çÌÁ×ÎÁÑ/

éÎÏÓÔÒÁÎÎÙÅ ÑÚÙËÉ /

Internetional Raw Materials Market /english/

Contents

Introduction

1. Raw Materials - A natural of semifinished god that is used in manufacturing or processing to make some other good. Bauxite is the raw materials (ore) from which aluminum is made; aluminum is turn can be the raw material from which household utensils are manufactured.[1]

š

2. There is another definitions from the subject area of raw materialsš distinct from the above mentioned:ššš

ž Raw materials are products immediately extracted from nature which have undergone a first processing through which they have become marketable and, consequently, a tradable commodity. Raw materials include all energy raw materials (crude oil, natural gas, coal, uranium), metals, semi-metals and industrial minerals (kaolin, graphite, sulfur, salts, phosphates), rocks, water as well as all plant and animal products, whether they come from tropical regions (coffee, jute, tropical timber) or from temperate latitudes (wheat, meat, wool, etc.).[2]

ž Raw material economy: It comprises all activities which are part of the planned handling of raw materials, i.e. explanation, evaluation, extraction, conversion into a tradable product, trade and forecasting. "Planned" here means economically useful, ecologically and socially responsible activities.[2]

ž Resources are all natural material systems which as such are no commodities, but the intactness of which is a basic prerequisite for the continued existence of the earth's chemical and physical equilibrium and, consequently, for the survival of mankind. Resources include: the ozone balance, the CO2 balance, the equilibrium of sea water, the tropical forest, the krill and fish population, etc.[2]

ž World resource balances are the planned (i.e. ecologically useful and socially responsible) handling of resources. This comprises: the explanation, evaluation, risk assessment and forecasting regarding world resources.[2]

Current research emphasis [2]

ž international raw material balances

ž supply problems of the industrial countries

ž location disadvantages of the developing countries

ž dumping problems in international raw material trade

ž recycling as a source for raw materials

ž raw material deposits and connected environmental problems in east Siberia (addendum 1)

ž structural questions and environmental problems of the Polish energy and metal economy[2]

I. Trade intermediates and natural resources

Once international trade in more than final consumer goods is allowed, basic notions of comparative advantage need to be re-examined. We have already discussed the limitations in a multi-commodity word of comparing autarky prices in two countries to predict item-by-item the pattern of trade; generally only correlations can be made except under additional assumptions. With trade in intermediates allowed, the problems in predicting trade in final goods became even greater. As MakKenzie (1945) remarked in one of his classic problem on the Ricardian model, the familiar nineteenth century trade pattern in which Lancashire produced andš exported cotton textiles would most probably not have been observed if Englandš had had to grow its own cotton . We shall have occasion both in this section and to revert to this theme: the pattern of trade in final goods may not be readily deducible from the comparison of pre-trade relative prices in these markets.[3]šššš

I.I Middle products (intermediates)

The phrase 'middle-products' was used by Sanyal and Jones (1982) to encompass what traditionally are referred to as intermediate goods, goods-in-process, and natural resources which have been extracted and prepared for trade on world markets. The core concept in their model is that of a productive spectrum whereby, at initial stages, natural resources and raw materials are processed and, in the final stages, goods-in-process and intermediate products are locally assembled for national consumption. International trade, according to this view, takes place in commodities, somewhere in the 'middle' of this productive spectrum, freeing up a nation's input requirements in the final stages of production from its output tradeable middle products at earlier stages.[3]

Such a view of the role of international trade suggests a natural division between that part of the economy which produces commodities (middle products) for the world market (including the local economy), called the Input Tier, and that section of the economy which makes use of internationally traded middle products as input along with local resources to produce none-trade goods for final consumption (the Output Tier). Ruled out by assumption in the simple version on this model is the notion that the 'middle' stages of the productive spectrum might be 'thick' in the sense that tradeable middle products might use other tradeable middle products as inputs. In addition, in production structure in each tier of the economy as assumed to resemble that of the specific-factors model. Labor is mobile both among sectors in each tier and between tiers. The balance of payments provides an additional link between the two tiers; if the trade account is balanced, the value of total output from the Input Tier of the economy is matched by the value of middle products used as inputs (along with labour) in the Output Tier.[3]

Several types of questions have been raised in the context on this model, and of central concern in each case is the allocation of labour between tiers and the real wage. Fore example, a transfer payment which gives rise to a trade surplus requires labour to be reallocated to the Input Tierš as consumption falls, and this serves unambiguously to reduce the real wage.[3]

š If domestic (and world) prices of trade middle products remain constant to the small country, all non-labour inputs in the Output Tier can be aggregated, a la Hicks, into a composite middle product input, which serves to convert the production structure in the Output Tier from an (n+1)-factor, n-commodity specific-factors model into a two-factors, many-commodity Heckscher-Ohlin model.[3]

In the middle-products model Input Tier is the existence of a world market in which middle products can be exchanged for each other that permits such a conversion.[3]

