International Commodity Management , IIPMB

1. International CommodityInternational Commodity
ManagementManagement

2. Natural ResourcesNatural Resources
►Renewable resources willRenewable resources will
replace themselves over time.replace themselves over time.
Examples would be soil, waterExamples would be soil, water
and forestsand forests

3. ►Non-renewable resources areNon-renewable resources are
resources that will not replaceresources that will not replace
themselves. Once they arethemselves. Once they are
used, they are gone.used, they are gone.
Examples--fossil fuels (Oil,Examples--fossil fuels (Oil,
Coal, Natural gas) and MetalsCoal, Natural gas) and Metals
- Gold, Iron Ore, Copper and- Gold, Iron Ore, Copper and
BauxiteBauxite

4. Human ResourcesHuman Resources
►Human resources are man andHuman resources are man and
his mind -(Skills)his mind -(Skills)
►Potential of Human resourcesPotential of Human resources
depends on level of education,depends on level of education,
whether skilled or unskilledwhether skilled or unskilled
labor, and are entrepreneuriallabor, and are entrepreneurial
or managerial abilities required.or managerial abilities required.

5. Capital ResourcesCapital Resources
►Capital resourcesCapital resources are resourcesare resources
that can be used to make more, likethat can be used to make more, like
monetary resources or toolsmonetary resources or tools
►Key features of capital are theKey features of capital are the
availability of money for lending, theavailability of money for lending, the
level of infrastructure, the availabilitylevel of infrastructure, the availability
and use of tools, machines, andand use of tools, machines, and
technologiestechnologies

6. Three levels of Economic ActivityThree levels of Economic Activity
►Primary Activities-Primary Activities--dealing directly-dealing directly
with natural resources (ex.-fishing,with natural resources (ex.-fishing,
farming, mining, and forestry)farming, mining, and forestry)
►Secondary Activities-Secondary Activities--are-are
manufacturing and processing ofmanufacturing and processing of
natural resources (ex.--steel mills,natural resources (ex.--steel mills,
automobile assembly, sawmillsautomobile assembly, sawmills

7. ►Tertiary Activities-are serviceTertiary Activities-are service
industries (ex.-transportation,industries (ex.-transportation,
retail trade, informational andretail trade, informational and
technology services)technology services)

8. Energy resources and technologyEnergy resources and technology
has changed over timehas changed over time
►Wood--deforestationWood--deforestation
►Coal--pollution, miningCoal--pollution, mining
problems, competition with Oilproblems, competition with Oil
and Gasand Gas
►Petroleum--transportation,Petroleum--transportation,
environmental considerationsenvironmental considerations

9. Energy resources and TechnologyEnergy resources and Technology
has changed over time cont.has changed over time cont.
►Nuclear--Contamination,Nuclear--Contamination,
WasteWaste
►Solar or Wind--Cost,Solar or Wind--Cost,
AestheticsAesthetics

10. Patterns of Land usePatterns of Land use
►Most economic activities areMost economic activities are
relatively close to the naturalrelatively close to the natural
resources they use; ex.-resources they use; ex.-
coal/steel, grain/cattle,coal/steel, grain/cattle,
fishing/ocean, hydroelectricfishing/ocean, hydroelectric
power/aluminum smeltingpower/aluminum smelting

11. Patterns of land use cont.Patterns of land use cont.
►Not all nations are close to theNot all nations are close to the
resources they use: ex.--Japanresources they use: ex.--Japan
has limited natural resources,has limited natural resources,
but they are a major industrialbut they are a major industrial
power and the United Arabpower and the United Arab
Emirates (UAE) have lots of Oil,Emirates (UAE) have lots of Oil,
but no major industriesbut no major industries

12. Examples of Technology CreatingExamples of Technology Creating
DemandDemand
►Some new technologies haveSome new technologies have
created a demand for acreated a demand for a
particular natural resource--particular natural resource--
steam engine and coal, internalsteam engine and coal, internal
combustion engine and gas,combustion engine and gas,
computer chips & skilled laborcomputer chips & skilled labor

13. Costs and benefits from usingCosts and benefits from using
Natural ResourcesNatural Resources
►CostsCosts
► 1. Resource depletion.1. Resource depletion.
► 2. Environmental destruction2. Environmental destruction
► 3. Health problems3. Health problems

14. Costs and benefits from usingCosts and benefits from using
Natural ResourcesNatural Resources
►BenefitsBenefits
►1. Helps us produce goods and1. Helps us produce goods and
services.services.
►2. It creates employment2. It creates employment
opportunitiesopportunities
► 3. It helps develop new3. It helps develop new
technologiestechnologies

