ROLE OF INTERNATIONAL TRADE IN ECONOMIC GROWTH
22:53 Posted in International Economy Edit This 1 Comment »
A. Effects of International Trade on Economic Growth
In the context of the economy of a country, one that stands out is the discourse of economic growth. Although there is also another discourse on unemployment, inflation or rising prices of goods at the same time, poverty, income and so forth. Economic growth is important in the context of a country's economy as it can be one measure of growth or achievement of the nation's economy, although it can not be denied that other measures. Wijono (2005) states that economic growth is one of the indicators of development progress.
One of the things that can be used as a driving force for the growth is international trade. Salvatore said that trade can be an engine for growth (trade as engine of growth, Salvatore, 2004). If international trade activity is the export and import, then one of the components or both can be a driving force for growth. Tambunan (2005) states in the early 1980s Indonesia was set in the form of export promotion policies. Thus, the policy makes exports as a driving force for growth.
When the subject of international trade, capital movements between countries of course, an important part is also to be studied. In line with the theory advanced by Vernon, capital movements specifically for direct investment, beginning with the international trade (Appleyard, 2004). When there is international trade in the form of exports and imports, will bring the possibility of moving the production. Increasing the size of a growing market that is characterized by an increase in imports of goods in the country, will bring up the possibility of producing the goods in the importing country. Chances are it is based with a comparison between the cost of production in the exporting countries plus the cost of transportation costs incurred when the goods are produced in the importing country. If the cost of production in the exporting countries plus the transportation cost is greater than the cost of production in importing countries, then investors will relocate its production in importing countries (Appleyard, 2004).
B. Effects on Production
Foreign trade has a complex effect on domestic production sector. In general we can say that the influence of four different working through the:
1. Specialization of production.
2. The increase in "investing surplus"
3. "Vent for Surplus".
4. The increase in productivity.
Specialization
International Perdagagangan encourage each country towards specialization in the production of goods in which the country has advantages komperatifnya. In the case of constant-cost, there will be a full production specialization, whereas in the case of cost-increasing specialization occurs not full. The thing to remember here is that specialization itself does not bring benefits to the public except when accompanied by the possibility to exchange their products with other items that are needed. Plus trade specialization can increase the real income of the community, but specialization without trade may actually reduce welfare.
But if the trade is always beneficial specialization plus a country? In the description above can menyimpulakan, the CPF after the trade is always higher or at least equal to the CPF before perdangangan. This means that the trade is not going to make the real income is lower, and quite possibly make it higher. But note that this kind of analysis is "static", that does not take into account the effects that arise when circumstances change or evolve, as we encounter in reality.
There are three conditions that allowed specialization and trade is not always beneficial to a country. Keaadan third is related to the possibility of too much specialization of production, meaning that the production sector is too concentrated on one or two items only. This situation is:
a. The instability of foreign markets
Imagine a country because of the encouragement of specialization of trade, only to produce rubber and wood. If the world price of rubber and timber fell, the domestic economy will automatically fall. Another case where the state is not only berspesialsasi proficiency level in both goods, but also produce other goods both for export and for domestic needs alone. The fall in the price of one or two items might be offset by naiknnya haga other goods. This contradiction or konfik between specialization with diversification. Specialization unusual increase the real income of the maximum, but with the risk of earnings volatility but the consequences have to sacrifice some of the revenue increase of specialization. Now almost all countries in the world recognize that specialization too far (although based on the principle of comparative advantage, as indicated by economic theory) is not a good state. The benefits of diversification should also be taken into account.
b. National security
Imagine a country can only produce one item, such as rubber, and the material must import all its food needs. Although rubber is a branch of production in which the country has the highest comparative advantage, so as to improve CPFnya increasingly likely, of course, this situation is not healthy. In case of war or inhibit any foreign trade, which is obtained from food for the country? It is clear that the pattern of production as dictated by comparative advantage does not have to be followed if it turns out the viability of the state itself is not at all assured.
c. Dualism
History of international trade developing countries, especially during they are still a colony of European countries, characterized by the emergence of export-oriented sectors of the world market and that has little to do with the traditional sector in the country. Export sector as if it is not part of the country, but part of the world market. In these circumstances no international specialization and trade benefit the domestic economy. The situation in developing countries after their independence, it has shown a change. But it is often not a fundamental change. Export sector "modern" still can not seem to support the sector in the country that "traditional".
