Slide 1
Ethics Ethics is the principles, standards and norms of conduct
that govern individual and firm behavior. What is ethical in one
country maybe unethical elsewhere. Also, in some cases, there is a
grey area which is legal but unethical. There are two schools of
thought. 1) Ethical relativism is an idea that all ethical are
relative. 2) Ethical imperialism is an idea that there is one set
of Ethics and we have it. In practice, both of these schools of
thought are unrealistic. Ethics helps to combat corruption which is
the abuse of public power for private benefits usually in form of
bribery in cash or in kind. Many companies have introduced a code
of conduct - a set of guidelines for making ethical decisions.
Japanese gift giving customs Gift giving in Japan is deeply
rooted in tradition with gifts given not only for social occasions,
but also for social obligations -- gifts given when indebted to
others, both family and business. Many aged Japanese believe gift
giving is very ethical. However, if we would gave a very expensive
gift to someone for some special private help, it would be a not
ethical conduct. This is the reason why many companies have a code
of conduct. The President of US is required to publicly disclose
personal financial information, including personal gifts over
minimal amounts ($350 as of this writing) which have been received
by him and his immediate family. For government officials in USA,
no gift but there are exceptions to the prohibition may allow, for
example, the receipt of gifts of minimal value (under $20 in
value), incidental food or drinks at events,
Norms & Ethical challenges Norms are prevailing practices of
relevant players that affect the focal individuals and firms. How
firms strategically respond to ethical challenges is often driven
by norms. When confronting ethical challenges, individual firms
have four strategic choices.
VW under investigation over illegal software that masks
emissions The US government has ordered Volkswagen to recall almost
500,000 cars after discovering that the company deployed
sophisticated software to cheat emission tests allowing its cars to
produce up to 40 times more pollution than allowed. The Environment
Protection Agency (EPA) on Friday accused VW of installing illegal
defeat device software that dramatically reduces nitrogen oxide
(NOx) emissions but only when the cars are undergoing strict
emission tests. Four Strategic choices 1. Reactive strategyDeny
responsibility. Do less than required. 2. Defensive strategy Accept
responsibility. Do the least that is required. 3. Accommodative
strategy Accept responsibility. Do all that is required. 4.
Proactive strategy Accept responsibility. Do more than
required.
Sweatshop A sweatshop is a manufacturing facility characterized
by poor working conditions, violations of labor law, long hours,
and low wages. It is a negatively connoted term for any working
environment considered to be unacceptably difficult or dangerous.
The term originated in 1892, when concerned individuals began to
speak up about the unsafe working conditions for American garment
workers. Today, sweatshops can be found all over the world,
although they are an especially big problem in developing nations
In some countries, consumers have lobbied major companies to reduce
their reliance on this type of labor in an attempt to promote
healthy working conditions for laborers in the third world. There
are pros and cons on this issue. In US, Sweatshop is defined as an
employer that violates more than one federal or state labor law
governing minimum wage and overtime, child labor, industrial
homework, occupational safety and health, workers compensation or
industry regulation in US. It is argued that sweatshop-type jobs in
a developing country are often a significant improvement over other
employment options . UK, United States and Japan went through its
own period of sweatshop labor during its development. China has
more than 150million mingong (), which is one of the biggest labor
troubles in China for many years. However, it improved its
situation a lot recently because of China s high economic
growth.
Nike Sweatshop (From Wikipedia) Nike, Inc. has been accused of
having a history of using sweatshops, a working environment
considered by many people to be dangerous and difficult. Workers
can be exposed to hazardous materials, harmful situations, extreme
temperatures, and abuse from employers. Sweatshop workers often
work long days, sometimes exceeding 14 hours, and earn pay far
below a "living wage". Now, many firms in developed countries
compare the wages and the amount of labor of the workers in Nike
factories to developed world standards.
Nike Anti-Sweatshop Campaign The Nike Anti-Sweatshop campaign is
one branch of a larger global movement aimed at raising awareness
about labor conditions in manufacturing zones of developing nations
where major global corporations increasingly contract for the
manufacture of their products. Nike is one of the largest, most
popular, and most profitable shoe and clothing companies in the
world. But the reality for many workers overseas making Nike shoes
and clothing is far less rosy. Workers are paid wages insufficient
to meet their basic needs, are not allowed to organize independent
unions, and often face health and safety hazards.
