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Let’s see…
• Production Sharing
• Trade in Services and
developing countries
• Trade and Marginalization
Intra regional trade
• Global sourcing

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Production Sharing
• Production sharing is an agreement to share
the production or extraction costs between
2 agreements.
• This can be accomplished when 2 counties
agree to allow certain raw materials are
manufactured in to a finished product.
• When successful, the company is permitted
to use the money from produced oil to
recover capital and operational
expenditures. Known as “cost oil”.

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Cont..
• The remaining money is known as profit oil.
• In some production sharing agreements
changes in international oil prices rate can
affect the company’s share of production.
• Production sharing agreements can be
beneficial to governments of countries
that lack of expertise and capital to
develop their resources and wish to attack
foreign companies to do so.

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Trade in Services and developing
countries
• Trade in services take place between a
producer and consumer that are in legal terms
based in different countries or economies
this is called international trade in services.
• General Agreement on Trade in Services
(GATS)
1. Cross border trade
2. Consumption abroad
3. Commercial presence
4. Presence of natural persons

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Cont..
• The contribution of service in world wide
70% in GDP (WTO).
• FDI in the service sector reach some 70
Billion (World Investment Report 2012).
• Innovation strategies also tend o promote
trade in service.

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Challenges for developing countries
desiring to enter international service
market
• Create a competitive location and a conductive
business environment.
• Ability to human capital & adequate skills.
• Quality of institution and rule of law.
• Protection and development of intangible assets
and supportive environment for services
innovation for expert enabling digital
infrastructure in particular abilty to connect
outward.
• Movement of person
• Efficiency of domestic regulation.
• Efficiency of international agreements.

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Trade and marginalization
• Trade - goods exchange economy, is to
transfer the ownership of goods from one
person by getting product or service in
exchange from the buyer.
• Marginalization – process in which groups
of people are excluded by the wider
society.

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Intra regional trade
• Regional integration is a process in which
states enter into a regional agreement in
order to enhance regional cooperation
through regional institutions and rules.
• Intra regional trade refers to trade which
focuses on economic exchange primarily
between countries of the same region.

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Regional integration initiatives according to
Van Longen have fulfill at least and
important function
• The strengthening of trade integration n the
region.
• The creation of an approprapriate enabling
environment development for private sector.
• the development of infrastructure program in
support of economic growth and regional
integration.

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Cont..
• The development of strong public sector
institution and good governance.
• The reduction of social exclusion and the
development of an inclusive society.
• Contribution to peace and security in the region.
• The building of environment programs at the
regional level.
• The strengthening of the region’s interaction
with other regions of the world.

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Intra regional trade – Asian aspect
• “Catch – up” process through technology
transfer.
• China has become Asia’s expert hub for IRT
rest of world.
• SAARC
Regional economic integration.
• SAPTA
it marked the onset of regional cooperation
in the core area of trade.

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Global sourcing
• Solution designed to improve operating
efficiencies and bottom – line result for
global organization with distributed
operations across the country and around
the world.
• It involves integrating and coordinating
common items, materials processes
technologies designs and suppliers across
the world wide.

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Global sourcing can be visualized as
movement along 5 different levels
International purchasing global sourcing
Level-1 Level-2 Level-3 Level-4 Level-5
Domestic
purchasing
only
Internation
al
purchasing
only as
needed
Internation
al
purchasing
as part of
sourcing
strategy
Global
sourcing
strategies
integrated
across
world wide
location
Global
sourcing
integrated
across
world wide
locations
and
functional
group

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Cont..
• Global sourcing is the practice of sourcing
from the global market for goods and
services.
• It aims to exploit global efficiencies in the
delivery of a product or services.
• Common examples of globally sourced
products or services include labor -
intensive

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Reference

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The EndThe End
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INTERNATIONAL TRADE

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