GLOBAL TRADE AND MARKETING

Transcription

1 GLOBAL TRADE AND MARKETING A Nepalese Perspective Bijendra Man Shakya Associate Professor (Economics) Shanker Dev Campus Tribhuvan University RATNA PUSTAK BHANDAR Kathmandu, Nepal

2 CONTENTS List of Boxes List of Tables and Figures PREFACE xiv xv xvii PART ONE: INTRODUCTION Chapter I An Overview of Global Trade Meaning and nature of global trade Scope of global trade Global trade at a glance Global trade and business firm 12 Plan of the book 13 Notes 13 Chapter II Domestic Trade and Global Trade Factor immobility and Variation in factor prices Use of different currencies Politically different units Trade barriers Separate markets Balance of payments Greater distance and higher transaction costs International economic problems 20 Notes 20 Chapter III Role of Global Trade in Economic Development Advantage of specialization Income and employment opportunities Progress in technology Attraction of foreign Investment Basier access to raw materials Expansion of external markets Fostering of healthy competition 27 Notes 28

3 Chapter IV Importance of Global Trade to Business Firms Increasing sales and profits Exploiting excess production capacity Tapping the growing global markets Reducing dependency on domestic market Enhancing competitiveness Expanding research and development Getting international feedback on technical Information 33 Notes 33 PART TWO: THEORETICAL BASIS OF GLOBAL TRADE Chapter V Trade Theories and Terms of Trade Absolute Cost Theory Comparative Cost Theory 40 Comparative cost differences and gains from trade 41 Equal exchange ratlos and impossibility of trade 43 Assumptions and criticisms Opportunity Cost Theory 45 Opportunity cost and production possibilities curve 46 Constant opportunity cost and gains from trade Factor Proportions Theory 50 Reasons for comparative cost differences 50 Relative differences in factor proportions and factor endowment 50 Leontief Paradox Alternative trade theories 53 Similar Incomes and Tastes Hypothesis 54 Technology Gap and Product Life-cycle 55 Intra-Industry Trade Terms of trade 56 Factors affecting the terms of trade 59 Problems in measuring the terms of trade 60 Notes 61 Chapter VI Trade Barriers Tariff 64 Types of tariff 65 Tariff schedule 66 (vi)

4 Preferential tariff 67 Retaliatory tariff 68 Effects of tariff and partial equilibrium analysis Non-tariff barriers (NTBs) 71 Quota 71 Exchange control measures 74 Technical and administrative regulations 75 Voluntary Export Restraints (VER) 76 Other administrative barriers 77 Notes 77 Chapter VII Commercial Policy Free trade policy 79 Arguments for free trade 80 Arguments against free trade Policy of protection 84 Arguments for and against protection Commercial policy in developing countries 87 Notes 89 Chapter VIII Balance of Trade and Balance of Payments The meaning and purpose Balance of payments accounting Composition of balance of payments Balance of trade and balance of payments Disequilibrium in balance of payments Correction of balance of payments disequilibrium 99 Notes 102 PART THREE: NEPAL AND GLOBAL TRADE Chapter IX Foreign Trade Structure of Nepal Performance of the trade sector Composition and direction 108 Vulnerable export 112 Uncontrollable import 113 Mounting trade deficit 114 Notes 115 (vii)

5 Chapter X Problems and Prospects in Nepal's Trade Sector Problems in trade sector 117 Commodity-country concentration 117 Narrow export base 118 Lack of infrastructures 119 Weak standardization and conformity assessment facility 119 High transaction costs 120 Weak international demand 121 Non-tariff barriers 121 Cumbersome trade procedure 122 Ineffective and inconsistence policy measures 123 Absence of public-private sector partnership Prospects in trade sector 124 Comparative and competitive advantage 124 Benefits of policy measures and support 126 Proximity to the world's two fastest growing economies 127 Access to preferential market entry 130 Generalized system of preference (GSP) 130 Market access privilege under SAFTA 133 Preferential market access to India 133 Notes 134 Chapter XI Review of Nepal's Trade Policy Protectionist regime Begirming of trade policy reform Liberalization of trade 143 Elimination of trade barriers and deregulation of licensing 143 Improvement of export promotion strategy 143 Liberalization of foreign exchange system Integration with global trading system Trade Policy (2009) Nepal Trade Integration Strategy (NTIS) 150 Notes 153 Chapter XII Trade Policy Instruments Import control measures Export promotion measures 159 Duty-drawback scheme 159 Bonded warehouse facility 160 (viii)