All three of the above situation is a warning for us not granted and unreservedly accept the proposition that the Neoclassical trade specialization and trade is always beneficial in any keaadaan. But on the other hand, the description above is not merupkan evidence that the benefits of trade can not be learned in reality. The theory of comparative advantage still has the essence of truth, which is that a country should take advantage of the opportunity komperatifnya and "transformation through trade". It's just to note that in certain cases other considerations should not be forgotten.
Investible Surplus Rises
Trade increases real income communities. With higher real income means the state is able to set aside resources for greater economic investment (this is called "investible surplus"). Higher investment rate means higher economic growth. So can trade memdorong economic growth.
This is the essence of the influence of international trade through the investible surplus production. There are three things to note about this effect:
a. We must ask how much of the gains from trade (increase in real income) received by the citizens of that country, and how many are accepted by foreign nationals who have factors of production, such as capital, labor, the diperkejakan in the country. In other words, the more important is how much increase in GNP, not GDP increases, caused by the trade.
b. We must also ask how much of the increase in real income due to the trade will translate into an increase in domestic investment, and how apparently spent on higher consumption or transferred abroad by foreign companies in return for capital embedded? In terms of economic growth is the most important is the increase in investment in the country and not just the "investible surplus" of his.
c. We must also distinguishing between "economic growth" and "economic growth". Mentioned above how the duality in the structure of the economy can arise from the presence of international trade. In the past, and the symptoms remained until now, rising ivestible surplus tends to be invested in the sector of "modern" and only a few are flowing into the sector "traditional". Such growth is even more sharpened dualism and the difference between the two sectors. In this case we must be careful not to equate economic growth with economic development in the real sense.
The essence of the description above is that the increase in investible surplus for trade is something real. But we need further mmpertanyakan who benefits, how much those benefits are in realisir as an investment in the country, and is there any influence of these benefits to economic development in the real sense.
Vent For Surplus
This concept originates from Adam Smith. According to Adam Smith, the foreign trade open up new market areas for greater outcomes in the country. Domestic production which was originally limited because of the limited domestic market, can now be enlarged again. Economic resources are initially unemployed (the surplus) now acquires the channel (vent) to be used, because of the new market area. The core of the concept of "vent for surplus" is that the economic growth stimulated by the opening of new market areas. For example, a country rich in agricultural land but the population is relatively small. Before the possibility of open trade with foreign countries, the country mnghasilkan only enough food to feed its population and no more than that. Many actual land fertile and suitable for agriculture is left unused. In contact with the world market, the country began menamam world trade goods like pepper, coffee, tea, rubber, sugar, and so by utilizing the idle farmland. Thus, economic growth increased.
It should be noted here is that the use of new agricultural lands are memerluakan capital and huge investment, far beyond the country's ability to finance itself. Therefore, history records that the opening of estates almost always originate from foreign capital. It is clear from the history of countries like Indonesia, Malaysia, India, Sri Lanka, and many others. In the present economic resources untapped no longer the mostly agricultural lands (though sometimes still is), but the form of natural resources (especially energy) and sometimes labor is cheap and plentiful and cheap . Capital and high technology required for the utilization of natural resources, and all of them are often beyond the capabilities of the owners of those resources to fund and implement. So still need foreign capital and technology. Note that the core of the "vent for surplus" remains the same, both past and present, namely: economic resources that can not be used unless there are channels to the world market and, if foreign capital is allowed to enter. The main difference is that in the past countries in natural resources is a colonial country, while now is an independent state with the national government. The key instead is the "vent for surplus" will generate economic development in the real sense in the real sense or merely "economic growth" as has happened in ancient times, lies in the hands of national governments. They should be able to achieve most of the "gains from trade" produced and used for the benefit of national development in the true sense.
