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Global Economy - Guest - 12-18-2003
<b>Dollar Sinks to New Low Vs Euro</b>
Wednesday December 17, 4:20 pm ET
By Gertrude Chavez
NEW YORK (Reuters) - The dollar plumbed fresh lows against the euro and sank against other major currencies on Wednesday, undermined by positive news from Europe and still hurting from expectations that U.S. rates will remain low for some time.
The euro broke through the psychologically important $1.2400(EUR=) level, reaching a record $1.2418 earlier in the session, before trading back down to $1.2397. This is the 12th record high of the past 14 trading sessions for the euro, which has surged almost 19 percent this year.
"The dollar's fall was a combination of a few things. The tax package that came out of Germany was a slight positive even though some people were slightly disappointed with the size of the tax cut. But nonetheless, Germany is actually doing something and that's really good," said Andrew Busch, global foreign exchange strategist at BMO Nesbitt Burns in Chicago.
German newspapers reported on Wednesday that the landmark German tax and welfare reform deal agreed this week will produce over 1 billion euros more in tax relief next year than earlier announced.
Busch also said Tuesday's weaker-than-expected consumer prices still weighed on the greenback, as the data suggested that inflation is quite tame and as a consequence U.S. interest rates will stay at their currently low level for quite some time.
The dollar index slipped to a seven-year low of about 87.79 on Wednesday as market sentiment on the currency remained bearish. The index (=USD), a measure of the dollar against a basket of currencies, was trading at 87.94.
Despite a quiet trading day, the dollar posted substantial downward moves against most of its major counterparts. Analysts say that as the end of the year approaches, the market tends to become illiquid, so any moves could jolt the currency.
Against the yen, the greenback fell slightly to 107.44 yen (JPY=), with traders on the alert of possible Japan intervention to weaken the Japanese currency.
The dollar hit a seven-year low against the Swiss franc of 1.2514 francs(CHF=), before edging up to 1.2542 francs, down 0.4 percent on the day.
Sterling climbed for a second straight day to an 11-year high of $1.7667(GBP=) before drifting back to $1.7655.
ECB'S ISSING SAYS EURO RATE BACK TO NORMAL
European Central Bank Chief Economist Otmar Issing was quoted on Wednesday as saying the euro's exchange rate against the dollar was back to normal, having reached the same level as around the time of its introduction of $1.17 in 1999.
Analysts also said one factor contributing to the euro's rise was a report from Market News International citing unidentified ECB sources saying the bank would not intervene unless the euro rose above $1.35.
"Things were relatively quiet this morning until this story came out suggesting from ECB sources that they did not see the need for any intervention unless the euro got to $1.35, and of course, whenever you put a number out there, the markets get very excited," said Robert Sinche, global head of currency strategy at Citibank in New York.
A spokesman for the ECB declined to comment on the report, following the central bank's standard policy not to comment on currency markets or on reports about possible market action.
But still the surging euro has provoked concern among European companies that export to the United States, citing the negative impact of the single European currency's strength on their bottom lines.
The co-chief executive of Airbus parent EADS said the company would have to take radical new cost-cutting measures and put additional pressure on suppliers if the euro rose to the $1.30-$1.35 level for a lengthy period of time.
The Norwegian central bank, meanwhile, made a surprise rate cut of 25 basis points to a record low 2.25 percent, sending the Norwegian crown to a six-week low against the euro of 8.2668 crowns (EURNOK=), and dropping it to 6.7061 crowns (NOK=) against the dollar.
Global Economy - Guest - 01-03-2004
<b>India joins ASIAN century</b>
http://us.rediff.com/money/2004/jan/03guest.htm
Remember the "Asian Century"? Back in 1998 it seemed to have ended even before it had begun. The so-called Asian Tigers had collapsed almost as suddenly as they had arrived on the world economic scene. Pessimists argued it was all a bubble and that rebuilding would take a decade or more.