IMC Japan In Feb.2009, IMC sold 12,000 Allerhand Ergo one
shoulder backpack through Shop Channel TV shopping. (60 minutes
& 30 minutes program) 1,200 pieces X JPY10,000= JPY12,000,000 =
TBH3,600,000 The fist sales was in August 2008 and we sold 1,000
pieces. This was the second sales at this TV shopping company. I
had confidence on quality of this products because I visited their
factory in China and did in line check by myself. However, I found
a defect of this product before we get a claim from customers. I
decided RECALL of this product and told my idea to Shop Channel.
They did not want to do RECALL and we had a big discussion.28
Finally, they agree to do RECALL with unwillingness. IMC lost
JPY6,000,000 =TBH1, 800,000 + THB 500,000 sending and returning
cost. However, e got a good reputation from customers like IMC is a
very honest company because they told customers the defect of the
product before customers know. IMC lost around JPY15,000,000 = THB
4,500,000 because of RECALL action. However, IMC got a good
reputation from customers and TV shopping company. Then, TV
shopping company invited IMC again to join their program after that
accident. (Ordinary, they stop the business.)
PART II : Acquiring Tools We need academic tools for import
& export management. Preface Why do nations trade International
trade consists of Exporting & Importing. There are two main
sectors in Exporting & Importing; Goods & Services. Why do
nations trade? Because, both countries get economic gains from
international trade. International trade is a win-win game not zero
sum game.International TradeInternational TradeEXPORT Goods &
Services IMPORTGoods & Services
International Trade vs GDPInternational TradeGDP
World Export & Import Volume In merchandise export, China,
USA , Germany and Japan are leading countries and have around 11%,
8 %,7% and 4% world market share respectively in 2014. In
merchandise import, USA is the largest countries and has around 12%
world share in 2014. 35 World trade growth (6%) outpaces GDP growth
(3%) averaging 3% during 1998~2008. International Trade would be a
key to increase GDP of each country. World export & import
value of China is growing very rapidly . Also, India & Thai are
growing more than average of World export & import value.
However, we must very carefully check the details of goods. (
ex. Finished products or Components) The value chain would be the
key for this analyze in this global age. 2014 World Export Ranking
1 China $2,252,000,000,000-- EU $2,173,000,000,0002 United States
$1,610,000,000,0003 Germany $1,492,000,000,0004 Japan
$710,500,000,0005 South Korea $628,000,000,0006 France
$578,300,000,0007 Netherlands $552,800,000,000-- Hong Kong
$528,200,000,0008 Russia $520,300,000,0009 UK $503,400,000,00010
Italy $500,300,000,00022 Thailand $232,000,000,000
1990~2010 World Export unit : million US$ 1990 1995 2000 2005
2est.WORLD 3,332,750 4,955,400 6,391,210 10,374,000 14,920,000 447%
======================================================= 1. China
62,091 148,780 249,203 761,9531,506,000 2420% 2. Germany 410,104
523,802 550,112 977,881 1,337,000 326% 3. U.S.A. 393,592 584,743
781,918 907,158 1,270,000 322% 4. Japan 287,581 443,116 479,249
594,905 765,200266% 5. France 216,591 286,738 300,024 437,611
508,700 234% 6. Korea 65,016 125,058 172,268 284,419 466,300 717%
7. Italy 170,486 233,998 239,886 372,928458,400 268% 8. Holland
131,775 196,276 213,382 349,812 451,300 342% 9. Canada 127,629
192,197 276,635 359,399406,800 318% 10. U.K. 185,268 242,006
281,564 371,370 405,600 218%11. HKG 82,160 173,750 201,860 289,337
388,600 473%24 Thailand 23,068 56,439 68,963 110,178 191,300 829%
2014 World Import Ranking 1 United States $ 2,380,000,000,0002
China $2,249,000,000,0003 Germany $1,319,000,000,0004 Japan
