Nature and Scope of Export Management

• Nature and Scope of Export Management
  Introduction
  Agriculture is the main occupation in most of the developing countries. These countries are endowed with natural resources and also human resources. With the advent of new farm technologies productivity of many crops are increasing and this led to surplus production of certain commodities. This surplus finds a marketing place through proper management. Exporters explore the opportunities for selling the commodities in other countries. External trade takes place in two forms viz., export and import. If a country’s domestic production is more than the domestic demand export takes place and if the production is less than the domestic demand import takes place. Exchange of commodities or Trade between countries is called international trade. If exchange is done within the country it is called domestic trade.
  Export increases the income of the country. Foreign exchange earning increases. It provides support for import of other goods but at the same time it reduce the domestic availability of commodities. This may increase the domestic prices.
  Imports are done if the technology or commodity is not adequately produced. To meet out scarcity of commodities and to make the goods available at a reasonable price import is done. It reduces the foreign exchange. Import of certain commodities like pulses, oilseeds are necessary to meet the India’s domestic requirements.
  Traditional commodities exported from India are Tea, Coffee, Spices. New exports are Rice especially Basmati rice (scented rice) flowers, herbal products etc.
  In the context of globalization management of agricultural export assumes importance. It enables a country to plan for efficient utilization of available resources. Both natural and human resources. Focused efforts are being made to produce Agricultural commodities that has demand in other countries. Suitable technologies in production processing packing, transport, retailing etc. have to be followed to satisfy the customers of other countries. Knowledge on Rules Policies and tariff structure both in domestic and other countries relating to export of agricultural commodities plays a major role in successful international trade. Understanding of legal, social and cultural environment, income and profile of customers marketing strategies investments, competitors are another areas that promotes export.
  India’s share in world export was less than one percent whereas share of US was 25 percent. The share of Japan and china is getting increased recently. Our country’s aim is to achieve at least one per cent share in world Trade. It contributes for the economic development.
  Trade Patterns
  After the Second World War the world merchandise trade has grown faster than the world GNP or production. World’s Export and import growth was more than the GNP growth.
  Europe and central Eurasia accounted for 60 per cent of world’s exports and imports – Industrialized countries have increased their share in world trade by trading more among themselves and less with the rest of the world.
  Merchandise Trade
  In 1994 the dollar value of world trade was approximately $4 trillion. 75 percent of world export was generated by developed countries and 25 percent by developing countries.
  Among the Asian countries China and South Korea showed a higher growth. (720%).
  Nature and Scope
  It deals with the various factors that influence the domestic and international trade of agricultural commodities. The scope of the subject is very abroad especially after establishment of WTO in January 1st, 1995.
  The economic activities between the countries are different especially in the context of mobility of factors of production. With in the country mobility is perfect between countries it is less mobile. Goods are mobile within the country but also across the country if there are no government restrictions. The study of production, technology used in production quantity and quality of factors infrastructure availability various functions after the harvest of agricultural commodities, enterprises, rules, policies, procedures, promotional role, investment, income, production are the important areas of study in agricultural export marketing.
  Subject matter: There are two parts in studying Agricultural Export Management. They are theoretical and descriptive part.
  1. Theoretical part: It includes the theories, general principles, logical frameworks, actual events that influence the export policy of the government are studied. Theory can be divided into pure and monetary theory.
  Pure Theory of international trade are micro economic in nature and covers the following areas.
  The bases or causes of trade and pattern of trade
  Effect of trade on production, consumption and distribution of income
  Effect of trade on relative factor price and product price
  Gains from Trade and distribution of the gains
  Effect of trade barriers on trade factor and product prices and income distribution
  Effect of trade on economic growth and vice versa.
  The International Monetary Theory: It is macro economic in nature. It deals with balance of payments and international monetary system. It covers the areas of equilibrium and correction of balance of payment disequilibria, exchange rate determination, liquidity and balance of payment etc and other macro economic variables that have effect on export.
  2.Descriptive part is concerned with description of economic events just as they are and the institutional (rules, policies, procedures) environment in which they take place. It covers the flow of goods and services from one country to another country, flow of finance between countries, international organizations like World Bank, IMF, WTO etc.
  There are 206 countries in the World according to World Bank is report (World Development Report, 2006). These countries are classified into three categories based on per capita income as Low, Middle and High income.
  Low income economies: If the per capita income is (GNI-Gross National Income or GNP- Gross National Product) $ 825 or less in 2004 it is referred as low income economies. There are 59 low income economies in 2004.
  