......
Says the magazine editorial: "The fastest-growing technology companies in the world are Asian -- Wipro, Huawei, ZTE, Samsung and Infosys. And lately, we see that the buyers of what were previously American-funded regional infrastructures -- the Flag Telecoms, the Global Crossings and so on -- are Asian."
Any of those names sound familiar?
Global Economy - Guest - 01-04-2004
<b>ENSURING IT REMAINS INDIAN TERRITORY </b>
<i><b>ARUN SHOURIE</b> </i>
Part 1
In <b>infotech, we have a headstart so letâs not put up our feet</b>
Part II
<b>Indian infotech needs to partner east Europe, target China</b>
Global Economy - Guest - 01-04-2004
<b><span style='color:blue'><span style='font-size:12pt;line-height:100%'>The global Indian Takeover</span></span></b>
Ladies and gentlemen please take your seats. You are about to witness one of the greatest shows on earth: the gradual Indian takeover of global companies.
......
Global Economy - Guest - 01-08-2004
From : The Financial Times â London â A subscription Site :
<b>THE MECHANICS BEHIND CHINAâS CAPITAL INJECTION</b>
<b>The mechanism by which China injected $45bn in fresh capital into two of its large state banks is both unusual and revealing of future intentions.
The two banks, China Construction Bank (CCB) and Bank of China (BOC), each received $22.5bn from China's pile of foreign currency reserves late last month. But the money was neither physically transferred nor was it a gift, according to officials, bankers and academics.</b>
The funds are to remain in US dollars and stay invested in their current instruments, mainly US treasuries. However, the ownership of the funds has been transferred to the two banks, both of which must pay interest to a new state company, Central Huijin Investment Co, said Wang Zhaowen, a senior executive at the Bank of China.
âFrom the hour after we received this money we have had to start paying interest on it,â said Mr Wang, who did not specify the interest rate.
The government insisted that interest be paid on the funds so that the injection would not be seen as another âfree lunchâ for the banks. In this regard, the current injection is different from a Rmb270bn bail-out in 1998 and a Rmb1,400bn write-off of bad loans three years ago.
Officials said Central Huijin was eventually set to become a shareholder in the two banks by transferring what is now effectively a loan into equity, once CCB and BOC become joint-stock companies. They are now wholly-owned by the finance ministry but plan to sell stakes to investors at an unspecified time, possibly this year.
At that time the US dollar-denominated funds probably would be changed into renminbi, requiring the sale of dollar-denominated assets, academics said. To soften the potential shock to US capital markets, it was unlikely that the entire $45bn would be sold off simultaneously, they added.
On the issue of how the capital is to be used, current plans were revealing of future intentions. An official at the State Administration of Foreign Exchange (SAFE) and Mr Wang said the capital would not be spent on writing off bad loans, but instead be added to the banks' capital base - thereby boosting capital adequacy.
This will have several ramifications. The first is that the banks will be able to lend more. The second is that - in theory at least - the banks will become more attractive to potential strategic investors, helping to prepare for the sale of equity stakes to foreign and domestic investors possibly as early as this year.
Nevertheless, the banks' balance sheets may exhibit the unusual combination of robust capital adequacy ratios and high levels of non-performing loans (NPLs) for some time to come. One reason that the capital may not be used to write off NPLs is that such activities often require the liquidation of companies, something that it is politically sensitive in China.
Cheers
Global Economy - Guest - 01-15-2004
<b>Now US workers to be trained to replace Indians</b>! <!--emo&:roll--><img src='style_emoticons/<#EMO_DIR#>/ROTFL.gif' border='0' style='vertical-align:middle' alt='ROTFL.gif' /><!--endemo-->
Washington: The US state of Arizona has set aside $3 million as a grant to train its own workers and counter dependence on highly skilled foreign workers, particularly from India.