$811,900,000,0006 United Kingdom $686,000,000,0005 France
$634,000,000,000- Hong Kong $499,400,000,0007 South Korea
$542,900,000,0008 India $508,100,000,0009 Netherlands
$488,800,000,00011 Canada $482,100,000,00025 Thailand
$219,000,000,000
1990~2010Value of World Import unit : million US$ 1990 1995 2000
2005 2010World 3,432,370 5,056,480 6,584,770 10,619,400 12,647,000
368%=========================================================1
U.S.A. 516,987 770,852 1,259,300 1,732,350 1,903,000 368%2 Germany
346,153 464,271 495,351 780,444 1,307,000 377%3 China 53,345
132,084 225,094 659,953 1,120,000 2010%4 Japan 235,368 335,882
379,511 514,922 636,800 270%5 France 234,447 281,440 310,926
473,803 577,700 246%6 U.K. 224,412 265,297 334,396 483,017 546,500
243%7 Italy 181,968 206,040 238,023 384,802. 459,700 252%8 HK
82,490 192,751 212,805 299,533 431,400 520%9 Korea 69,844 135,119
160,481 261,238 417,900 598%10 Holland 126,475 176,874 198,886
310,571 408,400 379%11 Canada 123,244 168,041 244,786 331,565
406,400 329%12 India 359,30022 Thailand 33,045 70,786 61,923
118,158 156,900 474%
41
Balance of Trade A country trade with the rest of the
worldExport Import= (Merchandise & Services)Trade surplusTrade
deficitI) Theories of International Trade There are six major
theories of international trade. Three classical trade theories and
three modern theories.
International Trade Theory 1. Classical Theories Adam Smith
(Absolute Advantage) is one of the most famous economists in
history and he wrote The Wealth of Nations to criticize
Mercantilism in 1776. Then, David Ricardo (Comparative Advantage)
improve Adam Smith idea in 1817. 2. Modern Theories In 1966,
Raymond Vernon (Product life Cycle) pointed out that trade is not
static in real world. In 1980s, Brander & Spencer (Strategic
Trade) insisted that strategic intervention by governments would
affect international trade results. The most resent theory is
Michael Porter (National Competitive Advantage of Industries).
InternationalTrade Theories Classical Trade
Theories1.Mercantilism2. Absolute Advantage 3.ComparativeAdvantage
Modern Trade Theories4.Product Life Cycle5.Strategic Trade6.
National Competitive Advantage of Industries.
... Audible
1) The Mercantilism ( 1600~1800) If a country would promote
favorable trade balance (a surplus of exports over imports), it
would realize net payments received from the rest of the world in
the form of gold and/or silver. Such revenues would contribute to
increased spending and a rise in domestic output and employment. To
promote a favorable trade balance, the mercantilists advocated
government regulation of trade. Tariffs, quotas, and other
commercial policies were proposed by the mercantilists to minimize
imports in order to protect a nations trade position. However, this
economic policy could provide at best only short term economic
advantage. Mercantilism; International trade is a zero-sum game.
The wealth of the world is fixed. A nation should export more and
import less. A country gets trade surplus in the form of gold &
silver.
2) Absolute AdvantageThis is the international trade theory by
Adam Smith that Specialization and Free trade will be beneficial
for the world. The world gains benefit from specialization and
international trade. In this case, each nation must have a good
that it is absolutely more efficient in producing than the other
nation.
When one nation has an absolute cost advantage (using less labor
to produce a unit of output) in one goods and the other nation has
an absolute cost advantage in the other goods, a nation should
concentrate on producing this goods. Then a nation export the goods
in which it has an absolute cost advantage and import the other
goods in which it has an absolute cost disadvantage.
