By Edgar P. Hibbert (auth.)
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Extra info for International Business: Strategy and Operations
Quotas among producers are often implemented to prevent over-production forcing down prices, causing loss and precipitating future shortages of supply. The other important aspect is the balance of market power between producing and consuming countries. A study by the Economist Intelligence Unit examined this aspect with reference to 13 commodities: bananas, bauxite, cocoa, coffee, copper, iron ore, pepper and other spices, phosphates, natural rubber, sugar, tea, tin and wool. The study found that there were five significant limitations on the market power of the producers: 1.
Trade in manufactures One of the most significant trends in the last decade has been the expansion of the industrial base of newly-industrialising countries (NICs), evidenced by the increase in their machinery and equipment exports and their increased sales to Europe and North America of a range of durable and other consumer goods. At the same time, the member countries of the OECD have expanded their intraregional trade at a greater rate than their trade in those sectors with developing countries.
Because this is an essential requirement of modern civilisation, the Middle East states find a ready world market for their oil, and all the oil states are very wealthy indeed. Because they are interested in developing their other industries quickly, they are a good market for industrial goods. The Middle East is also a growing market for consumer goods as greater wealth becomes more available to the mass of the population. Each country in the Middle East has its own government and its own laws, and it is not possible to make a general statement that applies to them all.