The H1-B Training Grant for the state's Maricopa county from the US Department of Labour's Employment and Training Administration is for a specific goal: to reduce businesses' dependence on Indian H1-B workers.
The grant programme, named after the H1-B visas that foreign workers need to work here temporarily, is designed to upgrade the skills of American workers so they can fill the high-skills jobs that often go to foreign workers , according to a report in the Arizona Republic.
Sixty per cent of those foreign workers are from India, and they generally have a master's degree. Employers pay fees to recruit H-1B visa holders. The government wants to lessen companies' dependence on these highly skilled foreign workers here on visas and to retain US jobs.
"Companies are saying that our domestic US workers do not have the skill set that foreigners do," said Suzanne Ledy, business projects coordinator for the Maricopa Workforce Connections Centre in Phoenix and the grant manager for the latest proposal.
"It (the programme) is to increase the skill level of our domestic workers so we can ultimately replace H1-B workers," she said. The county's workforce development division, which includes the free Workforce Connection Centres, helped 956 workers over the past two years with the first H1-B grant. The bulk of the money, 85 per cent, was used to upgrade the skills of existing workers; the rest was used to help laid-off workers.
The latest grant will be used for job-training programmes in H1-B-heavy industries: IT , manufacturing, engineering and biotechnology. Officials said companies that collaborated with the county on the grant included Honeywell, Apollo Group, Brooks Automation, Three-Five Systems and TGen.
Job-training programmes funded by the grant are offered at the county Workforce Connection Centres, employer sites and through other training providers.
To be eligible, employees and laid-off workers must have a bachelor's degree and at least four years of experience.
Global Economy - Guest - 01-22-2004
http://www.spacedaily.com/2004/040121014113.6r2kbp29.html
India to keep lion's share of global outsourcing business: analysts
NEW DELHI (AFP) Jan 21, 2004
India will continue to enjoy the lion's share of the vast global outsourcing business, despite growing competition from South Africa, China, South Korea and Mexico, analysts said.
India has the largest pool of English-speaking Graduates outside the United States who are willing to work for salaries that are far less than those paid in the West and will keep its advantages over the competition, they said.
"According to our conservative estimates, India enjoyed a 60 percent share of the international offshore call centre business in 2002," Evan Kirchheimer, analyst with British research group Datamonitor, told an outsourcing conference in New Delhi this week.
"That will go down to 52 percent in 2007 as South Korea, China, Mexico and South Africa make inroads into the business," he said at the conference, called "Contact Centre India" and attended by over 200 foreign company representatives.
........
Global Economy - Guest - 02-13-2004
<b>Indian job seekers beware</b>!
PRESS TRUST OF INDIA
New Delhi: Indian job seekers beware! With a large number of professionals from the US, UK and African countries seeking jobs in India, competition is bound to rise manifold in the job market here.
As an effect of outsourcing and job cuts in countries like the US and the UK, experts here say that skilled foreign workers from these countries are now exploring opportunities elsewhere. India for several reasons is fast emerging as one of the most favoured destinations for these professionals.
âContrary to what has been happening so far, the Indian job market is witnessing reverse migration with a lot of foreigners now looking for jobs in India. Although presently the number of such cases is not very large the process has started,â says Kris Lakshmikanth, founder CEO and managing director of Head Hunters (India), a recruiting firm.
âAs several foreign firms are setting up their offices here in India, experienced professionals from these countries are also on the lookout for jobs here and the trend is being witnessed by the top-tier recruitment firms,â Mr Lakshmikanth adds.
......
Global Economy - Guest - 02-13-2004
<!--QuoteBegin-Mudy+Feb 12 2004, 05:57 PM-->QUOTE(Mudy @ Feb 12 2004, 05:57 PM)<!--QuoteEBegin--> âAs several foreign firms are setting up their offices here in India, experienced professionals from these countries are also on the lookout for jobs here and the trend is being witnessed by the top-tier recruitment firms,â Mr Lakshmikanth adds.
