2012, fiscal policy shifted towards greater austerity for a majority of the countries. In an attempt to attack their deficit and debt problems head-on, nearly 5 out of 6 countries slowed the rate of growth of government spending, and 1 in 3 countries actually lowered the level of their expenditures. The global growth rate for government expenditures dropped from 5.9% in 2010 and 10.1% in 2011, to just 1.6% in 2012. Roughly 1 out of 3 central banks tightened monetary policy, decelerating the rate of growth of their money supply, and about 1 out of 7 actually withdrew money from circulation. Growth of the global money supply, as measured by the narrowly defined M1, slowed from 10.5% in 2009 and 10.4% in 2010 to 4.6% in 2011 and 6.0% in 2012.
    These policy choices significantly affected economic performance. The global budget deficit narrowed to roughly $2.7 trillion in 2012, or 3.8% of World GDP. But growth of the world economy slipped from 5.1% in 2010, and 3.7% in 2011, to just 3.3% in 2012. And world unemployment increased to 9.2%.
    Countries with expansionary fiscal and monetary policies achieved significantly higher rates of growth, lower unemployment, higher growth of tax revenues, and greater success curbing public debt than those countries that chose concretionary policies. In 2012, the 85 countries that followed a pro-growth approach achieved a median GDP growth rate of 4.9%, compared to just 0.8% for the 47 countries with restrictive fiscal and monetary policies, a difference of more than 4 percentage points. Among the 85, China grew 7.8%, Indonesia 6.0%, Mexico 3.8%, Russia 3.6%, Turkey 3.0%, the United States 2.2%, and Canada 1.9%, while among the 47, Brazil grew 1.3%, Germany 0.9%, France 0.1%, Belgium 0%, Netherlands -0.5%, Spain -1.5%, and Italy -2.3%. The median unemployment rate for the 47 countries jumped to 11.5%, while the median for the pro-growth countries held steady at 7.3%.
    Faster GDP growth and lower unemployment rates translated into increased tax revenues and a lower debt burden. Revenues for the 85 expansionary countries grew at a median rate of 10.8%, whereas tax revenues fell at a median rate of 6.2% for the 47 countries that chose austere economic policies. This put increased pressure on many of the 47 to raise public debt. For these countries, the median level of public debt as a share of GDP increased 2.5 percentage points to 57.8%, while the median for the 85 pro-growth countries actually declined slightly (-0.1 percentage points).
    The world recession has suppressed inflation rates - world inflation declined 0.8 percentage points in 2012 to about 4.2%. At the same time, the median inflation rate for the 85 pro-growth countries, at 5.5%, was 2.5 percentage points higher than that for the countries who followed more austere fiscal and monetary policies. The latter countries also improved their current account balances by shedding imports; as a result, current account balances deteriorated for most of the countries that pursued pro-growth policies. Slower growth of world income reduced import demand and crude oil prices fell. Consequently, the dollar value of world trade grew just 1% in 2012, compared with 18% in 2011.
    Beyond the current global slowdown, the world faces several long-standing challenges. The addition of 80 million people each year to an already overcrowded globe is exacerbating the problems of underemployment, pollution, waste-disposal, epidemics, water-shortages, famine, over-fishing of oceans, deforestation, desertification, and depletion of non-renewable resources. The nation-state, as a bedrock economic-political institution, is steadily losing control over international flows of people, goods, services, funds, and technology. The introduction of the euro as the common currency of much of Western Europe in January 1999, while paving the way for an integrated economic powerhouse, created economic risks because the participating nations have varying levels and rates of growth of income, and hence, differing needs for monetary and fiscal policies. Especially in Western Europe, governments face the difficult political problem of channeling resources away from welfare programs in order to increase investment and strengthen incentives to seek employment. Because of their own internal problems and priorities, the industrialized countries devote insufficient resources to deal effectively with the poorer areas of the world, which, at least from an economic point of view, are becoming further marginalized. The terrorist attacks on the US on 11 September 2001 accentuated a growing risk to global prosperity, illustrated by the reallocation of resources away from investment to anti-terrorist programs.
