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Lecture №3 Government regulation of the world prices 1.The main methods of state interference in world pricing 2. Duties and their role in world pricing.

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Presentation on theme: "Lecture №3 Government regulation of the world prices 1.The main methods of state interference in world pricing 2. Duties and their role in world pricing."— Presentation transcript:

1 Lecture №3 Government regulation of the world prices 1.The main methods of state interference in world pricing 2. Duties and their role in world pricing 3. Use by state nontariff methods of the influence upon world prices 4. Hidden forms of the state influence on world prices 5. Financial instruments of state interference in pricing

2 Key notions The protectionism, direct and indirect methods of the regulation of the prices, tariff, duty, imported duty, transit duty, exported duty, fiscal and protectionists duty, specific duty, nontariff methods: quantitative, hide methods, financial methods, assignment of quotas, quota, embargo, licensing, "voluntary" restrictions of the export, state purchases, technical barriers, backing, export lending, dumping, help of state.

3 The main methods of state interference in world pricing State interference in world prices is realized by means of legislative, administrative and budgetary-financial actions.And presents itself special kind of the protectionism. Protectionism is a state policy of the protection of the inside market from foreign competition by use tariff and nontariff instruments to trade in the world market.

4 Government regulation of the world prices: Select several forms of the government regulation of the world prices: Direct participation state in sphere of production and circulating of commodities(goods) ; influence on market balance; use antimonopoly laws, politics of income, credit and money systems, budgets.

5 The indirect methods The indirect methods of the state influence on world prices present itself regulation of the aggregate demand by means of tariff and duties, tax politicians, credit, different of the quotas and subsides, government purchase rendering help enterprise-exporter and countries.

6 Direct and indirect methods. The state instruments of interference in world pricing include direct and indirect methods. Direct method is administrative establishment of prices on separate goods and services. This method broadly used in such country, as France, Belgium, Netherlands, Russia, Ukraine, Kazakhstan and others. Given method gets its development and in Tajikistan. Typical its particularity is that direct interference in world pricing is realized in branches of the public use or other branch and having strategic nature for separate countries (energy, transport, communication, water-supply and another.) State can direct influence on price by means of legislative acts or use different tariff and nontariff methods

7 Consequence of direct state interference in world pricing

8 The export quotas of the country The export quotas of the country use in accordance with international stabilization relations, installing share of each country in general export of certain goods, or for prevention export of goods on internal markets. Often quotas are used for ensuring the domestic producers of sufficient reserve goods spare on more low price, for warning the exhaustion of natural resource, as well in purpose of increasing of the prices on export by restrictions of the deliveries on foreign market.

9 Embargo The specific type of quota system is an embargo, which completely forbids trade. Most often its use in political purpose for pressure on country. Particularly often uses the embargo USA, England and other developed countries. The embargo for country has heavy economic and social aftermath. Together with that, it have principle of the boomerang, is reflected on country, which its used.

10 Nontariff methods The embargo, licensing, "voluntary" restriction of the export are a quantitative instruments of nontariff methods of state interference in economy. Quotas greatly influence upon world prices.

11 The financial methods The financial methods of the influence government countries on pricing are a subsidies, crediting, dumping, financial help. In modern condition, in purpose of the stimulation of the export and restrictions of the import on separate goods and services, many countries broadly practice subsidies. The subsidy - an allowance in money or natural form, provided to by state to account of the budget domestic company and enterprise, as well as foreign state and company in purpose of support of the national producers in the world market.

12 Direct subsiding. Subsiding is one of the most important forms of the state interference in pricing. Realizing their own goods on more low to price, than on internal markets, exporters carry the enormous losses and do not get the profit. In purpose of support of their competitiveness the countries to realize direct subsiding.

13 State compensations State resorts to such forms of the compensations of the losses exporter, as presentation of domestic producer set of the different sort of the services: free information on the market and prices; organization of the trade exhibitions; undertaking the fairs; establishment contact between representative of the business groups different countries and local producer.

14 Indirect subsiding Indirect subsiding of exporter is realized by banks: granting the privileges on payment of the taxes; the favorable conditions of the insurance; the loans on rate below market; return the market duties. Typical example of state support of the prices on different goods and service can serve the country European community. Else in times of the generation to this regional organization formed whole system of financial stabilization of the prices on agricultural product its participant: intervention, in accordance with which EC installs the minimum price on agricultural product and buys it on this price if market price is more low; export compensations, emerging as subsidies on export of the product for outside of EC; quotas and close check for volume of the product, produced by each participant EC.

15 The Dumping The Dumping - an export goods on "worthless" prices, which considerably below the prices of the country-exporter provided that such sort will inflict the strong damage corresponding to branches in country of the importer. The dumping is realized to account of the separate companies, as well of state subsidy exporter. The Dumping emerges in the following forms: " sporadic dumping -a sale spare goods spare on foreign markets on understated prices. The reason is presence spare goods, which can not be marketed on internal market. The Company cost(stand)s before dilemma: or destroy goods and be ruined, or sell him(it) on foreign markets on бросовой to price; " intentional dumping - a temporary reduction of the export price for the reason displacing the rival with the market and following determination of the monopoly price. The Prices will in this instance be below costs and prime cost production goods; " inverse dumping - завышение prices on export product in contrast with the prices of the sale her(it) on home markets. In practice, the inverse dumping meets much seldom; " mutual dumping -a bilateral trade two countries one and same goods on understated prices.

16 The International credit The International credit – is non tariff method of foreign economic politicians, providing financial stimulation of government of the development to export activity.

17 Export lending In depending from that,who directly credits of the foreign buyer, export lending can be branded or banking. In many events export lending of the governmental credit or credit of governmental organ. Necessary to note that branded and bank quotient export credits has a state warranties from different sort risk in within the framework of systems of their insurance. On information of the International monetary fund, the export lending is concentrated on small group of the countries. Approximately 63% all export credit in world economy get only ten countries, amongst them Russia, China, Brasilia, Mexican and others

18 The conditions of the realization of the dumping: in first, differences in resilience demand for goods in different country - a demand for national market must be less elasticity, than demand for given goods overseas; secondly, market situation and competition - an imperfect competition allows the producer to install and dictate the price; thirdly, segmentation of the market - an ability to fence the high internal prices from foreign market. The Dumping is used, first of all, for the reason suppressions market and its seizure; he is straight connected with the prices on goods and services.

19 Thereby, dispute about that, must the state to intervene in economy and provide the economic growing, has persuasively allowed the world financial crisis. Already no doubts that all decisions, which take the government of the countries on tax, tariff, subsidy, percent rate on credit, on rates of exchange, as well as on question of the education, public health, preparing of the personal and, directly or indirectly characterize the state influence on economic processes as inwardly country, so and on world market. The modern processes, occurring in world economy, have practically crowded the concept that state must sail in economy where does not operate the self-regulatory mechanism, and bring forth on the first plan complex state toolbox on use it in overcoming world economic crisis.

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