...... <!--QuoteEnd--><!--QuoteEEnd-->
Err...I don't understand. Doesn't India have INS <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> that issues "H1-B" visas <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> and "haraa-pataas" too ? Can any Tom, Abdul and Harry walk in and get a job in India!
Global Economy - Guest - 02-13-2004
In India getting job permit is big pain, but company influence do wonders. Work permit are issued on annual renewal basis. In India no method to monitor those who over stay and get away without paying TAX.
Global Economy - Guest - 02-18-2004
<b>Exports fuel a 7 percent surge in Japan's economy </b>
...
ââWe reckon that 80 percent of the growth in exports in the last 12 months is due to Chinese demand,ââ said Jesper Koll, chief Japan economist for Merrill Lynch. ââThere is absolutely no question that here in Japan, all eyes are on China. If China slows down, Japan will crash.ââ
....
The currency interventions limited the dollarâs drop against the yen to 12 percent in the past year. Even so, the yen is trading at a rate of around 105 to the dollar, a three-and-a-half-year low for the U.S. currency.
...
Global Economy - Guest - 02-19-2004
<b>US anti-dumping case against Indian shrimp worsens</b>
Global Economy - Guest - 02-20-2004
Might not be the right thread...nevertheless:
Today's Wall St Journal article (subscription site, posting in full):
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->THE WALL STREET JOURNAL, FEBRUARY 19, 2004
<b>
[url=http://online.wsj.com/article/0,,SB107714681116133212,00.html
]Investors Find the 'Other' Billion-Person Nation[/url]
It's India, and Portfolio Managers Say It Might Outshine China; Foreign Investing Is Opening Up <!--emo&:cool--><img src='style_emoticons/<#EMO_DIR#>/specool.gif' border='0' style='vertical-align:middle' alt='specool.gif' /><!--endemo-->
By CRAIG KARMIN </b>
Staff Reporter of THE WALL STREET JOURNAL
At a time when China commands more attention from investors than any other emerging market, many U.S. fund managers are starting to take a closer look at the other billion-person nation: India.
India has received only a fraction of the money that corporations have invested in China, but portfolio managers say India is in a number of ways the more attractive stock-market investment.
The South Asian giant has spawned a greater number of companies that can compete on a global scale and whose management style more closely resembles their U.S. competitors. That list includes Indian software firms such as Infosys Technologies and Wipro and pharmaceutical companies such as Dr. Reddy's Laboratories, all of which trade in New York. Investors also credit India with having better corporate disclosure, stronger property rights, and a more investor-friendly legal system than China.
India is about a dozen years behind China in liberalizing its economy, lowering tariffs, and opening up industry to foreign investors. But it is beginning to close that gap. Just recently, in fact, the government raised the ceiling on foreign investment in private banks and abolished foreign limits on private oil exploration and marketing companies.
New Delhi is forecasting Indian economic growth of about 8% for the fiscal year ending next month -- on par with China's official growth forecast for 2004 -- and it has emerged as the world leader for outsourcing and call centers.
Some economists say India may be entering a period of rapid growth reminiscent of China's powerful economic expansion of the 1990s, enabling India to evolve over the next few years from a fringe to a more mainstream emerging market. Investors have been encouraged to see the government running on a market-reform platform ahead of the April parliamentary elections and anticipate an acceleration in reform measures after the elections.
"India looks like it is at the beginning of a multiyear upswing," says Mark Madden, who manages the Pioneer Emerging Markets Fund and counts India as one of his three top country picks this year, along with Brazil and Turkey.
Foreigners invested a record $7 billion in Indian stocks last year, which helped the rupee appreciate 5% against the U.S. dollar in 2003 as the Bombay Sensex Index jumped 82% in dollar terms. (So far this year, the Sensex is up 3.2%.) Foreign fund mangers raised their stakes in India's 10 biggest companies by 7.3 percentage points to 35.2% of shares outstanding, according to Morgan Stanley.
