Introduction
As the world globalizes and liberalization of free trade advocated for, countries are looking for what they can produce cheaply and best in order to reduce the cost of production involved lessening the strain to world’s resources which are at an alarming declining rate. Any country in the world has got the resources it is well endowed with and the resources it is poorly endowed with.
Thus, with trade liberalization specialization has been boosted as countries can produce their specialty cheaply, trade with others, and still have the purchasing power of what cannot be cheaply produced within their own countries.
To succeed in this, the country needs to evaluate its critical success factors to enable it succeed. To enable trade all over the world there has been an establishment of an international body which looks into trade matters, the World Trade Organization. WTO was created in the year 1995 though it has been working since 1945 under the GATT guidelines.
Contribution of UAE in International Market with Respect to Goods and Services
According to a WTO report, the United Arab Emirate success in trade (both locally and at internationally) has mainly been supported by its liberal and multifaceted economy which is characterized by low trade barriers.
“The economy has been growing steadily at around 6% per year in the last 10 years and slightly higher at 9% in the period between 2003- 2005” (WTO Press Release Par. 2). The country fares well in the international trade with its exports spread across the whole world.
According to the statistics of 2004, the European commission was the lead market for the country’s exports while Asia was the main source of its imports (see table 3 in appendices). This might have led to its’ success as the raw materials are sourced from around the continent giving the country an upper hand in cutting down the cost of production involved. The European Commission is the major market for the United Arab Emirates as table 4 in appendices indicates.
The country is a major exporter of oil products (Moore 2008). The country is also a lead exporter of merchandise trade as shown in table 1. The country lies at position 19 as of 2007 statistics. Despite the country success it has been faced by trade barriers within, which makes it difficult to conduct business within the country due to their restrictive polices, weak institutions, and lack of competition (WTO press release 2006).
The Top Ten Exporters and Importers in World Merchandise Trade
The critical success factors of the world top ten exporters and importers lies on the efforts these countries have been making to open up of their economies coupled with different economic strategies and initiatives being initiated by these countries. For the top ten exporters and importers of merchandise trade our focus shall be centrally on China due to its emergence as a world economic leader in the near future.
As we have seen, China is the leading exporter of merchandise trade while the United States is the lead importer of merchandise in the world as per the statistics. China’s success factors have simply been based on the fact that the country has a huge market due to its large population size and economy is growing holistically across all sectors.
For example in the year 2008, China surpassed the United States of America as the world leader in the production of electronics such as the laptops and mobile phones. With its growing population, the country has grown to become the second largest car market in the world and could surpass United States of America by the end of the year 2010 if the expected sales are achieved as predicted.
The country’s middle class population is estimated to be around half a billion and if the middle class continues to grow in this country you can expect the market share of China in the world’s market to increase. Another critical success factor has been that China operates the third busiest port after Hong Kong and Singapore thus with the capability of the Shanghai’s port becoming the largest shipping port in the near future, the prospects of China are still bright as ever.
As the above figure shows, the country has the largest world GDP share after the United States of America and with its growing population of more than 1.3 billion people China will continue to be a big market destination. China has got the highest literacy levels among the developing countries and this has been a success factor as it shows that the country has the capability of providing quality labor at low costs, which is difficult to be marched by other big economies such as the United States of America.
The entry of China into the WTO has also been a major boost in enabling the country open its local markets for international investors. The country has been offering international investors a comfortable environment in which they can conduct trade by offering tax incentives, for example sometimes she offers tax waivers to foreign investors depending on the location of their investment projects (Cohen 2010.)
In some places within the country, there exist free trade zones as the country increases its efforts to attract foreign investment in these areas. Despite the country’s success, many companies in China do not practice due diligence as most do not keep proper inventory of their records.
Many companies keep different records depending on the use for example you will find companies keeping books for government inspectors, investors, and for their own all with different entries but referring to the same accounts. The banking system is also suffering from in active loans for example statistics show that in the year 2008, bad debts were to the extent of more than 50 billons American US dollars (Kang, Kim, Sun, Jones & Zangh 2010).
Among the European Union members, Germany lies second in exporting and third at importing in the merchandise trade and it is the leading in Europe and her critical success factors have been attributed to the fact that just as the other countries, Germany has embraced an open economic system.
As observed by Hamilton & Quinlan (2008) evidence shows that, “The German economy is the world’s fifth largest, measured by purchasing power parity, and of the five is the most tightly tied to the global economy – more than the U.S., China, India or Japan.
Germany is also the world’s #1 exporter of goods and the #3 exporter of services. Germany accounts for only 1.5% of the world’s population yet in recent years it has actually boosted its share of global markets.”(p. 2). The growth has been achieved despite pressure from other emerging economies like China and India who boasts a high population in their countries compared to Germany.