6 Export subsidy 161 Freight subsidy 163 Taxrebate 163 Export processing zones (EPZs) Limitations of export incentives 164 Notes _ 165 Chapter XIII Trade Support Institutions Trade Board and Business Forum Trade and Export Promotion Centre (TEPC) Federation of Nepalese Chambers of Commerce and Industry (FNCCI) 171 Notes 174 Chapter XIV Bilateral Trade Relations Trade relation with India 175 Composition and direction of Nepal's trade with India 176 Trade relations in retrospect 177 Trade impasse with India 178 Treaty of Trade (1991) 179 Towards free trade agreement 180 The latest development Nepal - China Trade relations 183 Notes 184 Chapter XV Regional Free Trade Arrangement Phases of preferential trading arrangement 187 Preferential Trading Arrangement (PTA) 188 Free Trade Area (FTA) 188 Customs Union 188 Common Market 189 Economic Union Trade creation and trade diversion effects Limitations of FT As Proliferation of free trade areas Nepal's affiliation to regional FT As 192 SAFTA and Nepal 192 BIMSTEC and Nepal 198 Notes 201 (ix)

7 Chapter XVI Multilateral Trading System and WTO Emergence of the multilateral trading system 204 Trade negotiations under GATT 204 Transformation from GATT to WTO WTO and the multilateral trading system 206 Principles of WTO 206 Structure and decision-making process of WTO 208 WTO Ministerial Meetings Nepal and WTO 212 Commitments and obligations 213 Implications of WTO membership 215 Notes 217 Chapter XVII Trade Procedures and Documentation Export procedure and documents Import procedures and documents Problems in trade procedures 232 Notes 234 Chapter XVIII Transit System and Transit Agreements Transit process and documentation Transit agreements 239 Nepal-India Transit Treaty 239 Nepal-Bangladesh Transit Treaty Problems in transit trade 242 Notes 244 Chapter XIX Multimodal Transport System and Dry Ports Advent of the multimodal transport system in Nepal Inland Container depots (ICDs) and dry ports 248 Advantages of ICDs 249 Notes 250 PART FOUR: GLOBAL MARKETING Chapter XX Introduction to Global Marketing Concept and nature of global marketing Importance of global marketing Global management orientation Organization and management of global marketing 257 Export Manager 257 (x)

8 Factors affecting export organizational set-up 258 Alternatives for organizational structure Management of export firms in Nepal Driving and restraining forces affecting global marketing 261 Notes 264 Chapter XXI Global Marketing Environment Economic environment 265 Economic systems and economic freedom 266 Stages of economic development and market development 267 Global trade alliance and economic Cooperation 268 European Union (EU) 269 North American Free Trade Agreement (NAFTA) 271 Asia-Pacific Economic Cooperation (APEC) 271 Association of South East Asian Nations (ASEAN) 272 South Asian Free Trade Agreement (SAFTA) 273 Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC) 274 Global trading system and emergence of WTO Political environment 276 Government's attitude and national sovereignty 277 Political risks 278 Expropriation, conßscation, and nationalization 278 High tax and tariff regimes 279 Other political risks 279 Reducing the political risks Legal environment 280 International legal system 280 Important global business legal issues 281 Intellectual property rights 281 Licensing and trade secrets 282 Antitrust laws 282 Bribary and corruption 283 Dispute resolution in global marketing 283 Arbitration of commercial disputes 284 Mediation 285 Jurisdiction clause 285 (xi)

9 Regulatory environment 285 WTO and Dispute Settlement Mechanism Cultural environment 288 Aspects of society and culture 288 Analysis of cultural factors 291 Hierarchy of needs 291 Seif reference criteria 292 Environmental sensitivity 293 Impact of culture on marketing of industrial and consumer products 293 Gross cultural complications and their solutions 294 Notes 295 Chapter XXII Global Market Flanning and Entry Strategies Flanning for global markets Selection of global markets Alternatives for global market entry strategies 300 Exporting 300 Piggyback arrangement / 304 Licensing and franchising 304 Joint venture 305 Fully-owned manufacturing 306 Notes 306 Chapter XXIII Global Marketing Mix Strategies Product development strategy 307 Standardized products versus differentiated products 308 Quality control and product Standards 309 International quality system and ISO Benefits of ISO 9000 quality systems 311 Brand management and strategy 312 Global branding strategy 312 Packaging and Green Marketing 314 Green marketing and global marketing 315 Product positioning Pricing for global markets 318 Factors affecting the pricing decisions 319 Global pricing approaches 321 Cost-oriented pricing 321 Price escalation 323 Strategie approaches to price escalation 325 Demand and competition oriented pricing 326 (xii)

10 Dumping. 326 Administered pricing and countertrades 329 Transfer pricing Distribution in global marketing 332 Channel structures and options 334 Channel selection and motivation Global promotion 337 Global promotion challenges 338 Promotional campaign 339 Global advertisement 340 Creative challenges in advertising 340 Media availability 341 Factors to be considered in advertising 343 E-marketing 343 Drivers of e-commerce 344 Development of e-commerce 345 Notes 345 Chapter XXIV Targeting Global Customers Characteristics of regional markets 348 European markets 348 Western Europe 348 Eastem and Central Europe 349 North America 349 Asia Pacific 350 China, 351 India 352 Japan 353 Middle East Global buyers and buying decisions 354 Customer value and value equation 354 Diffusion of innovations 356 The adoption process 356 Categories of adopters 357 Characteristics of Innovation 358 Notes 359 REFERENCES (xiü)