Changes in the Global Trade Environment Sithembiso Mtanga 24 January 2013 Highlights in Recent G lobal Developments Overall trade grew in 2011 by 50 a drastic fall from a 138 growth in 2010 ID: 588128
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Slide1
Changes in the Global Trade Environment
Changes in the Global Trade
Environment
Sithembiso Mtanga
24 January 2013Slide2
Highlights in Recent
G
lobal Developments
Overall
trade
grew
in 2011 by 5.0%,
a drastic fall from a 13.8% growth in 2010
There has been a shift of Global Growth from Developed to Developing Economies
There is an increasing share of Emerging Markets in Global Trade and InvestmentSlide3
Growth in World Exports
World Exports grew by over 9% annually over the past 15 years
The World Weighted Average Applied Tariff Rate fell from 34% in 1996 to 2.7% in 2010
Source: IMF IFS and World Bank StatisticsSlide4
Growth in Volume of Goods Trade and GDP (Annual % Change)
World GDP and Trade grew on average by 3.4% and 5.7% respectively since 1980
During the crisis trade fell by over 10% (
US$3.6 trillion
) and GDP dropped by 0.5%
Source: IMF IFS Slide5
Global Trade Trends: Developed
vs
Developing Economies
Before the crisis
developed economies
exhibited a worsening current account deficits whereas emerging markets and developing economies were experiencing increases in the current account surplus
The share of
developing economies
in world total trade rose to 47% on the export side and 42% on the import side in 2011, the highest levels ever recorded since 1948
.
Source: IMF IFSSlide6
Goods Trade by Region - 2011
Source: WTO SecretariatSlide7
World Exports: Top Products at HS2 (2011) – US$ billion
Rank
Product code
Product label
2007
2008
2009
2010
2011
Ave. Share 2007-2011
Ave Annual Growth Rate 2007-2011
Total Exports
All products
13 920
16 077
12 394
15 114
17 579
100%
4.1%
1
'27
Mineral
fuels,
oils
, distillation
products, etc 1 985 2 870 1 791 2 327 2 899 16%5.6%2'85 Electrical, electronic equipment 1 830 1 942 1 625 1 997 2 153 13%3.6%3'84 Machinery, nuclear reactors, boilers, etc 1 824 1 981 1 532 1 827 2 071 12%1.7%4'87 Vehicles other than railway, tramway 1 206 1 261 859 1 093 1 272 8%-0.4%5'39 Plastics and articles thereof 453 483 393 493 566 3%4.7%6'71 Pearls, precious stones, metals, coins, etc 290 334 321 422 540 3%15.9%7'90 Optical, photo, technical, medical, etc apparatus 401 440 398 477 530 3%6.6%8'72 Iron and steel 432 526 277 389 467 3%-1.4%9'30 Pharmaceutical products 347 399 422 445 465 3%7.2%10'29 Organic chemicals 349 371 313 377 455 2%5.6%11'73 Articles of iron or steel 261 312 228 249 296 2%0.2%12'99 Commodities not elsewhere specified 244 346 204 223 279 2%-1.7%13'26 Ores, slag and ash 122 149 119 196 268 1%20.2%14'88 Aircraft, spacecraft, and parts thereof 199 213 214 223 249 1%5.1%15'40 Rubber and articles thereof 142 158 126 169 223 1%10.2%16'61 Articles of apparel, accessories, knit or crochet 174 181 160 181 210 1%3.9%17'62 Articles of apparel, accessories, not knit or crochet 172 184 158 170 201 1%2.4%18'94 Furniture, lighting, signs, prefabricated buildings 165 180 147 169 192 1%2.4%19'48 Paper and paperboard, articles of pulp, paper and board 169 180 153 171 187 1%1.4%20'74 Copper and articles thereof 154 151 106 161 186 1%4.5%
Source: UNComtrade and Own CalculationsSlide8
Commercial Services Trade by Region - 2011
Source: WTO SecretariatSlide9
World leading exporters and importers of Goods Trade, 2011 (US$ Billion)
Source: WTO SecretariatSlide10
Global Key Issues – Going Forward
At 5.0%, trade growth slows in 2011
following 13.8% rebound in 2010
Further slowing to 3.7% in 2012
, below the 5.4% 20-year average (WTO)
Fragile and uncertain global economy
remains, with enhanced downside riskShocks held back trade last year: European debt crisis, Japanese tsunami, Thai floods, Disasters hit supply chains and production in Japan, China and elsewhere. Most recently Hurricane Sandy in the US
EU may already be in recession
as global output growth eases.