  
  
  Economic Comparisons, 2004
  Country Region
  GNI
  GNI(PPP)
  GNI Per capita (Dollars)
  GNI (PPP) per capita (Dollars)
  $ billion
  Rank
  $ billion
  Rank
  USA
  12,151
  1
  11,655
  1
  41,400
  39,710
  Japan
  4,750
  2
  3,838
  3
  37,180
  30,040
  Germany
  2,489
  3
  2,310
  5
  30,120
  27,950
  UK
  2,016
  4
  1,869
  6
  33,940
  31,460
  France
  1,859
  5
  1,759
  7
  30,090
  29,320
  China
  1,677
  6
  7,170
  2
  1,290
  5,530
  Italy
  1,504
  7
  1,604
  8
  26,120
  27,860
  Canada
  906
  8
  978
  12
  28,390
  30,660
  Spain
  876
  9
  1,035
  9
  21,210
  25,070
  Mexico
  703
  10
  995
  10
  6,770
  9,590
  India
  675
  11
  3,347
  4
  620
  3,100
  Koria, Rep.
  673
  12
  982
  11
  13,980
  20,400
  World
  39,834
  -
  55,584
  -
  6,280
  8,760
  High income countries
  32,064
  -
  31,000
  -
  32,040
  30,970
  Middle income countries
  6,594
  -
  19,483
  -
  2,190
  6,480
  Low income countries
  1,184
  -
  5,279
  -
  510
  2,260
  Source: World Bank, World Development Report, 2006
  Middle Income economies: This is divided into lower middle income ($ 826 to $ 3255 in 2004) and upper middle income ($ 3256 to $ 10,065) economies. In 2004 there are 94 middle income economies. Majority of them are lower middle income economies.
  GNI Per capita and GNI Purchasing Power Parity (PPP) per capita are the measures used for international comparisons.
  Economic Comparisons, 2004 US $ billion
  Particulars
  India
  USA
  World
  GNI ($ billion)
  675
  12151
  39834
  GNI ($)
  620
  41400
  6280
  GNI (PPP) per capita
  3100
  39710
  8760
  Source: World Bank, World Development Report, 2006
  Low income countries are referred as Third world. (First world – high income second world-middle income)
  India is a middle income country. In terms of GNI India was the 11th largest economy and in terms of GNI (PPP) per capita it is the 4th largest economy.
  Foreign (Merchandise) Trade Scenario, 2003
  India’s Exports $ Billion 50
  India’s Imports $ Billion 70
  Trade Balance -15
  Imports as a percentage of exports 79
  Distribution of Global Trade: Much of the trade takes place between developed countries particularly the triad (USA, Western Europe and Japan). Bulk of the exports of developing countries is also absorbed by the developed countries.
  Germany, U.S.A and China account for more than 25 per cent of world trade.
  Leading Merchandise Traders, 2004
  Countries (Exporters)
  Value ($ billion)
  % share to
  world
  Importers
  Value ($ billion)
  % share to world
  Germany
  914.80
  10.00
  USA
  1526.40
  16.10
  USA
  819
  9.00
  Germany
  715.50
  7.60
  China
  593.40
  6.50
  China
  561.40
  5.90
  Japan
  565.50
  6.20
  France
  464.10
  4.90
  India
  55.00
  -
  India
  70.00
  -
  World
  9123.50
  100.00
  World
  9458.30
  100.00
  Globalization: is the process of integration of economies across the world through cross-border flow of factors, products and information.
  The IMF defines globalization as “growing economic interdependence of countries worldwide through increasing volume and variety of cross – border transaction in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technology.