Transcript Trade

IBEA 2016
Term paper 3
Trade and investment
23 September 2016
Trade
Chart 1: Growth in volume of world merchandise trade and GDP, 2005-13 a (Annual % change)
a Figures for 2012 and 2013 are projections. Source: WTO Secretariat (2012).
Source: UN 2015
Trade statistics
- caveat emptor!
Main reasons for differences in trade data:
1. Time lags
2. Valuation
3. Types of goods excluded from trade statistics
4. Trade system (general/special)
5. Extent of re-export (entrepôt trade)
Trade: Valuation
M are valued usually at CIF
(Cost Insurance Freight)
X are recorded FOB
(Free on Board)
=> M value higher than X value by the
value of freight and insurance.
Trade classifications
SITC = Standard International
Trade Classification (5 digits)
HS = Harmonized System
(6 digits + national additional digits)
See e.g. http://unstats.un.org for details
World Trade Organization
(164 members)
Regional trade agreements
proliferated since 1990s
East Asia – regional trade agreements illustrated
Missing data?
…use mirror statistics
Rule of thumb:
M statistics generally more reliable
than X data
Trade in tasks…
measuring and analysing trade
in value added
WTO – MiWi
Made in the World initiative
=> OECD-WTO joint database
WTO MiWi link:
on-line resources, video,
and publications
http://www.wto.org/english/res_e/st
atis_e/miwi_e/miwi_e.htm
China – limited value added in export production: iPhone example
Limited value added in
Chinese production!
iPhone: 180 USD
Japan 34 %
Germany 17 %
South Korea 13 %
USA 6 %
China 3.6 %
Other countries 27 %
Foreign Direct Investment
- the neglected twin of trade?
Pros and cons of FDI vividly debated
over time…
To invest or
not to invest,
that is the
question…
Foreign investor
vs.
Recipient country
perspective
To accept or
not accept foreign
investment, that
is the question…
The Janus face properties of FDI
General consensus:
Properly managed,
potential advantages
of FDI
outweigh disadvantages
UNCTAD 2014
Global FDI inflows 1995-2014
(USD billion)
Source: UNCTAD 2015
FDI definitions
• IMF BoP Manual (5th ed 1993) and OECD
Benchmark Definition of FDI (3rd ed) 1996:
“the category of international investment that
reflects the objective of obtaining a lasting
interest by a resident entity in one economy in an
enterprise resident in another economy...”
(italics added)
Rule of thumb:
Threshold level ≥10 % ownership
=> Foreign Direct Investment!
Components of FDI Flows and Stocks
* Equity capital
capital raised from owners
* Reinvested earnings:
in addition to equity capital
* Intercompany loans:
loans extended by the paternal company
to the affiliate
Components of FDI flows and stocks
FDI statistics
- caveat emptor!!
Measurement
Approval vs. disbursements data
– two sides of the FDI coin
Gross vs. net measures
Directional principle
=> immediate investing country
Sectoral composition
=> ISIC (International Standard Industrial Classification)
FDI approval
vs.
disbursement
data I
FDI approval
vs.
disbursement
data II
PR China inward FDI 2012
Source countries (USD million)
PRC
111,716
%
Hong Kong
65,561
58.7
USA
Europe
Japan
2,598
6,290
7,352
2.3
5.6
6.6
British Virgin Islands
Cayman Islands
Samoa
7,831
1,975
1,744
7.0
1.8
1.6
Acronym
Fairly
Disappointing
Indicator (of international production)
FDI => represents bundle of capital, technology,
know-how, marketing channels, employment,
etc… cannot be captured in monetary terms…
Assignment 23 September 2016:
Trade and investment
Provide an overview and brief
analysis of developments in
international trade and investment
flows over the last decade in
[country: XXX]
Trade:
Limitation:
Merchandise trade (excluding trade in services)
Main indicators:
* Total XM values (trade balance)
* Composition of trade
* Major regional groups/countries:
source (M)/destination (X)
FDI:
Limitation:
Inward foreign direct investment (FDI)
excluding outward FDI and
foreign portfolio investments (FPI)
/foreign indirect investment (FII).
Main indicators:
Total size (approved/disbursed/BoP-concept)
Sectors (broad sectors, ISIC)
Source countries
Sectors/source countries
Flagship publications: Trade
UN International Trade Statistics Yearbook (online)
UN Comtrade (United Nations Commodity Trade Statistics Database)
WTO World Trade Report – themes
WTO International Trade Statistics + database at WTO webpage
IMF Direction of Trade Statistics (DOTS: quarterly + annual)
UNCTAD Trade and Development Report – themes
UNCTAD Handbook on Statistics
International Trade Center (intracen.org) (joint UN and WTO agency)
World Bank Trade Indicators (Country briefs; Trade at a Glance TAAG)
National sources and regional organizations, e.g.: ADB, OECD,
UNESCAP, UNECLAC, UNECA…
Flagship publications: FDI
IMF BoP statistics
U
N
C
T
A
D
UNCTAD World Investment Report
UNCTAD World Investment Directory (regional)
UNCTAD FDI database online + UNCTAD stats database online
UNCTAD country fact sheets/profiles
International Trade Center (intracen.org) (joint UN and WTO agency)
OECD International Direct Investment Statistics Yearbook
National sources and regional organizations, e.g.: ADB, OECD,
UNESCAP, UNECLAC, UNECA…
Country selection
Bolivia
South Korea
Egypt
Taiwan
Indonesia
Turkey
Mexico
Uzbekistan
Nigeria
Venezuela
Philippines
Vietnam