Absolute Advantage before Specialization In a 2-nation,
2-product world. To make 1 unit Car Rice Japan 10 hours 20hours
Thailand 40 hours 10hours
Production and Consumption without Trade Use 100 hours each
product Car Rice Japan 10.0 units 5.0 units Thailand 2.5 units 10.0
units-----------------------------------------------------------------Total
production 12.5 units 15.0 units
Production with specialization Car Rice Japan 20.0 0.0 Thailand
0.0
20.0-------------------------------------------------------------------
Total production 20.0 20.0 Japan Trades 6 units of Car for 6 units
of Thai Rice Car Rice Japan 14.0 (10.0) 6.0 (5.0) Thailand 6.0
(2.5) 14.0 (10.0) Gain from International Trade Car Rice Japan 4.0
1.0 Thailand 3.5 4.0
Thailand could consume 3.5 units more car than it could have
consumed before specialization and trade and 4 units more rice. And
Japan could consume 4.0 units more car than it could have consumed
before specialization and 1 unit more rice. As a result of
specialization and trade, output of both car and rice would be
increased, and consumers in both nations would be able to consume
more.
b) Absolute advantage
Adam Smith (1723~1729), the Farther of modern Economics, is the
author of The Wealth of Nations which is the first modern work of
Economics. Smith was a leading advocate of free trade. Smiths
trading principle was the principle of absolute advantage. With
free trade, nations could concentrate their production on goods
they could make most cheaply, with all the consequent benefits of
the division of labor.
3) Comparative Advantage Comparative Advantage is still one of
the most important international trade theories. This theory is one
step further than the absolute advantage by exploring what might
happen when one nation has an absolute advantage in the production
of all goods. David Ricardo (1772~1823) made Adam Smiths theory
improved by exploring what might happen when one country has an
absolute advantage in the production of all goods. Ricardo
developed a principle to show that mutually beneficial trade can
occur even when one nation is absolutely more efficient in the
production of all goods.
Ricardo emphasized the supply side of the market. The immediate
bases for trade stemmed from cost differences between nations,
which were underlaid by their natural and acquired advantages.
Also, Ricardo emphasized the importance of absolute cost
differences among nations. Specialization According to Ricardos
theory of comparative advantage, it makes sense for a country to
specialize in the production of those goods that it produces most
efficiently and to buy the goods that it produces less efficiently
from other countries, even if this means buying goods from other
countries that it could produce more efficiently itself.
Specialization
Videohttps://www.youtube.com/watch?feature=player_detailpage&v=e0H7r_Dl1CQ
Comparative Advantage Before Specialization In a 2-nation,
2-product world To make 1 ton Mango Rice Thailand 10.0 hours 13.33
hours Japan 40.0 hours 20.0 hoursProduction and Consumption without
Trade Use 100 hour /product Mango Rice Thailand 10.0 tons 7.5 tons
Japan 2.5 tons 5.0
tons-----------------------------------------------------------------------------Total
production 12.5 tons 12.5 tons After swapping 4 tons of rice with
Thailand which gets 4 tons of rice from Japan , Japan still ends up
with 6 tons of rice, which is more than it had before
specialization. In addition, the 4 tons of Mango it receives in
exchange is 1.5 tons more than it produced before trade.
Specialization
Mango RiceThailand15.0 (10.0) 3.75(7.5)Use 150 for Mango /50 for
RiceJapan 0.0 (2.5) 10.0 (5.0)Use 200 for rice
----------------------------------------------------------------Total
production 15.0(12.25) 13.75(12.5)
Thailand 4 tons of Mango to Japan 4 tons of Rice from Japan
Mango RiceThailand 11.0 7.75Japan 4.0 6.00
Gains from Trade Mango Rice Thailand 11.0 7.75 10.0
7.50------------------------------------------------------- 1.0
0.25 Japan 4.0 6.0 2.5
5.0-------------------------------------------------------- 1.5
1.0
If Thailand exchanges 4 tons of Mango with Japan for 4 tons of
rice, it still left with 11 tons of rice, which is 1 ton more than
it had before trade. In exchange for its 4 tons of Mango, when
added to the3.75 tons it now produces domestically, leaves it with
a total of 7.75 tons of rice, which is 2.5 ton more than it had
before specialization. The basic message of the theory of
comparative advantage is that potential world production is greater
with unrestricted free trade than it is with restricted trade.
Ricardos theory suggests that consumers in all nations can consume
more if there are no restrictions on trade. This occurs even in
countries that lack an absolute advantage in the production of any
good.. In other words, to an even greater degree than the theory of
absolute advantage, the theory of comparative advantage suggests
that trade is a positive-sum game in which all countries that
participate realize economic gains. Thailand WHY 150/50 ?