Some large global funds with limited emerging-market investments are taking a fresh look. "A lot of our guys [have been] getting excited about what was going on in India," says Shigeki Makino, senior global portfolio manager for Putnam Investments.
His fund last year bought shares of Reliant, a conglomerate with telecom and petrochemical businesses, marking the fund's first Indian purchase in years. He cited the stock as a way to play the country's economic growth and a cheap valuation relative to global peers, though he adds that most Indian stocks have too small a market capitalization for large global funds that like to take big positions.
And even if the optimistic forecasts come true, India still poses plenty of risks. While there has been a recent thaw in tension between India and Pakistan, any future conflict could weigh on the market.
In the U.S., a political backlash against the outsourcing of jobs to India has been gaining momentum. Recently, the Senate passed an amendment restricting companies from using offshore workers for government-contract work. State legislators in New Jersey and Indiana have passed similar measures, sparking an angry response from New Delhi and raising concerns about a potential trade war. Both the Democrats and Republicans are already making this a campaign issue.
<b>Populist Opposition</b>
In India, the ruling coalition could face increasing populist opposition to market overhauls if the economic gains aren't seen as equitably distributed and India's widespread poverty doesn't ease. Also, poor infrastructure -- from roads and highways to ports and power supply -- must be improved to cut transportation costs and boost gross domestic product.
Even if India's economy does achieve a higher level of sustained economic growth, that alone doesn't make it a wise investment. "Investors commonly fall into the trap of equating fast economic growth with strong stock-market performances," says Andrew Milligan, head of global strategy for Standard Life Investments in Edinburgh, Scotland. "That need not be the case."
Look no farther than China: Despite persistent annual economic growth of 7% to 10% over the past decade, the stock market has seen no gains over that period and lots of volatility. In fact, the Morgan Stanley Capital International China Index tumbled 75% from its inception in 1993 through the end of 2003.
Yet some investors maintain that there are compelling reasons to expect something better from India, even if the stock market stumbles in the near term following last year's big gains.
Most of the Chinese companies that went public in the 1990s were bloated state-owned enterprises. They were selected not because they were the most profitable, or attractive, candidates but because they had political connections or Beijing wanted to use the stock market to help bail them out. They remain majority state-owned.
In India, by contrast, about 60% of publicly traded companies have no state ownership, says Arindam Bhattacharjee, a portfolio manager at Emerging Markets Management in Arlington, Va.
That percentage is poised to rise as privatization and restructuring gather steam. For instance, Maruti Udyog, India's largest auto maker, started in 1977 as a joint venture between the government and Japan's Suzuki Motor. But the government has been selling down its stake as part of a plan for the auto maker to be wholly owned by Suzuki and shareholders. Maruti said it sold a record 49,140 cars in January, a 30% year-over-year increase, and the shares have more than tripled in price since the initial public offering of stock last summer.
<b>Not Cheap?</b>
After last year's rally, some say that Indian stocks no longer look cheap. Mr. Madden at Pioneer points out, however, that some of the most expensive have the best growth rates. Infosys, for example, trades at 23.4 times its estimated earnings for the fiscal year ending in March 2005, but earnings per share are projected to grow 26% for that period.
Still, he favors banks that are positioned to benefit from India's economic growth. In recent years, they have been freed from government instructions to lend to the agricultural sector at limited rates and are turning their focus to the more profitable consumer-loan market. He likes Punjab National Bank, which trades at less than seven times estimated earnings for the fiscal year ending in March 2005 and has projected earnings growth of 16% for that period.
Mr. Bhattacharjee notes that unlike China, where few companies have much presence overseas, several Indian companies rely on exports for the bulk of their revenue. Bharat Forge, an auto-components maker, counts on exports for 60% of its sales, with about half of that foreign revenue coming from the U.S. The generic drug maker Ranbaxy gets about 50% of revenue abroad, mostly from U.S. sales.
