Wednesday, June 4, 2014

Basic Overview Of Standby Letter Of Credit

By Nora Jennings

Key points in mercantilism is the need to maintain trade surplus (excess exports over imports); recognition of benefits of gold and other precious metals to increase its welfare. Protectionism aimed at importing raw materials and semi-finished products restriction on exports of luxury goods, as it leads to the leakage of gold from the state. The real wealth of a country consists of goods and services available to its citizens. If a country can produce a particular product more cheaply than other countries, it has an absolute advantage (standby letter of credit Dubai).

The least developed countries such as Zimbabwe have not experienced such an increase in cross border trade. The volume of world trade increased fifteen-fold from 1950 to 1960 and has tripled between the fall of Berlin Wall and 2010. Regional agreements are of different types, each reflecting different degrees of economic integration.

There are therefore six major types of regional economic organizations: the zone of preferential trade that remove barriers to interregional trade for certain products and the EEC since the 1960s (source of conflict within the WTO). The free-trade which is marked by a removal of tariff barriers; for example, NAFTA from 1994. The customs union that combines free movement of goods and the adoption of a common external tariff, ie identical to each member vis-a-vis third countries customs taxes.

Profit level remains constant or decreases due to increased spending on marketing activities to protect the product from competition. This theory introduces the concept of competitiveness. That national competitiveness determines the success or failure of specific industries and the place that the country ranks in the world economy.

National competitiveness depends on the ability of its industries. Theorem is the assertion that if the value of one of two factors of production grows, to maintain a constant price of goods and factors it is necessary to increase production. Factor prices may remain constant only when the ratio of factors used in the two sectors remains constant.

Growth in one factor can only occur with an increase in production in industries in which this factor is intensively used, this will lead to the release of a fixed factor, which will be available for use with a growing factor in the expanding industry.About 60 % of world GDP is used for services, majority of which are not subject to international trade (education, health care, government, wholesale and retail trade). This so-called non-tradable activities, ie not involved in international trade.

The share of exports in world GDP, deducted from the services that are not involved in world trade is much larger than the total world GDP (according to some estimates, almost about half ). At the present stage international trade plays an important role in the economic development of countries, regions and the entire international community. Foreign trade has become a powerful driver of economic growth. Dependence on international commodity has increased significantly.

This was for instance the case for Britain vis-a-vis the Commonwealth following its entry into the European Union, thus supplanting the imperial preference. More recently, the entry of Eastern Europe countries into the European Union may affect textile imports from Maghreb. They is another creative side flow. They enable collaboration and thus increased specialization of individual member countries increasing global trade. They allow a better understanding and increased knowledge of business partners that brings confidence and ease in trade (for example, it is easier to organize an exchange with the Germans than with the Chinese).

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