GLOBAL TRADE & BALANCE

OF PAYMENT

SHIVALI KAMAL
M.B.A+PGPM
2nd SEM
Rbs,Hyd.
 CONTENT

 Trade Performance Index

 Competition Policy
 Paction-The Model international sale contract
 Balance Of Payment
 The Balancing Act
 Liberalizing the Accounts
 Analysis of INDIA’s BOP
World Trade grows faster than GDP:-Global
Trade in 2002-over $2,000,000/sec
Commodity Dependency-Value Added manufacturing-Tech
based products-High Tech based services.
 Trade Performance Index

The TPI Comprises a set of 24 quantitative indicators benchmarking

the export performance of 184 countries:-

 It ranks 14 different product sectors in each country like wood

products,food,chemicals etc.

 It summarizes performance indicators into current index as well as

change index.

 It throws light on comparative & competitive advantages.

 Competition Policy

It is important for developing countries in order to counter the

potential of privatization, deregulation , liberalization & the inter-
national merger movement.
Policies adopted by developed countries are not appropriate
for developing countries . Because:-
 Developing countries’ perceptions towards Policy are concerned
with - Dynamic efficiency & ‘Optimal degree of competition’ to
promote Long-term growth.
 Optimal combination of competition and co- operation between
firms .
So, they must establish an international competition
authority to prevent restrictive business practices & competition-
reducing actions of MNCs
 PACTION -The Model International Sale Contract

Web-based application which allows a buyer & seller to prepare,

negotiate & contracts for the international sale & purchase of goods
online.
The contracts are based on the International Chamber of Commerce’s
model international sale contract, which provides a clear & concise set
of conditions , balancing the interests of both the parties. It was
developed by Allagraf Limited to provide easy access to contracts.
Benefits:-
 Contract text are concise & deliver only relevant clauses.
 Offers help, advice and further related readings.
 Convenience of making partners over the Web & provides ability to
sign contracts online, using a secure & ICC approved digital ID.
 Tracking of contract revisions.
 Secure storage of contracts .
 BALANCE OF PAYMENT

The IMF definition: "Balance of Payments is a statistical statement that

summarizes transactions between residents and non- residents
during a period.
The BOP is determined by the country's exports
and imports of goods, services, and financial capital, as well as
financial transfers.
 It is an Indicator of a country’s status in International Trade
 It is a method to monitor all international monetary transactions at
a specific period of time.
 Theoretically, the BOP should be ‘ZERO'. But we observe it as
deficit or surplus, called as favorable (if Export> Import).
Categories:-
(a) The Current Account
(b) The Capital Account
(c) The Financial Account
 The Balancing Act

 Current account =Capital A/C +Financial A/C (rare situation)

 Fluctuating Exchange rates add to BOP discrepancies.
 In case of a deficit , the difference can be funded by the capital A/C.
 It will appear as an inflow of foreign capital in the BOP.

Liberalizing The Accounts

 Capital flows into market in 1980s:-USD 50 million to USD 150 million
 Developing countries were urged to lift restrictions on capital & financial
transactions to take advantages of capital inflows.
 Formation of more transparent & sophisticated market for investors , but
also given rise to FDI.
 Liberalization can facilitate less risk by allowing diversified markets.
Import (US $ 142 billion for India) sources-
China(10.7%),USA(7.8%)
Export (US $103 bn) markets - USA (17.2%),
UAE (8.6%) & China (6.7%)
DIRECTION OF INDIA'S FOREIGN TRADE
 Current Analysis of INDIA’S BOP

 Export growth turned negative during Q3 of 2008-09 for the

first time after 2001-02 due to global economic slowdown.
 The current account deficit at US$ 14.6 billion during Q3 of
2008-09 was the highest quarterly deficit since 1990.
 For the first time since Q1 of 1998-99, the capital account
balance turned negative during Q3 of 2008-09 mainly due
to net outflows under portfolio investment, banking capital
and short-term trade credit.
 India’s merchandise exports during April-November 2008
increased by 18.7 percent while imports recorded a higher
growth of 32.5 per cent due to rise in POL import.
Any Queries
Thanks for your
attention

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