<!--QuoteEnd--><!--QuoteEEnd-->
Global Economy - Guest - 03-05-2004
<b>The Historical Struggle for Dominance in World Trade</b>
Global Economy - Guest - 03-30-2004
<b>Indian economy doing well: Morgan Stanley</b>
Press Trust of India
New Delhi, March 29: Appreciative of India's economic performance, international investment banker Morgan Stanley said on Monday the domestic economy was more integrating with the global ones and corporate houses were focusing on cutting cost to be competitive.
"India is certainly performing well...The economy is increasingly getting integrated with the global economy," Morgan Stanley, Chief Economist and Managing Director Stephen Roach, said here.
Speaking at a CII seminar on 'Global Re-balancing: Day of Reckonining,' he said India's corporate houses were more focused on cutting costs than ever before and outsourcing was one of the options before the country to leverage growth.
He indicated that outsourcing of manufacturing to India was quite possible if the bottlenecks were removed.
Moreover, he said, there was ignorance among the global investors as far as the economic reforms were concerned.
Talking about the growing debate on the issue of outsourcing, Roach said the Presidential elecions in the US had raised it to political level.
"Outsourcing has become more of a politicial issue in the US," he said, adding that the future was dependent on who would win the election.
<b>On the Chinese economy, he said it was destined to slow down since there had been overheating on infrastructure and credit. </b>
He said re-balancing in the global economy was inevitable since the dollar was likely to weaken in the international market because of its high current account deficit
Global Economy - Guest - 04-12-2004
T<b>he Rupee takes wing</b>
<i>The RBI watches from the sidelines as the rupee goes up, up and away. Is this the dawn of a new era? And should we celebrate or fear the strong rupee?</i>
Global Economy - Guest - 06-19-2004
<b>Poor countries need to form a trade bloc </b>
June 19, 2004
Perhaps the greatest challenge the world faces on globalisation is ensuring it works to the benefit of the developing countries, writes Ross Gittins.
And, as UN Secretary-General Kofi Annan said this week, the lack of a development-friendly trading system is one of the main factors hindering the integration of developing countries into the global economy.
It's up to the richest countries - the United States, the European Union and Japan - to make the <b>international trading system more development-friendly by agreeing to significant reductions in agricultural protection in the present Doha round of trade negotiations in the World Trade Organisation. </b>
With the developing countries now dominating the numbers in the WTO, the <b>Doha round will collapse in failure unless the rich countries agree to accept more of the agricultural goods that are the main things the poorest of the developing countries have to trade</b>.
Fortunately, there are signs of a new willingness to compromise on the part of the Europeans. In just the past few weeks, the Doha round has come back to life.
But while the justice of the developing countries' demands can't be denied, it would be wrong to think that increased trade with the rich countries is the only way the poor countries can make a quid out of globalisation.
No, the developing countries have a lot to gain by increasing the trade between themselves, as our Department of Foreign Affairs and Trade's Economic Analytical Unit points out in a recent report, South-South Trade.
<b>If you've fallen for all the talk about how Australia is the only country to be pure on protection and how there's "no level playing field", it may surprise you to know that, on average, the developing countries have cut the level of their tariffs (import duties) by two-thirds since 1983.</b>
These reductions would help to explain why, over the 20 years to 2001, the developing countries have increased their share of global trade from about a quarter to a third.
Despite having been cut so heavily, the average tariff rate applying to imports to the developing countries is still 12 per cent - and that's more than three times the level of tariffs applied by the developed countries.
So there's still plenty of scope for developing country tariffs to come down and for those countries to gain the "benefits of trade".
One legitimate criticism to be made of the protection-reducing process that's been running since the end of World War II under the auspices of what's now the WTO is that, until the '90s, its focus was on reducing the barriers to trade in manufactured goods between the rich countries, not on increasing trade between the rich and poor countries.