Production with specialization Mango RiceThailand Use 200 for Mango
20.0 0.00 Japan Use 200 for rice 0.0 10.0 Summery Theory of
Comparative Advantage Theory of comparative advantage was explained
by David Ricardo in 1817 and it improved Adam Smiths the theory of
absolute advantage. This is the theory that focuses on the relative
(not absolute) advantage in one economic activity that one nation
enjoys in comparison with other nations. Even without an absolute
advantage, still a nation gains from international trade.
Opportunity Cost Opportunity cost is the cost of purchasing one
activity at the expensive of another activity, give the
alternatives. For example : Thailand produces more rice and less
apples. Japan produces more apples and less rice from the decision
of selecting less opportunity cost. Factor Endowments Theory In
1933, Heckscher & Ohlin explained that absolute &
comparative advantage stem from different factor endowments . A
factor endowment is commonly understood as the amount of land,
labor, capital, technology and entrepreneurship that a country
possesses and can exploit for manufacturing. This theory proposed
that nations will develop comparative advantage based on their
locally abundant factors. 4) Product Life Cycle The three classical
theories have an assumption of static economic situation. However,
in the real world, factor endowments and trade patterns change over
time. Thailand was an importer of cars for many years but now it
became an exporter. This is the first dynamic international trade
theory which accounts for changes in the patterns of trade over
time by focusing on product life cycles. In 1966, Raymond Vernon
explained his dynamic (not static) theory of international trade in
his book. He divided the world into three categories. A. The lead
innovation country (USA) B. Other Advanced countries C. Developing
countries
Every product has three life cycle stages: 1. New product 2.
Maturing product 3. Standardized product
5) Strategic Trade Absolute Advantage & Comparative
Advantage do not say anything about the role of governments. Smith
& Ricardo insisted no government intervention would be better
for (international) trade - Free Market. Strategic Trade theory
suggests that strategic intervention by governments in certain
industries can enhance its possibilities for international success.
Highly capital-intensive industries like as the commercial aircraft
industry with high barriers to entry where domestic firms may have
little chance of entering and succeeding without government
assistance. trade theorists propose only a few strategically
important industries, not all industries like Mercantilists did.
Airbus by EU countries (France, Germany, UK & Spain) would be
the best example. Boeing vs. Airbus
Japanese government decided to subsidize Elpida Memory Inc.
which is a manufacture of DRAM for PC to cope with Korean
manufactures . Dynamic random-access memory (DRAM) is a type of
random-access memory that stores each bit of data in a separate
capacitor within an integrated circuit. This kind of subsidize
would increase year by year.
Boeing vs. Airbus No subsidize from government Boeing vs. Airbus
Subsidize to airbus $10billion from government 6) National
Comparative Advantage Theory of National Comparative Advantage
focus on why certain industries within a nation are competitive
internationally. The competitive advantage of certain industries in
different nations depends on 4 aspects. 1. Factor endowments 2.
Domestic demand conditions 3. Domestic firm strategy 4. Related
& supporting industries
The dynamic interaction of these four aspects explains what is
behind the competitive advantage of leading industries in different
nations. This theory is the first multilevel theory to
realistically connect firms, industries and nations. Some critics
argue that this theory places too much emphasis on domestic
conditions. In this global age, some cases, overseas demand is more
important than domestic demand.
7) Evaluating Theories of International Trade 1. The classical
pro free trade theories seem like common sense today. Although,
these theories have assumptions of two-nation & two-product
world, perfect resource mobility, no foreign exchange complications
and zero transportation costs, free trade still beneficial as Smith
& Ricardo suggested in the real world. 2. Modern theories rely
on more realistic product life cycles, first-mover advantages and
the diamond theory to explain and predict patterns of trade. 3. The
victory of pro-free trade theories is not complete. The political
realities governing international trade indicate that Mercantilism
is still alive.Mid Term ExaminationII) Realities of International
Trade International Trade has substantial mismatches between
theories and realties. The political realties are that plenty of
trade barriers exist. There are two types of trade barriers; 1)
Tariff Barriers 2) Nontariff Barriers 1) Tariff Barriers A trade
barrier is a means of discouraging imports by placing a tariff on
imported goods. An import tariff is a tax imposed on a good brought
in from another country. When import tariffs are imposed, net
losses called deadweight costs occur. Although everybody in a
country suffers because of high price, the government must listen
to the powerful lobby. (political realties) 2) Nontariff Barriers
(NTBs) Tariff barriers are criticized around the world and
nontariff barriers are choice in trade wars, now. NTB discourages
imports using means other than taxes on imported goods.