Productivity has a very important influence of foreign trade on the production sector by increasing productivity and efficiency in general. We can distinguish three main sources of increased productivity and efficiency brought about by the presence of the foreign trade.
a. Economies of scale means that the extent of marketing production can be enlarged and done in a cheaper and more efficient (economies of scale bring down Long Run Average Cost of an industrial sector).
b. The new technology means that international trade and foreign relations generally regarded as an important medium for the dissemination of the technology - developed countries to developed countries. Forms directly from the deployment of this technology is when the opening of relations with a foreign country can import goods such as machines that can increase productivity in the country. For example, a computer importing developing countries to improve productivity pemerintannya apparatus. Actually, here are imported are "new technology" contained in the computer. Forms of technology deployments that are not direct but sometimes very important. If domestic producers gain knowledge about new products. Ways - ways that do will be more efficient in the production, marketing and corporate management in general, a new spirit and motivation to innovate. For example, in the past farmers in Indonesia to benefit from Dutch plantations knowledge about new products such as coffee, tea, tobacco, rubber and sugar sold in the market and the way the world is good for planting. "Learn" new technology like this has great benefits over and berdifat more sustainable than just "buy" technologies such as in the example above.
c. Stimulus competition means not only increased efficiency through new technology but also "by the market". It is said that the opening of international trade is not uncommon to make the sector - specific sectors in the economy which was originally "fell asleep" and not efficiently into a more dynamic sector due to the influence of competition from outside. For example, if a domestic market dominated by a monopoly is inefficient. Losses incurred by the public sector will be higher. However, for various reasons no company in the country who can enter this ksektor and shift the position of the monopolist. When the country outgoing opened later relationship, it could be expected that the goods - goods of the same or similar to the production sector but sold at a cheaper price and better quality will flow into the country. In this case the opening of trade has a similar effect with the entry of the company - a new, more efficient firms into the sector. So foreign trade can improve the efficiency of the sector through increased competition. In practice, If this situation occurs it can be expected that the monopolist who feel their life is endangered will attempt to stymie - hinder the flow of goods - goods abroad. For example, by demanding the imposition of high import duties. The government should consider a variety of interests, including the interests of consumers, producers, workers and the community at large. Often the problem becomes difficult and complicated because of the economic arguments are often confused with political arguments and class or sectoral interests.
There are some important things to note about the possibility of increased productivity through international relations. Among the three sources of increased productivity are economies of scale, new technologies and stimulation of competition. One emphasis and receive special attention from the State is developing the new technology. Issues removal or transfer of technologi technology from developed countries to developing negar is the most discussed topic among both science and international negotiations between the developing country with the developed countries. Transfer of technology is seen as one of the keys of success of development in developing countries. To what keep developing country to benefit from the new technology through international trade, foreign investment and external assistance negari? The answer to
a. How far producers and actors - domestic economic pleku ready to accept the new technology? This involves not only the skills and knowledge that must be at least first owned by the producers, workers didalm country but also related to their readiness and there - whether or not the environment that supports the transfer of technology. Unpreparedness of the recipient of a factor though negaraterkadang developing country do not always want to admit the truth.
b. To what keep the developed countries, including foreign companies operating country is willing to provide and teach technology to developing country? Will and genuine honesty - indeed on the part of developed countries is a major requirement of successful technology transfer program. Intentions of the developed countries and the company - the company to spread and teach the technology also needs to be questioned, if we look at how the slow process of "transfer of technologies described in this work in practice.
There is another problem in addition to the transfer of technology itself that need attention. Masalai This is about the suitability of the technology transferred to developing country interests of development. The technology developed in developed countries stem from pressure and the circumstances in the country. While the needs and circumstances of developing country may require different technologies. Now people are starting to question whether computer, tractor - the tractor, the machine is fully automated technology required by developing country at the moment. Is not it more effective if developed countries assist developing States in the development of new technologies that directly a response to the needs of developing country and not only what has been developed in developed countries. From this came the idea - the idea of the importance of developing intermediate technology and so on. But until now there is no firm answer to a question like this and there is no consensus among economists themselves.
What about other sources of improvement? Saying that the two sources are not commensurate attention compared with other new technologies. Both of these sources is no less important for increasing prodiktivitas.