Oil supply disruption in Libya
cut African export growth by 8%
Growth in manufactured goods trade is currently slowing, trade in automotive products fell to single digits and electronics trade declined.Arab spring uprisings also hit African services exports due to sharp declines in Egypt, Tunisia.Slide11
Changes in the Global Trade Environment
Changes in
South Africa’s Trade Environment
Sithembiso Mtanga
24 January 2013Slide12
SA Share of World Exports Declining
Source: IMF IFS
The share of SA’s Exports in total world exports has decline from 2% in 1948 to 0.5% in 2011
0
20
40
60
80
100
120
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
US dollars billions
SA Exports to the World
SA Share of World ExportsSlide13
World market share decreasingSlide14
SA
TRADE FLOWS TO THE WORLD (
Rbn
)
2007
2008
2009
2010
2011
Total Imports
562.56
728.86
542.39
586.04
726.23
Total
Exports
474.44
637.78
507.67
580.08
691.56
Trade balance
-88.12
-91.07
-34.71
-5.97
-34.67 South Africa’s trade flows to the worldSlide15
2002-2006
2007-2011
Total Exports
9.07%
6.81%
Total Imports
14.55%
2.97%
Note: Growth rates have been calculated on the Rand Values
South African trade with the world: percentage growth rateSlide16
SA TRADE WITH THE WORLD: TOP 10 PRODUCTS (HS2, 2011)
Products
Total Exports (Rbn)
% of Total Exports
Products
Total Imports (Rbn)
% of Total Imports
H71: Pearls, precious stones, metals, coins, etc
178.13
25.76%
H27:
Mineral
fuels,
oils
, distillation
products
,
etc
153.87
21.19%
H26: Ores, slag and ash
99.07
14.33%
H84: Nuclear reactors, boilers, machinery, etc
109.52
15.08%
H27:
Mineral
fuels, oils, distillation products, etc68.879.96%H85: Electrical, electronic equipment68.049.37%H72: Iron and steel58.568.47%H87: Vehicles other than railway, tramway65.949.08%H87: Vehicles other than railway, tramway53.047.67%H98: Special classifications provisions43.876.04%H84: Nuclear reactors, boilers, machinery, etc42.726.18%H90: Optical, photo, technical, medical, etc apparatus17.962.47%H76: Aluminium and articles thereof16.502.39%H39: Plastics and articles thereof17.492.41%H08: Edible fruit, nuts, peel of citrus fruit, melons16.502.39%H30: Pharmaceutical products15.962.20%H28: Inorganic chemicals, precious metal compound, isotopes11.461.66%H88: Aircraft, spacecraft, and parts thereof14.001.93%H85: Electrical, electronic equipment10.921.58%H29: Organic chemicals12.451.71% Slide17
TOP THREE NON-MINERAL EXPORTS FROM AND IMPORTS TO SA FROM REGIONS
(
HS4, 2011)
EXPORTS
IMPORTS
Products
Value (
Rbn
)
Share
Products
Value (
Rbn
)
Share
SADC
H8704
: Motor vehicles for the transport of goods
3.04
4.1
%
H7403
: Refined copper and copper alloys, unwrought
1.13
3.7%
H7308
: Structures, parts of structures of iron or steel,
nes 1.50 2.0% H7408: Copper wire 0.74 2.4% H8474: Machinery to sort, screen, wash, etc mineral products 1.35 1.8% H5201: Cotton, not carded or combed 0.64 2.1%S. AMERICA H8407: Spark-ignition internal combustion engines 0.67 6.6% H2304: Soya-bean oil-cake and other solid residues 2.61 11.8% H7202: Ferro-alloys 0.62 6.2% H0207: Meat, edible offal of domestic poultry 1.64 7.4% H3902: Polymers of propylene, other olefins in primary forms 0.53 5.2% H8704: Motor vehicles for the transport of goods 1.56 7.1%NAFTA H7202: Ferro-alloys 4.65 7% H8802: Aircraft, spacecraft, satellites 6.49 9.4% H1005: Maize (corn) 2.82 4% H8703: Motor vehicles for transport of persons (except buses) 3.73 5.4% H8421: Liquid, gas centrifuges, filtering, purifying machines 2.29 3% H8517: Electric apparatus for line telephony, telegraphy 2.79 4.0%E. ASIA H7202: Ferro-alloys 16.51 9.4% H8703: Motor vehicles for transport of persons (except buses) 10.82 6.6% H7601: Unwrought aluminium 4.42 2.5% H8517: Electric apparatus for line telephony, telegraphy 10.42 6.3% H8703: Motor vehicles for transport of persons (except buses)4.01 2.3% H8471: Automatic data processing machines (computers) 9.12 5.5%S.C. ASIA H7204: Ferrous waste or scrap, ingots or iron or steel 2.19 8% H8703: Motor vehicles for transport of persons (except buses) 3.60 6.1% H2809: Diphosphorus pentaoxide, phosphoric acids 1.65 6% H3004: Medicaments, therapeutic, prophylactic use, in dosage 1.85 3.2% H7601: Unwrought aluminium 0.69 2.5% H8517: Electric apparatus for line telephony, telegraphy 1.08 1.8%MIDDLE EAST H0805: Citrus fruit, fresh or dried 1.44 6.8% H3102: Mineral or chemical fertilizers, nitrogenous 2.16 3.7% H2601: Iron ores and concentrates, roasted iron pyrites 0.52 2.5% H3901: Polymers of ethylene, in primary forms 1.10 1.9% H7208: Hot-rolled products, iron/steel, width>600mm, not clad 0.50 2.4% H2901: Acyclic hydrocarbons 0.99 1.7%EU H8421: Liquid, gas centrifuges, filtering, purifying machines 16.30 10.7% H3004: Medicaments, therapeutic, prophylactic use, in dosage 7.82 3.5% H7202: Ferro-alloys 10.95 7.2% H8517: Electric apparatus for line telephony, telegraphy 7.62 3.4% H8703: Motor vehicles for transport of persons (except buses) 8.45 5.5% H8708: Parts and accessories for motor vehicles 5.49 2.5% Slide18
TOP 10 EXPORT MARKETS & IMPORT SOURCES (2011), ALL PRODUCTS
EXPORTS
IMPORTS
Country
Value (Rbn)
Share
Country
Value (Rbn)
Share
China
85.30
12.3%
China
103.13
14.2%
United
States
59.63
8.6%
Germany
77.26
10.6%
Japan
55.29
8.0%
United
States
58.39
8.0%
Germany43.176.2% Japan34.534.8% United Kingdom28.684.1% Saudi Arabia32.304.4% India24.333.5% India29.194.0% Netherlands21.503.1% United Kingdom29.144.0% Switzerland21.373.1% Iran26.703.7% Republic of Korea17.282.5% Nigeria22.663.1% Mozambique17.182.5% Italy19.552.7% Total373.7554.0% Total432.8759.6% Slide19
SA TRADE BY REGION (
Rbn
)
Region
2007
2008
2009
2010
2011
Exports
Imports
Exports
Imports
Exports
Imports
Exports
Imports
Exports
Imports
European
Union
145.90
189.62
188.03
228.09
122.34
174.50
137.37
188.28
152.31222.79 Eastern Asia94.61120.71128.37146.71106.06115.53133.69136.67175.86165.17 NAFTA58.0050.4370.3968.9145.2348.2956.1349.9967.8468.77 SADC41.9530.0067.7842.3757.5324.2460.7627.2973.3630.81 Middle East 15.9344.5622.2579.2516.7043.5818.3640.4621.1158.36 South-eastern Asia10.3528.9116.6939.1214.1433.2016.2937.0919.4745.12 South America5.8723.408.0626.894.8320.138.3018.2410.0722.14 Rest of Africa22.2814.3631.0319.8428.4319.1626.0518.6229.7724.98 Rest of the World79.5660.56105.1777.68112.4263.77123.1469.41141.7788.10 Slide20
Share of SA Exports according to
Broad Classification
Broad Classification
Share of SA Exports
1994
2000
2006
2011
Agriculture
and Forestry
7.8%
5.9%
4.8%
5.4%
Basic
Processing
27.9%
32.2%
31.9%
26.5%
Mining
57.3%
45.6%
42.9%
50.8%
Advanced
Manufacturing
7.0%
16.3%
20.4%17.3%Source: Quantec International Trade Database and own calculationsMining continues to feature strongly in SA exports (oscillating between 42% and 58% of SA’s total exportsThe share of Manufacturing exports in SA’s total exports has increased since 1994 whilst Agriculture has seen a declineSlide21
Exports per sector increase
Source: OECD (2013)Slide22
SA Exports by Province in 2008 & 2011
2008
2011
Source:
Quantec
Provincial Trade Database and own calculations
SA trade is highly concentrated in
Gauteng
. Ranked 2
nd
and 3
rd
are KZN and the Western
Cape.