NTB Subsidies Import Quota Export Restraints Local Contents
requirements Administrative Policies Antidumping duties Subsidies
Subsidies are government payments to domestic firms like the EU s
Common Agricultural Policy (CAP) and Japans rice subsidy. Import
Quota Import Quotas are restrictions on the quantity of goods that
can be brought into country. Import Quotas are worse than tariffs
because foreign goods can still be imported if tariffs are paid.
Quotas are the most straightforward denial of comparative
advantage. Voluntary Export Restraints Exporting countries
voluntarily agree to restrict their exports. One of the most famous
examples is the VERs that the Japanese government agreed to in the
early 1980s to restrict US-bound automobile exports. Actually,
Japanese government agreed VER reluctantly by pressure from US
government.
Local Contents requirementsA requirement stipulating that a
certain proportion of the value of the goods made in one country
must originate from that country. Because of VERs, Japanese
automakers switched to producing cars in US & other countries.
To avoid screwdriver plants, many governments imposed local
contents requirements on Japanese automakers. (To use more than 51%
of local components and labor.) Administrative Policies
Administrative policies are bureaucratic rules that make it harder
to import foreign goods. In 2011, several countries suddenly banned
foods from Japan because of radiation trouble in Japan.
Antidumping Duties If some foreign company export the product
below costs to unfairly drive domestic firms out of business, a
country impose antidumping duty on this import product.Economic
Arguments against Free Trade Trade barriers undermine international
trade . Although certain domestic industries & firms benefit
from them, the entire country tends to suffer. Still we have two
arguments against free trade. Political arguments & economic
arguments. There are two prominent economic arguments against free
trade, also. 1) The need to protect domestic industries. The oldest
& most frequently used economic argument against free trade is
the urge to protect domestic industries, firms & jobs from
allegedly unfair foreign competition. (Protectionism)
2) The need to shield infant industries. Young domestic firms
need government protection. Otherwise, they stand no chance of
surviving and will be crushed by mature foreign rivals. Although
this arguments is sometimes legitimate, Airbus was a good example,
governments & firms have a tendency to abuse it. Airbus
continues to ask for subsidies even now.
Political arguments against Free Trade Political arguments
against free trade are based on advancing nations political &
environmental agenda regardless of possible economic gains from
trade. There are main 4 arguments. 1) National security 2) Consumer
protection 3) Foreign policy 4) Environmental & social
responsibility
1) National security National security concerns are often
invoked to protect defense-related industries. France can purchase
nuclear weapons, aircraft carriers, & combat jets at much lower
costs from US. US eager to sell them, but the French answer was No
thank you! 2) Consumer protection Consumer protection has
frequently been used as an argument for nations to erect trade
barriers. American hormone-treated beef was banned by the EU
because of the alleged health risks. Even though US won a WTO
battle on this, EU still has refused to remove the ban. 3)Foreign
policy Trade intervention is often used to meet foreign policy
objectives. Trade embargoes are politically motivated trade
sanctions against foreign countries to signal displeasure. Many
Arab countries maintain embargoes against Israel. 4) Environmental
& social responsibility Environmental & social
responsibility can be used as political arguments to initiate trade
intervention against certain countries. In a shrimp-turtle case, US
banned shrimp imports from India, Malaysia, Pakistan &
Thailand. Also the shrimp were not harvested from US waters, they
were caught using a technique that also accidentally trapped sea
turtles, endangered species protected by US. These countries upset
& brought the case to WTO, alleging that US invoked an
environmental law as a trade barrier.The difference BTW AA &
CAWhen one nation is absolutely more efficient in the production of
all goods, The Absolute Advantage theory suggests no international
trade. Comparative Advantage theory is one step further than the