    Despite these challenges, the world economy also shows great promise. Technology has made possible further advances in all fields, from agriculture, to medicine, alternative energy, metallurgy, and transportation. Improved global communications have greatly reduced the costs of international trade, helping the world gain from the international division of labor, raise living standards, and reduce income disparities among nations. Much of the resilience of the world economy in the aftermath of the financial crisis resulted from government and central bank leaders around the globe working in concert to stem the financial onslaught, knowing well the lessons of past economic failures.
    GDP (purchasing power parity) $83.23 trillion (2012 est.)
    $80.61 trillion (2011 est.)
    $77.71 trillion (2010 est.)
    note: data are in 2012 US dollars
    GDP (official exchange rate) GWP (gross world product): $71.62 trillion (2012 est.)
    GDP - real growth rate 3.3% (2012 est.)
    3.7% (2011 est.)
    5.1% (2010 est.)
    GDP - per capita (PPP) $12,500 (2012 est.)
    $12,200 (2011 est.)
    $11,900 (2010 est.)
    note: data are in 2012 US dollars
    GDP - composition by sector agriculture: 5.9%
    industry: 30.5%
    services: 63.6% (2012 est.)
    Labor force 3.302 billion (2012 est.)
    Labor force - by occupation agriculture: 36.4%
    industry: 22.2%
    services: 41.4% (2007 est.)
    Unemployment rate 9.2% (2012 est.)
    8.4% (2011 est.)
    note: 30% combined unemployment and underemployment in many non-industrialized countries; developed countries typically 4%-12% unemployment (2007 est.)
    Household income or consumption by percentage share lowest 10%: 2.7%
    highest 10%: 27.7% (2007 est.)
    Distribution of family income - Gini index 39 (2007 est.)
    37.2 (1998 est.)
    Investment (gross fixed) 23.9% of GDP (2012 est.)
    23.4% of GDP (2011 est.)
    Budget revenues: $20.67 trillion
    expenditures: $23.42 trillion (2012 est.)
    Taxes and other revenues 28.9% of GDP (2012 est.)
    Budget surplus (+) or deficit (-) -3.8% of GDP (2012 est.)
    Public debt 65.4% of GDP (2012 est.)
    63.8% of GDP (2011 est.)
    Inflation rate (consumer prices) world average 4.2% (2012 est.)
    developed countries 2.2% (2011 est.)
    developing countries 5.5% (2012 est.)
    note: the above estimates are weighted averages; inflation in developed countries is 0% to 4% typically, in developing countries, 5% to 10% typically; national inflation rates vary widely in individual cases; inflation rates have declined for most countries for the last several years, held in check by increasing international competition from several low wage countries, and by soft demand as a result of the world financial crisis (2012 est.)
    Stock of money $12.35 trillion (31 December 2007)
    Stock of narrow money $27.05 trillion (31 December 2012 est.)
    $25.53 trillion (31 December 2011 est.)
    Stock of quasi money $27.31 trillion (31 December 2007)
    Stock of broad money $84.87 trillion (31 December 2012 est.)
    $78.76 trillion (31 December 2011 est.)
    Stock of domestic credit $106 trillion (31 December 2012 est.)
    $101.5 trillion (31 December 2011 est.)
    Market value of publicly traded shares $47.04 trillion (31 December 2011)
    $56.37 trillion (31 December 2010)
    $48.71 trillion (31 December 2009 est.)
    Industries Dominated by the onrush of technology, especially in computers, robotics, telecommunications, and medicines and medical equipment; most of these advances take place in OECD nations; only a small portion of non-OECD countries have succeeded in rapidly adjusting to these technological forces; the accelerated development of new industrial (and agricultural) technology is complicating already grim environmental problems
    Industrial production growth rate 4.3% (2011 est.)
    Exports $18.35 trillion (2012 est.) $18.13 trillion (2011 est.)
    Exports - commodities the whole range of industrial and agricultural goods and services
    top ten - share of world trade: electrical machinery, including computers 14.8%; mineral fuels, including oil, coal, gas, and refined products 14.4%; nuclear reactors, boilers, and parts 14.2%; cars, trucks, and buses 8.9%; scientific and precision instruments 3.5%; plastics 3.4%; iron and steel 2.7%; organic chemicals 2.6%; pharmaceutical products 2.6%; diamonds, pearls, and precious stones 1.9%
    Imports $18.24 trillion (2012 est.)
    $18.01 trillion (2011 est.)
    Imports - commodities the whole range of industrial and agricultural goods and services top ten - share of world trade: see listing for exports
    Debt - external $69.01 trillion (31 December 2012 est.)
    $63.6 trillion (31 December 2011 est.)
    note: this figure is the sum total of all countries' external debt, both public and private
    Stock of direct foreign investment - at home $20.59 trillion (31 December 2012 est.)
    $19.05 trillion (31 December 2011 est.)
    Stock of direct foreign investment - abroad $22.25 trillion (31 December 2012 est.) $20.63 trillion (31 December 2011 est.)
  • What Types of Import/Export Businesses are there?