Gauteng
has grown market share while most of the other provinces have lost market share Slide23
Trading Across Borders: Costs & Time Delays – BRICs and South Africa (2012)
Country
Rank
Documents to export (number)
Time to export (days)
Cost to export (US$ per container)
Documents to import (number)
Time to import (days)
Cost to import (US$ per container)
Brazil
123
7
13
2,215
8
17
2,275
Russia
162
8
21
2,820
11
36
2,920
India
127
9
161,12011201,200 China68821580524615 South Africa1156161,6207231,940185Source: World Bank Doing Business Surveyhttp://www.doingbusiness.org/ExploreTopics/TradingAcrossBorders/ [Accessed 16 November 2012]Slide24
Regional Trade Agreements for BRICs & South Africa
Source: WTO
China & India have concluded a large number of FTAs
Asian economies are using trade agreements to
reduce regional barriers
to trade and
enhance production networks
and
increase market accessSlide25
Revealed Comparative Advantage
RCA for South Africa and per Province on a HS-6 digit Level
Derick
Deale
24 January 2013Slide26
Revealed Comparative Advantage
RCA
Comparative advantage is a difficult theoretical concept
It is also difficult to determine using empirical analyses
We use Revealed Comparative Advantage
Balassa’s RCA index
Most widely used index
Transformed to symmetric RCA index
Positive Value = Comparative Advantage
Negative Value = Comparative DisadvantageSlide27
RCA South Africa 2011
Top 10 easily ranked.
Description
RSA - 2007
RSA - 2008
RSA - 2009
RSA - 2010
RSA - 2011
H711039: Rhodium in semi-manufactured forms
0.9880
0.9878
0.9882
0.9875
0.9869
H261790: Ores and concentrates nes
0.9808
0.9202
0.9857
0.9847
0.9857
H711019: Platinum in semi-manufactured forms
0.9778
0.9794
0.9796
0.9815
0.9825
H261590: Niobium, tantalum and vanadium ores and concentrates
0.9680
0.9853
0.98450.98100.9803H261000: Chromium ores and concentrates0.97990.97850.97750.97770.9775H710590: Dust of precious, semi-precious stones except diamonds0.86000.90440.82140.97650.9752H261400: Titanium ores and concentrates0.98120.98160.98390.97780.9740H293991: Vegetable alkaloids, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives - other0.98110.97810.97140.96990.9734H320120: Wattle tanning extract0.98610.97230.97330.97410.9732H750610: Plates, sheet, strip and foil, nickel, not alloyed0.97540.97560.95930.97660.9729Slide28
RCA over timeSlide29
Products with high RCA
High RCA can be further investigated using Trademap.org
Questions:
What is the market share?
To who are you selling?
Who are your competitors?
What has happened over time?Slide30
Example: Manufactured product
High RCA
No large irregular spikes
H760820: Tubes and pipe, aluminium alloy
0.7762
0.7551
0.7544
0.8031
0.8182Slide31
6.2 % of global market shareSlide32
Largest market GermanySlide33
5 Largest markets over timeSlide34
German Imports (Competition) Slide35
5 Largest exporters to GermanySlide36
Demonstration: Excel
Excel file available on websiteSlide37
Areas of possible Comparative Advantage
Concept of Proximity:
If South Africa is, for example, exporting apples,
and we know that apples and pears require similar factor conditions,
then why is it then that South Africa is not exporting pears as well as apples?Slide38
Product Space
Product Space investigates the proximity of similar products
T shirts and fish products are dissimilar,
T
shirts and dresses are similar however
Node size: market share of world
Clusters: similar products Slide39
Why do these similarities matter?
Imagine a forest
If the forest is dense, a monkey can easily swing from one branch to another
Imagine a desert
With not many trees the monkey will battle to get aroundSlide40Slide41
RCA: Gained
1994
2010Slide42
Motor vehicles and aeroplanes
1994
1999
2010Slide43
Mining Sector
1994
1999
2010Slide44
Fishing and fish products
1994
1999
2010Slide45
Garments
1994
1999
2010Slide46
Critical Observations
South Africa has comparative advantage in a certain products
How can we expand this to similar products within the cluster
Apples and Pears example Slide47
Introduction to the Gravity Model
Much like Newton’s theory of gravity, there are two components that drive attraction:
Size of the two objects
Distance between them
In economics, we don’t have objects, we have countries and instead of attraction, we have trade.
Thus larger countries will trade more, and those that are closer will trade more will each other. Slide48
What was included in our model
Slide49
Sectors identified by the Gravity Model Slide50
Gaps with African
Markets Slide51
Interesting SectorsSlide52
Critical Observations
From our regression coefficients we note:
Reduction in documents (domestically and abroad) to export will increase trade.
Reduction in domestic and foreign container costs will boost trade
Regarding gaps:
Demand side identification.
Must be matched with supply side identification to be meaningful
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