C. Effects on Trade Balance
Balance of Trade (Trade Balance) is a measure of the difference between the value of imports and exports of tangible goods and services. And changes in the level of trade balance of exports and imports are widely followed in the foreign exchange market. The effect on the trade balance tends to increase imports. Conversely, if a country is unable to compete, the export does not develop. This situation can worsen the condition of the balance of payments. Another adverse effect of globaliassi the balance of payments is the payment of net factor income from abroad tend to run a deficit. Foreign investment and growing cause flow benefit payments (income) investment overseas is increasing. No export growth can adversely impact the balance of payments.
International Rules Against Challenge that is particularly menyakut pengkotan-based pengkotan geoekonomi and geopolitical state of the world. Guild countries "non-aligned" who hopes to challenge neo-colonialist postwar secaara gradually expanded and strengthened anatara confer Bandung in 1955 and Algeria in 1973 confer. Conferences and meetings are widely held that only a small immediate results, while the socialist bloc was never able to help the third world in obtaining an effective collective negotiating power. However, a forum for negotiations held with the United Nations to confer teerciptanya trade and development (UNCTAD) in 1964 as a "union" to third world countries. Demands were formulated.
Table
Official on Foreign Debt in 86 Developing Countries
Group of States
Number
Official Sources
(Billions U.S. $) Source Private
(Billions U.S. $)
1976 1974 1976 1974 1976 1974
OPEC 4 18 3 11 1 7
Middle-income countries / High 22 66 13 33 9 33
Low-income countries 10 22 9 20 1 2
Total 36 106 25 64 11 42
Sources: World Bank, World Debi Table, Vol.I (October 31, 1976), EC-167/76, p. 31.
Official foreign debt is determined in such a way that it includes debt held by the government sector, and debt held by the private sector, which is guaranteed by the government.
The first meeting of UNCTAD already covers most of the issues to be negotiated and based on the general principles contained in the Charter of UNCTAD which requires each state to give a donation to an improved international economic order that includes "economic and social progress throughout the world "and" an improvement in the quality of life kesejaahteraan and everyone.
Measures the organization of petroleum-exporting countries (OPEC), the oil price increase by four-fold, occurred against the backdrop of the slow erosion of political and military hegemony of the United States in the whole world. spirit of the world, such as a resounding defeat in Southeast Asia.
OPEC actions mentioned above to achieve a real perge ¬ seran in the balance of power with three Konse ¬ kuensi important:
a. Such actions demonstrate the advantages ¬-profit potential for all three groups of countries exporting primary commodities to dominate the world market for an essential commodity, in which the Western countries can not meet their own needs.
b, OPEC actions weaken Western countries by greatly disrupt their balance of payments and to break their monopoly in international reserves.
c. Since OPEC is willing to use force be ¬ rundingnya to support other demands of the third world, then OPEC was substantially strengthened negotiating position of the third world as a whole.
Challenge, at least for, this time, is a real challenge, and negotiations between the nega ¬ ra-rich and poor countries become more focused. At UNCTAD IV trial reached agreement on two things-forming ¬ a multi-commodity stabilization fund and a code for the pe ¬ ngalihan technology. Another important field of negotiation is the United Nations Conference on the Law of the Sea, in which the third world countries were pushing for a new international arrangements to ensure the right resources, marine resources and seabed.
But the power of conferring the third world is still not solid. It remains to be seen whether the primary producers of other commodities, which are inspired by the success of OPEC, cartels can merigorganisir effective. It also remains to be seen whether the state-¬ western countries can improve their own economic damage, and whether OPEC members will continue to be richer in favor of the third world or, conversely, will gradually be drawn into the "club of people, rich" The price system "two-stage" of OPEC have shown the existence of a perpe ¬ solving.
It is important to note that the post-war system, which encourages rapid growth in Europe and Japan for more than two decades, is showing symptoms geja1a instability of an emergency prior to the oil crisis. In this case needs to be called three fundamental weakness, namely the rate of infla ¬ growing rapidly; unstable exchange rates and traffic currencies, and the development of different industries from different countries are competing with each other. Kele ¬ mahan weakness is ultimately stretches the fellowship nega ¬ ra-Western states and weaken the attachment of at least some of the country against the world economic arrangements ¬ behavior.
Main areas of negotiations is determined by the discussion topics at this time actively discussed can be grouped into three categories: primary commodities, industrial development and other external financing nege ¬ ri. Until now, the emphasis is primarily the first topic that is of primary commodities.