    05-05-2013by Admin

    The fact is, any business that is not only selling domestically is in the supply and demand chain of import export business. This also means, if you've ever sold any product on Export Portal, you may very well be in the import export business.

    Import export businesses can be simplified to the following processes. It starts from a manufacturer producing merchandise. It's exporter/export trading company will then promote the products internationally. An importer/import trading company buys the products for a particular buyer, and the buyer will then sell to a retailer or directly to the customer.

    Thanks to technology and also to the English language, the import export business has become everybody's business. There are several types of work that can be done by individuals/small companies. The following are several types of import export business that you can do.

    Manufacturer's representative: If you are specialized in a certain industry, you can very well go to an oversea manufacturer and ask to represent them in the countries of your choice. A representative has the edge because you are the expert in the industry or a certain market. For example, if you are an expert in the wooden furniture business and you have been selling in the western US region, you have the great opportunity of going to a Chinese furniture maker and asking to be a representative of their western US region. Most of the manufacturers love people like you because you are their free labor (no base, only commission) to help them get into the market. It's a win-win situation for both you and the manufacturer.

    Export management company (EMC): An EMC handles export operations for a domestic company that wants to sell its product overseas but doesn't know how (and perhaps doesn't want to know how). The EMC does it all-hiring dealers, distributors and representatives; handling advertising, marketing and promotions; overseeing labeling and packaging; arranging shipping; and sometimes getting financing. In some cases, the EMC even takes title to the goods, in essence becoming its own distributor. EMC's usually specialize by product, foreign market or both, and--unless they've taken title--are paid by commission, salary or retainer plus commission.

    Export trading company (ETC) : While an EMC has merchandise to sell and is using its energies to seek out buyers, an ETC attacks the other side of the trading coin. It identifies what foreign buyers want to spend their money on and then hunts down domestic sources willing to export. An ETC sometimes takes title to the goods and sometimes works on a commission basis.

    Import/export merchant: This international entrepreneur is a sort of free agent. He has no specific client base, and he doesn't specialize in any one industry or line of products. Instead, he purchases goods directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own. This means, of course, that unlike the EMC, he assumes all the risks (as well as all the profits).

    Import/export Agent: The true broker definition, this business never or at the very most, rarely invests capital in inventory or directly handles merchandise, products or services.

    Distributor or wholesale distributor: a company that buys the product you've imported and sell it to a retailer or other agent for eventual distribution to the end user.

    Representative: a savvy salesperson who pitches your product to wholesale or retail buyers, then passes the sale on to you; differs from a manufacturer's representative in that he doesn't necessarily specialize in a particular product or group of products. On the other hand, he/she has a very good relationship with one or many wholesaler/retailers.

    Retailer: the tail end of the trade channel where the merchandise smacks into the consumer; as yet another variation on a theme, if the end user is not Joan Q. Public but an original equipment manufacturer (OEM), then you don't need to worry about the retailer because the OEM becomes your end of the line (think Compaq purchasing a software program to pass along to its personal computer buyer as part of the goodie package).