šš

The middle-products model allows countries and sectors to differ in the extent to which local value must be added to transform middle products into final commodities,š andš muchš dependsš uponš thisš comparison.š Itš doesšš not,š however, focus upon another question: in Áš vertical productionš structure withš many stages, which goods-in-processš or middleš products doesš Á countryš import andš which does itš export?š Twoš recentš papersš haveš tackledš thisš issue independentlyš and with differentš models. Sanyalš (1980) assumesš that inš each ofš two countriesš Á commodity is produced in Á continuum of stages, withš different Ricardianš labor-only input structures. Depending upon technological differences andš relative countryš size, Á cut-off pointš will beš determined, withš one countryš producing theš commodity from raw material stage to some intermediateš point, andš then exportingš this good-in-processš toš theš otherš countryš where laborš is appliedš to finishš the production process.š Byš contrast,š Dixit andš Grossman (1982)š use Áš specific-factors model, withš oneš ofš theš commodities (manufacturing)š produced inš Á continuumš of stages using capital and labor (the other sector using land andš labor) . Theseš stages are arrangedš suchš that,š asš goods-in-processš develop towardsš the finalš stage, more labor-intensive techniques are required.š Thus withš two countries,š the labor-abundant country will tend to specialize in later stages of the productive spectrum.[3]

They analyze howš endowment changesš alter theš cut-off point,š as wellš as investigating issues related to content protection.[3]

I.II Natural resources

As Chapter 8 in this volume discusses,š the normativeš question ofš pricing natural resources (exhaustible or renewable) has received much attention inš the literature of the pastš decade. Theš middle-products approachš stresses thatš some activities, the extraction of natural resources, must take place locally although international trade then allows other countriesš access toš these resources.š Obviously, comparative advantage changesš over timeš for countriesš engaged inš exporting exhaustible resource. Inš early workš Vanek (1963)š traced throughš the changingš pattern of United States trade in natural resources, and suggested that asymmetries in resource use and availability could account for the Leontief paradox. In Á context of multi-level trade, the costs of recourse extractionš in oneš country often depend on the availability of foreign capital. Kemp and Ohyama (1978) haveš presentedš Áš simple šmodelš ofš Northš -š Southš trade inš which Southš makes use ofš Northernš capitalš toš developš itsš resourcesš andš exportsš these resourcesš to the Northš whereš theyš areš usedš toš produceš finalš commodities. They putš their model to use inš exploring theš normative issueš of differentš degrees ofš bargaining strength and ability to exploit via export taxes and tariffs inš the twoš regions. Butš the model alsoš stressesš the involvementš of capitalš flows inš resource extraction.š Schmitz and Helmbergerš (1979)š argueš stronglyš forš complementarityš betweenš tradeš inš resources and trade in capital, Á point also stressedš by Williamsš in hisš 1929 article.š We turn toš considerš moreš generally, now,š the interactionš between tradeš in goodsš and trade in factors.[3]

Addendum 1

Siberia is Among Leaders in Raw Materials Markets[5]

Siberia's rating looks more impressive in some groups of goods than its 7-th general placing. Split the whole flow of commercial projects into 9 groups of goods, and for 6 of them Siberia joins the leading three:

Timber and Paper

Išššššš Siberiašššššššš 32.6

IIššššš Moscowššššššššš 19.1

IIIšššš St.-Petersburgš 14.2

Fuel

Išššššš Siberiašššššššš 20.3

IIššššš Uralsšššššššššš 13.2

IIIšššš Moscowššššššššš 12.3

Chemical Products

Išššššš Moscowššššššššš 17.2

IIššššš Siberiašššššššš 15.7

IIIšššš St.-Petersburgš 11.9

Construction Materials

Išššššš Moscowššššššššš 22.0

IIššššš Siberiašššššššš 14.1

IIIšššš Uralsšššššššššš 5.6

Transportation

Išššššš Moscowššššššššš 23.6

IIššššš Siberiašššššššš 12.4

IIIšššš Volgašššššššššš 12.1

Metals

Išššššš St.-Petersburgš 20.9

IIššššš Uralsšššššššššš 19.6

IIIšššš Siberiašššššššš 11.7

Bibliography

1. 'The New Polgrave a dictionary of economic' Editor: J.Eatwell, M.Mmilgate P.Newman

2. Chair of Raw Material Economy and World Resource Balances Prof. Dr.rer.nat. E. Machens (temporary appointment)

3. 'Positive Theory of International Trade' Editor: R.W. Jones, J.P. Neary (pages 31-37)

4. 'The World Economyš History & Prospect' Editor: W.W Rostow (part 52 'The Future of the World Economy' , pages 610-618)

5. 'Siberia is Among Leaders in Raw Materials Markets'Editors: Alexei Alexeev, Andrey Kiselev

In Jones (1980) a two-country Recardian model is illustrated in which one commodity requires an intermediate input and technologies differ between countries The pattern of trade can be reversed as a result of variations in the price of the traded intermediate.šššš

Both papers cite the use of the continuum conceptš in Dornbusch,š Fischer, andš Samuelson (1977).

á limitation of both papers is the assumption that costs (orš factor proportions)š move monotonically from lower to higher stages of production. If not, trade may take place Á1 many pointsš in the productive spectrum in the absence of inhibiting transport costs.

This model is described in simplified terms by Findlay (1979).