The Top Ten Exporters and Importers of Commercial Services
The critical success factors on the top ten importers rely on country policies and our focus here shall be on the United States of America for its role as the global leader for a very long period. The United States of America is the global leader at both importing and exporting of commercial services as from 2009 statistics shown in table 2.
European Union countries comprising of the UK, Germany, France and Spain among others contribute to more than 25% of the market share with China having a fair share of 3.8%. As noted by Gutierrez (2007) before the economic crisis in the year 2008, there was evidence that the US economy had grown at a rate of “3.3% in 2006 and the country’s exports had grown to 13% in 2005 and imports by 10% over the same period” (p.5).
The factors which have made the US a major success in the world of exports has been its’ huge growth as well as the trade promotion authority which has enhanced free trade agreements between the country and other countries. With the highest percentage of consumers being outside the United States of America, the World Trade Organization plays a key role and the Doha talks if succeeds will enhance an increase in US exports to other countries around the world.
According to Gutierrez (2007) experts argue that “American competitiveness in the global market is due in large part to an economy and culture that welcome and encourage innovation and flexible open markets” (32). The other leading EU countries include the United Kingdom, Germany, France, Spain, Italy and Ireland with China and Japan coming there in between.
Fastest Growing Traders
Among the fastest growing traders in the world are China, India, Brazil and lately Qatar, though its economy size is small compared to the others. These countries emergence as fast traders has been attributed to their rising populations due to their large size thus giving them a chance for a large internal market and room for external market demands depending on their needs.
That’s why in the recent past, less developed countries have been relying on India, China and Brazil to help them convince the developed to reduce barriers and tariffs in trade so as to ensure even the poor and the Less Developed Countries benefit from liberalization of trade (Wood 2010).
These growing economies are expected to have an influence in the world of trade as we have seen in the case where Brazil has grown to the extent that it has of late disagreed with the UN on imposing economic sanctions on Iran over its role in nuclear weapons. Brazil has refused to impose sanctions on the country and it has grown into a position where it can sanction the United States of America after directions from the WTO for breaking the WTO guidelines (Dade 2010).
Both India and China have the majority population at 37% expected to drop to 34% by 2040 and their share of the GDP expected to grow to 40 % (Srinivasan 2010). India success has mainly based on its growing population and the liberalization of trade, which provides a large market pool for the Indian goods and services. The free trade policies have enabled the country export and import its goods and services at cheap costs and with its latest investments in infrastructure, the country will continue to grow.
Qatar has been another country from Asia which has been growing rapidly. As pointed out by Omran (2010), evidence shows that it has the “highest per capita income in the world and enjoys one of the fastest growing GDPs, reaching 13.3% real GDP, and valued in 2008 at over US$80 billion” (Par 1).
he country’s economy has been expanding in every sector. The country has been expanding its investment for infrastructures and expansion of the economy in almost every sector. The liberalization of trade has also enhanced rapid and expanding trade in this country. With new oil fields being discovered daily and the petroleum products supply declining, Qatar will continue to grow rapidly.
Conclusion
As the world globalizes and it develops to a global village, interactions will increase and the country’s dependency on one another will continue to increase. From the study we can conclude that the United States of America remains a global leader in world trade though the role of emerging economies such as China and India cannot be underestimated. Countries that supply the world with oil products will continue to expand faster than other economies due to the latest importance of oil products in the world.
Reference List
Cohen, J. C. 2010. Hearing on Evaluating China’s Past and Future Role in the World Trade Organization. Web.
Dade, C. 2010. Brazil Confirms It Will Impose Trade Sanctions against U.S. Web.
Gutierrez, C. M. 2007. The 2007 National Export Strategy: Administration’s Trade Promotion Agenda. Web.
Hamilton, D. S; Quinlan, P. J. 2008. Germany and Globalization. Web.
International Trade Statistics, 2010. World Trade Developments in 2009. Web.
Kang, S; Kim, S. H. S; Sun, F; Jones, P; Zangh, D. 2010. China Acquisition Opportunities 2010 Morgen. Web.
Moan, G. 2010. ME traders Qatar Expo 2010 Web.
Moore, M. 2008. The US-UAE Trade and Investment Relationship. Web.
Srinivasan, T.N. 2010. Economic Reforms, External Opening and Growth: China and India. Web.
Wood, C. 2010. What’s needed for the Doha Round to Move Ahead? Web.
World Trade Organization Press Release, 2006. Trade Policy Review: United Arab Emirates (UAE) Web.