LECTURE 2 TITLE:

1.0 OBJECTIVE 1.1 1.2 1.3 to show the relation between international trade and the nature of international shipping to show the grouping of the world in term of their volume of participation in international trading to show the major division of products according to world grouping.

Trade Pattern and Trade Composition

2.0

INTRODUCTION 2.1 The composition and characteristics of international shipping is very much related to the composition and characteristics of international trades between countries around the world. Understanding on the each participating countries, its trade commodities and its behaviour in trading will give a better insight on the understanding of the pattern of international shipping.

2.1

3.0

INTERNATIONAL TRADE AND SHIPPING 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 The trading country selects the type of commodity to be traded based on its capability Trading country selects type of capability, in relation to which economic activity is best, in accordance with the theory of comparative advantage. Trading country try to improve and maximise participation in international trading in all aspects ( administrative, legal, etc) including transportation. Trading country thus include in its overall infrastructure in its international trading the acquisition of ships. Ships acquired may strictly support its type of commodity traded as well as commodity traded by other countries ..to it of to others. This thus gives indication to the distribution of type of commodity and type of ships around the world. This in turn represent the nature of shipping operation around certain regions of the world.

4.0

CLASSIFICATION/GROUPING OF WORLD TRADING COUNTRIES 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 The above leads the grouping of countries around the world into four (4) categories. Group I the industralised countries comprising Western Europe, North America, Japan, Australia and New Zealand. Group II, the high income oil producing countries. .comprising Saudi Arabia, Oman, Libya, Kuwait and Saudi Arabia. Group III, the Eastern Europe (previously the socialist block).. .comprising East Germany, Poland, and members of the Russian block. Group IV, the developing countries. ..comprising the Southeast Asia The trading activity of the four groups are as follows

GROUP EXPORT IMPORT %POP. ____________________________________________________________ I 63% 65% 16 II 7% 4% 1% III 9% 8% 8% IV 21% 23% 75% .these are 1982 figures. 4.11 Note that, if we agree on the fact that flow of commodity depends on demand by world population, export and import activities should be more for Group IV. Note that import and export activities concentrates among Group I. This is, in one way, due to faster flow of commodity internally within each of Group I country,. Also due to very active economic activity,.. Group IV exports to Group I more than other groups. Leading us to a point that Group I involves in processing commodity originating from Group IV. This situation of unbalance share of international economic activities has been a major debates But Group IV share has in 1982 been forecasted to increase yearly by around 3%.

4.12 4.13 4.14 4.15 4.16 4.17 4.18

4.19

Group to group trading situation is as follows:

Exporting to GROUP-I GROUP-II GROUP-III GROUP-IV % % % % __________________________________________________________ GROUP-I 66 4 3 27 GROUP-II 55 10 1 34 GROUP-III 31 4 52 13 GROUP-IV 64 3 4 29 .figures from 1982 4.20 4.21 4.22 4.23 4.24 4.25 4.26 Note that GROUP-I export activities is 60% to its members, thus in a way indicating the nature of flow of end product of economic activities. Note that GROUP IV export raw materials to GROUP IV Export and import between members of GROUP IV only stands at 29%. ..this according to UNCTAD in 1982 only amounts to 6% of world trade. Activities among members of GROUP IV is low because, of one primary reason, that they are producing the same kind of commodity. Among the GROUP-IV Asian take a better share of international trading Activities by the ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC (ESCAP) developing countries in GROUP-IV is as follows: Export to % Import from % _________________________________________________ ESCAP developing 27 22.7 ESCAP developed 20.7 24.1 North America 22.0 16.9 Western Europe 14.1 15.9 . Figures from 1982 Active ESCAP members are Myanmar, Laos, Viet Nam, Bangladesh, Malaysia, etc.

4.27

5.0

TRADE COMPOSITION 5.1 5.2 5.3 5.4 Commodities may be divided into two categories, primary and manufactures. Primary commodities are basically raw materials such as agricultural products and fuels and minerals. Manufactures are machinery, transport equipment textiles, etc. The situation between GROUP-I and GROUP-IV when split into the two categories is as follows:

GROUP-I GROUP-IV TYPE Exp. Imp. Exp. Imp. ___________________________________________________ Primary-agri. 15 11 25 12 Primary-fuel&min. 12 37 31 21 Manuf-m/c 37 22 11 28 Manuf-textile 36 30 33 39 ..figures are by value and as of 1984 5.5 5.6 5.7 5.8 Note that textiles contributes a major value in international trading in both GROUPs. Note also than primary commodities are of low value although volume of trade is far more important in shipping. Hence participation in shipping by GROUP-IV should not be restricted by value but by the volume of raw materials it traded. The volume of world sea borne trade in 1984 is 3,312 million tons; 38% of it crude oil and oil product, 22% primary bulks such as iron ore, coal and grain and 40% others.

6.0

CLOSING 6.1 6.2 6.3 6.4 There is definite groupings of countries in international trading There is definite grouping of commodities traded There is definite pattern in international trading All these dictates the composition and characteristic of international maritime transportation.