Specific proposals put forward include a "unified plan of co ¬ moditi" for commodities representing 80 percent of all commodities, excluding oil, the price indexation komoditi2-association and the formation of the Association of ¬ the manufacturer.
Plans include an integrated commodity supply pe ¬ nyangga international group financed by the general fund, amounting to several billion U.S. dollars, the pressure on the supply contracts are long-term, financial compensation for lost income FITNESS ¬ babkan by falling prices, and increased processing and distribution of raw materials by producing countries co ¬ moditi.
The proposals are more controversial is the indexation (terms) prices of commodities exported by the countries of the world keti ¬ ga with the prices they pay for imports and estab ¬ formation of producer associations. These proposals may invite ¬ tungkan both producers and consumers by providing a stable market, and enable a more rapid growth. "But they face opposition from many Western countries, who consider the proposal latter as a desire to emulate OPEC to set high prices and limit supply. Fact, the first proposal considered a worse suggestion that excess inventory to be subsidized at the expense of them. indexation proposal will include an expansion of price support policy undertaken in Western countries.
Counterproposals, which are mainly filed by the United States, is the development of primary commodities through pen ¬ naman private capital in the integrated production, processing and distribution of light ¬ ja. It is not acceptable to many countries DIMIA third, because it would mean expansion of the sum ¬ control air-power of their natural resources by multinational corporations, which have occurred in the minerals, and that they have long been considered as an example The main neo-colonialist exploitation.
The objectives of the third world in terms of industrial development is a requirement for obtaining better technology, better opportunities to sell high-end goods in pa ¬ suggestions Western countries and greater scrutiny terha ¬ dap-company activities multinational companies. Mes ¬ though there is a code on the transfer of technology, but to ¬ possibility of significant change only little once. Western countries are already engaged in intense competition with each other, are not eager to help the third world countries to seize the market from their hands. ¬ During the last years the main vehicle for the development of export-ba-rang ¬ finished goods from the third world are multinational companies, attracted by cheap labor in third world countries. In the field of solid stuff ¬ work of these companies bring trade to the detriment of third world workers in the same industries in the West.
Western governments do not oppose this process, although this mempemgaruhi employment opportunities in their own countries, and the governments of the third world are welcome balk foreign exchange earnings derived from the export of manufactured goods. Commercial strength of the company ¬ multi-national corporations are the reason why Perun ¬ dingan-serious negotiations on the construction industry is very unlikely, because many governments in rich and poor countries too dependent on them to be willing to do a lot of interference in the activities of mere ¬ ka. But even if a group of third world countries greater opportunities to better market unluk mema ¬ suki industrial world, then this will only ¬ resulted in greater competition among those without a significant net accretion Western countries means that international financial system in its present form many shortcomings in the view of most countries that participate in these systems.
The goal of each group is mainly depended on whether they are the debtor or creditor. Third world wants cheap loans without bond; countries and glue ¬ baga-OPEC creditor institution and the West want the advantages and security. Government creditors also appreciate that they gain political influence, the "bonds" were opposed by the debtor countries of the third world in revenue for the third world as a whole.
Budget constraints in building and climate kembangakan foster industrialization in third world countries, lure them to obtain financing from abroad, especially the developed countries. And, finally are becoming a serious debt problem of many third world countries themselves, and it is also difficult for OPEC countries to find a tuk ben ¬ safe investment for surplus income from the sale of petroleum, and instability of the currency ba ¬ suffered much.
But if the state because of the West ¬ ne can assign to their own rules and regulations ¬ can be done with either the balance of payments adjustment ¬, then they will be able to solve problems without the need to make concessions speculative-con ¬ major session to the state- third world countries.
At this time snaking indeed owes the third world, especially after the rapid growth in loans from international private capital markets. Rich countries will be forced to delay the repayment period of these debts to avoid bankruptcy ghost mass of the third world, but it is not likely to produce a soft ¬ gleaned requirements. Even the expectation that OPEC will be a source of air ¬ new loan will probably turn out a mere illusion; ¬-OPEC countries seem to have the same view as ¬ like Western countries about the safety and benefits of the funds they invest, and it seems they will also seek to use every credit they provide as a way to gain political influence.
http://id.wikipedia.org/wiki/Globalisasi