In the jargon of the trade debate, it increased trade not between the rich countries of the (predominantly) northern hemisphere and the poor countries of the southern hemisphere, but rather north-north trade.
There's nothing wrong with increasing north-north trade, of course; it's just that it doesn't spread the benefits of trade to the people of the world who could benefit most.
<b>But here's the point: there's nothing wrong with south-south trade, either. There's no reason the developing countries shouldn't make themselves mutually better off by increasing the trade between themselves</b>.
And here's the funny thing: when you examine the developing countries' remaining average 12 per cent tariffs, you find they're aimed more at keeping out goods from other developing countries than at keeping out stuff from the rich countries.
"Developing country tariffs often are higher on products that other developing countries are likely to export," the DFAT report says. "Around 70 per cent of the tariffs faced by developing country exporters are applied by other developing countries."
Part of this is the problem of "tariff peaks" - the tendency for a few industries to retain very high tariffs while all the other industries' tariffs have been chopped back.
In the Australian tariff-reducing process, our two tariff peaks were for TCF (textiles, clothing and footwear) and PMV (passenger motor vehicles). We're still in the process of trimming those two peaks back to the 5 per cent-or-less level the rest of the manufacturing sector has been at for some years.
Protection is all about giving particular local industries advantages you don't give to other local industries. When you give every industry the same protection, no one gets any.
It follows that leaving islands of high protection while you cut back everyone else significantly limits the gains you were seeking by reducing protection in the first place.
Although tariff rates in the developing countries average 12 per cent, more than a quarter of those countries have more than 40 per cent of tariffs at 15 per cent or higher.
And get this: tariff peaks on industrial products are most prevalent in textiles, clothing, footwear, leather goods and transport equipment.
It would be wrong to think there's been no growth in south-south trade. Such trade in goods grew by 10 per cent a year over the 10 years to 2001, twice as fast as world trade.
This growth took south-south trade's share of world trade in goods from less than 8 per cent to more than 12 per cent.
About half of the developing countries' exports of textiles go to other developing countries, and a fifth of their exports of clothing go to other developing countries.
If you find that strange, you don't appreciate the significance of "intra-industry" trade. Much of the growth in trade in recent decades has been between the same industry in different countries.
It's about the way the components of a car or personal computer or television set can be produced in five different countries, with the assembly occurring in a sixth. It's what transnational corporations do, and it's a key element of globalisation.
And the point is that the more developing countries maintain high barriers to trade with other developing countries, the more they cut themselves out of participating in the development of these global production chains.
You may have gathered by now that most of the growth in south-south trade has been trade in manufactured items rather than agricultural goods. It follows that much of the growth has been in Asian developing countries, including China.
It's the poorest of developing countries, particularly those in Africa, that have been missing out because of their continuing dependence on agriculture.
But here's the punchline. The World Bank estimates that developing countries stand to realise gains worth $US31 billion ($45 billion) a year if other developing countries eliminate their tariffs on manufactures, and a further $US31 billion a year if they remove their barriers to agricultural trade.
Ross Gittins is the Herald's Economics Editor.
Global Economy - Guest - 06-19-2004
If poor countries who have a need to protect their agri industries do so with high tariffs on agri products does it matter if the competing products come from another poor country from africa or rich country from europe ?
Global Economy - Guest - 06-19-2004
Not expert just my take -
Main purpose of high tariffs on agri products is to protect local product. But when competing country start dumping product in other country it will put pressure on other country, either to reduce price or take cover of regulation. Lot depends on supply and demand.
Global Economy - Guest - 06-23-2004
Cover story on Business 2.0
India:The New Land of Opportunity
(note: url recycles - paid subscription access after few weeks)
Print edition has some cool pictures - cover of Taj Mahal with the pond reflection of a $ and a huge caption stating "<b>It's a Global Economy, Stupid</b>". Center piece American Flag made of Indian fabric/design/art is worth archiving. <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo-->