15. The effects of unequal DistributionThe effects of unequal Distribution
of Resourcesof Resources
►Because resources are distributedBecause resources are distributed
unequally around the world, it causesunequally around the world, it causes
several things to happenseveral things to happen
►1. Interdependence of nations -- they1. Interdependence of nations -- they
must trade with each other to acquiremust trade with each other to acquire
the goods they do not possessthe goods they do not possess

16. The effects of unequal distributionThe effects of unequal distribution
of resources cont.of resources cont.
►2. Uneven economic development2. Uneven economic development
(rich and poor countries)(rich and poor countries)
►3. Energy producers and consumers3. Energy producers and consumers
►4. Imperialism (A country dominating4. Imperialism (A country dominating
another or Others)another or Others)
►5. Conflicts over control of Resources5. Conflicts over control of Resources

17. Differences between developingDifferences between developing
and developed nationsand developed nations
►Developed nations have betterDeveloped nations have better
access to natural and capitalaccess to natural and capital
resourcesresources
►Developed nations have moreDeveloped nations have more
investment in technology andinvestment in technology and
have created a betterhave created a better
infrastructureinfrastructure

18. Differences between developingDifferences between developing
and developed nations (cont.)and developed nations (cont.)
►Developed nations have more skilledDeveloped nations have more skilled
laborlabor
►Developed nations have a higherDeveloped nations have a higher
level of economic developmentlevel of economic development
►Developed nations have a higherDeveloped nations have a higher
standard of living and a higher qualitystandard of living and a higher quality
of lifeof life

19. Indicators ofIndicators of
Economic DevelopmentEconomic Development
►Is the country more urban orIs the country more urban or
more rural? Developed nationsmore rural? Developed nations
are generally urban.are generally urban.
►At what labor level do mostAt what labor level do most
people work? Most people inpeople work? Most people in
developed nations work indeveloped nations work in
secondary and tertiary areas.secondary and tertiary areas.

20. Indicators of EconomicIndicators of Economic
DevelopmentDevelopment
►Is the Gross Domestic Product forIs the Gross Domestic Product for
the nation high or low? Mostthe nation high or low? Most
developed nations have a highdeveloped nations have a high
GDP?GDP?
►What is the level of the educationalWhat is the level of the educational
achievement? Most developedachievement? Most developed
nations have a highly educatednations have a highly educated
populationpopulation

21. Indicators of Standard of LivingIndicators of Standard of Living
and Quality of Lifeand Quality of Life
►A nation has a high standard of livingA nation has a high standard of living
and a high quality of life if…and a high quality of life if…
 the population growth rate is low,the population growth rate is low,
 the population age distribution isthe population age distribution is
eveneven

22.  The literacy rate, life expectancyThe literacy rate, life expectancy
rate and percentage of urbanrate and percentage of urban
people is highpeople is high
 the infant mortality is lowthe infant mortality is low

23. Why do countries Trade?Why do countries Trade?
►To import goods and servicesTo import goods and services
they needthey need
►To export goods and servicesTo export goods and services
to make economic surplusto make economic surplus

24. What influences Economic Activity?What influences Economic Activity?
►A country’s access to human, naturalA country’s access to human, natural
and capital resources.and capital resources.
 Do they have a skilled workforce?Do they have a skilled workforce?
Do they have natural resources?Do they have natural resources?
 Are the transportation andAre the transportation and
communication networks modern/communication networks modern/
outdated or nonexistent?outdated or nonexistent?
 Do they have access to newDo they have access to new
technology?technology?

25. What influences economic activity?What influences economic activity?
►A country’s location and abilityA country’s location and ability
to exchange goods fromto exchange goods from
resources.resources.
►Are they landlocked? Are they anAre they landlocked? Are they an
island or coastal nation? Howisland or coastal nation? How
close are they to shipping lanes?close are they to shipping lanes?
What is their access toWhat is their access to
communications?

26. Who influences Economic Activity?Who influences Economic Activity?
cont.cont.
►They are members of aThey are members of a
political or economic alliancepolitical or economic alliance
which provides access towhich provides access to
markets.markets.
►Examples would be, theExamples would be, the
European Union (EU), NorthEuropean Union (EU), North
American Free TradeAmerican Free Trade
Agreement(NAFTA), etc.Agreement(NAFTA), etc.

27. What is Comparative advantage?What is Comparative advantage?
►Comparative advantageComparative advantage meansmeans
a country will export goods anda country will export goods and
services that they can produceservices that they can produce
at lower relative costs thanat lower relative costs than
other countries.other countries.

