World Trade Report 2014Class: International Business

Professor: oh, Joon Seok

Presenter: Kuy, Daranita

Content• Developed vs. developing economiesI. Worldwide Convergence in GDPII. What Factors Determine Growth?III. Rising Share of Developing Countries in the World

EconomyIV. Heterogeneity of Developing ExperienceV. Trade Opening in Developing CountriesVI. Conclusion

“developed” vs. “developing”

• Countries categorized as either “developed” vs. “developing” countries

• Developed economies: 27 members states of EU, non-EU Western European countries and territories.

• Developing economies:• Least-developed countries (LCDs)• G-20 countries• Other developing countries

I. World Convergence in GDP

• Faster growth in developing world and slower growth in developed world

(a) Strong growth in developing economies since 2000• Exporters of natural resources benefits from large increases in

commodity price

(b) Diverging rates of income convergence among developing countries• Per capita real GDP has increased dramatically which boost up the

whole economies, 1990-2011• Average per capita income in developing economies as a whole

increase by 54%• G-20 developing economies = 61%• LCDs = 43% • Other developing economies = 43%

II. What Factors Determine Growth?

(a) Resources, technology, institution• Resources:• Accumulate resources and investment in HR• Utilize these resources

• Technology:• Create new investment opportunities• Increase productivity

• Institution• Incentive for firm to invest in human and physical capital or R&D

(b) Trade and growth• Improve efficiency of its resource allocation• Extend the size of markets • Allows us to select the most productive firms in market; variety of choices

The graph shoes that a rising share of world trade in GDP has been accompanied by raising per capita GDP

since 1980

III. Rising share of developing countries in the world

IV. Heterogeneity of Development Experience

• Rising of output and higher incomes not only increase growth development but also better standard of living and higher income

(a) Increase human development indicators and income growth• Well-being, nutrition and opportunity/social equity

(b) Growth and inequality within countries• Kuznets Curve:1. Migration of rural people to cities increase, therefore GDP growth also increasing inequality.2. At certain point, GDP has reach certain level, inequality falls then welfare states allows for better redistribution policies

(c) Environment impact of economic development

Environment Kuznets Curve ((EKC)

1st: Production changes

2nd: Growing preference for environmentally friendly goods

3th: institutions improves, better capacity to enforce regulations to address environment problems

4th: Higher GDP enhances, exploits economies of scale associated with pollution through technologies

V. Trade Opening in Developing Countries

• Increasing of trade opening in developing countries has dramatically changed the pattern of international trade

• G-20 countries have reduced their MFN by over 5%, committed to a “bound” rate over 80% of their tariff lines and reduced bound rates by approximately 10% in the last decade

Ex: China’s average tariff was 40% in 1985 but under only 10% today

• Trade opening in G-20 developing economies has expanded export opportunities for the economies in general and for LDCs in particular.

VI. Conclusion

• Show the rapid rise of large developing countries over the past 15 years and their increased important in international trade

• Trade opening has been an integral part of this process, which enable us to access to today market and enormous opportunity for other developing countries

• The share of developing economies in world output increased from 23% to 40% between 2000-2012, and the share of these countries in world trade also rose from 33% to 48%

THANK YOU!!!