Absolute Advantage theory. In the production of all goods, what
might happen when one nation has an absolute advantage? By CA
theory, it makes sense for any country to specialize in the
production of those goods that it produces most efficiently and to
buy the goods that it produces less efficiently from other
countries. III) International Monetary system 1. Evolution of
International Monetary systemAfter studying the outline of the
basic determinants of exchange rates, we need to trace the history
of the three era of the evolution of the international monetary
system and IMF.Gold standardThe Bretton Woods SystemPost-Bretton
Woods System IMF
The Gold StandardThe gold standard was a system in place between
1870 and 1914, which the value of most major currencies was
maintained by fixing their prices in terms of gold.Gold was used as
the common denominator for all currencies. Thai Gold Thai Money
Supply Thai Products Price Germany Products Price
Thai Export Thai Import GermanyThailandGoldExportImport Thai
Gold Thai Money Supply Thai Products Price Germany Products
Price
Thai Export Thai Import GermanyThailand GoldExportImportThe
Bretton Woods System 1944~1973The gold standard was abandoned in
1914 when World War I broken out and several combatant countries
printed excessive amounts of currencies to finance their war
efforts. After World War I, especially during the Great Depression
1929-1933), countries engaged in competitive devaluations in an
effort to boost exports at the expense of trading partners. The
Mount Washington Hotel Bretton Woods, NH, USA @US$180~
Historical back groundCordell Hull, the United States Secretary
of State from 1933 to 1944, believed that the fundamental causes of
the two world wars lay in economic discrimination and trade
warfare. Specifically, he had in mind the trade and exchange
controls. He arranged to have a conference for this purpose at
Bretton Woods. By the end of World War II, USA became
incontrovertibly the world's dominant economic-military power. In
1945, U.S. held $26 billion=60% of world gold reserves.So, USA
controlled all discussions based on their ideas at the conference.
The idea of Harry Dexter White from USA was adapted and the almost
idea of John Maynard Keynes from UK was declined.
H. D. WhiteJ. M. KeynsThe strange story on Harry Dexter
White.
No one knows TRUE or NOT.Harry Dexter White: the man behind
Bretton Woods, the World Bank and the IMF was a Soviet Spy Harry
Dexter White (1892 1948) was an American economist and senior U.S.
Treasury department official. He was a primary mover behind the
Bretton Woods Conference, the formations of the World Bank and the
IMF . On July 31, 1948 Elizabeth Bentley - a former Soviet Union
Spy herself who defected Soviet Intelligence in 1945 - told the
House Committee on Un-American Activities that Harry Dexter White
had been involved in espionage activities on behalf of Soviet Union
during World War II, and had passed sensitive Treasury documents to
Soviet agents. Bentley insisted that White, acting on instructions
from the Soviet Union, pressured the Treasury Department to give
the Soviet Union plates for printing German occupation
currency.Harry Dexter White denied before HUAC on August 13, 1948
and died three days later of a heart attack. (Suicide or Killed)
Nixon Shock in 1971In 1971, US unilaterally announced that the
dollar was no longer convertible into gold.The Bretton Woods System
had been built on two conditions;1. US inflation rate had to be
low2. US could not run a trade deficitWhen both of these conditions
were violated, it would be very difficult to continue this
system.
40 years after from Nixon ShockAugust 15, 2011 was the 40 years
anniversary of Nixon Shock.August 15, 1971, US President Nixon
suddenly decided not to change gold with US dollars. It was the end
of the fixed rate. In 1973, we are facing unstable currency
situation by floating rate system. Now many countries increase
their gold reserve instead of US dollars.The Post- Bretton Woods
System 1973~Present1. In the 1960s , US increased government
spending in order to finance both the Vietnam War & Great
Society Welfare program not by taxation but by money supply.2. In
1971, US had the first post-1945 trade deficit because of the rapid
increase of productivity in Japan & Germany. US dollar value
YEN & Mark value
Marks = US$1 21 June 1948 3.3318 September 1949 4.20 6 March
1961 429 October 1969 3.6730 December1998 1.673*