28. What are the effects ofWhat are the effects of
comparative advantage?comparative advantage?
►Enables nations to produce goodsEnables nations to produce goods
and services they can sell for a profitand services they can sell for a profit
►influences the development ofinfluences the development of
industries (ex. steel, aircraft,industries (ex. steel, aircraft,
automobile, clothing etc.)automobile, clothing etc.)
►Supports specialization and efficientSupports specialization and efficient
use of human resourcesuse of human resources

29. Examples of countries andExamples of countries and
their use of Resourcestheir use of Resources
►Japan--Japan--highly industrializedhighly industrialized
despite limited Naturaldespite limited Natural
ResourcesResources
►Russia--hasRussia--has numerousnumerous
resources but many are notresources but many are not
economically profitableeconomically profitable toto
actually developactually develop

30. Examples of countries and their useExamples of countries and their use
of resourcesof resources cont.cont.
►United States--diversifiedUnited States--diversified
economy , specializedeconomy , specialized
industries, Abundant resourcesindustries, Abundant resources
►Cote d’Ivorie--limited NaturalCote d’Ivorie--limited Natural
resources, but they use cashresources, but they use cash
crops to buy manufacturedcrops to buy manufactured
goodsgoods

31. Use of resources by Countries.Use of resources by Countries.
►Switzerland--has limitedSwitzerland--has limited
natural resources, but producesnatural resources, but produces
goods on a global scalegoods on a global scale

32. What are the effects of unequalWhat are the effects of unequal
distribution of resources?distribution of resources?
►Unequal distribution of resourcesUnequal distribution of resources
causescauses countries to specializecountries to specialize in thein the
goods and services they produce.goods and services they produce.
►It also encourages countries to tradeIt also encourages countries to trade
with one another for the goods theywith one another for the goods they
can not produce themselves.can not produce themselves.
►It allows some to make a profitIt allows some to make a profit

33. How has economic interactionHow has economic interaction
changed over time?changed over time?
►Labor has moved fromLabor has moved from
individual homes (cottageindividual homes (cottage
industry) to factories to officesindustry) to factories to offices
to telecommunicationsto telecommunications
►there has been a largethere has been a large
migration from rural to urbanmigration from rural to urban
areasareas

34. How has economic interactionHow has economic interaction
changed over time? cont.changed over time? cont.
►Industrialized countries nowIndustrialized countries now
export labor intensive work toexport labor intensive work to
developing nationsdeveloping nations
►Trade alliances have grown inTrade alliances have grown in
numbernumber
►Service industries (tertiary)Service industries (tertiary)
have grown in numberhave grown in number

35. How has Economic InteractionHow has Economic Interaction
Changed Over Time? cont.Changed Over Time? cont.
►Financial services by networks andFinancial services by networks and
international banks have increasedinternational banks have increased
►Products have become internationallyProducts have become internationally
assembled instead of everythingassembled instead of everything
being made in one locationbeing made in one location
(ex. Vehicles, Electronics)(ex. Vehicles, Electronics)

36. How has economic interactionHow has economic interaction
changed over time? cont.changed over time? cont.
►ModernModern transportation networkstransportation networks thatthat
allow forallow for rapid and efficientrapid and efficient exchangeexchange
of goods and services (ex. Federalof goods and services (ex. Federal
Express, UPS, US Postal Service)Express, UPS, US Postal Service)
have grownhave grown
►Widespread marketing of productsWidespread marketing of products
has increased (ex. Fuji, Nike etc.)has increased (ex. Fuji, Nike etc.)

37. Examples of Economic UnionsExamples of Economic Unions
►EUEU--European Union--European Union
►NAFTANAFTA--North American Free--North American Free
Trade AgreementTrade Agreement
►OPECOPEC--Organization of--Organization of
Petroleum Exporting CountriesPetroleum Exporting Countries
►ASEANASEAN--Association of--Association of
Southeast Asian NationsSoutheast Asian Nations

38. Advantages of Economic UnionsAdvantages of Economic Unions
►Allow for more efficient industriesAllow for more efficient industries
►Have access to larger marketsHave access to larger markets
►Have access to more human, natural,Have access to more human, natural,
and capital resources withoutand capital resources without
restrictionsrestrictions
►Have a greater influence on worldHave a greater influence on world
marketsmarkets

39. Disadvantages to Economic UnionsDisadvantages to Economic Unions
►May cause some industries to closeMay cause some industries to close
►Certain industries becomeCertain industries become
concentrated in particular countriesconcentrated in particular countries
while ignoring the smaller ones.while ignoring the smaller ones.
►Agribusiness is replacing the familyAgribusiness is replacing the family
farm. (Small growers loosing theirfarm. (Small growers loosing their
identity)identity)
►There is often difficulty in agreeing onThere is often difficulty in agreeing on
common economic policies.common economic policies.