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CHAPTER 1: EVOLUTION OF executive of 25 years, leading to her

INTERNATIONAL TRADE appointment as the Director General of the
WTO effective March 1, 2021.
The Word Trade Organizaton (WTO) is the
only international organization dealing with - First Women and First African to serve
the rules of trade between nations. The goal as the director-general.
is to ensure that trade flows as smoothly, - Her term will expire on August 31, 2025.
predictability, and freely as possible and to
LESSON 1.1
help producers of goods and services,
exporters and importers conduct their The main historical theories are called
business. CLASSICAL and are from the perspective of a
country, or COUNTRY-BASED. The classical
Roles of WTO:
country-based theories include;
1. It OPERATES a global system of trade
1. MERCANTILISM
rules
2. ABSOLUTE ADVANTAGE
2. It ACTS as forum for negotiating trade
3. COMPARATIVE ADVANTAGE
agreements
4. HECKSCHER-OHLIN
3. It SETTLES trade disputes between its
members Mid-20th century, the theories began to shift to
4. It SUPPORTS the needs of developing explain trade from a firm, rather than a country-
countries based perspective. These theories referred to
as modern and are firm-based or company-
WTO functions primarily as the forum for trade
based.
negotiations between countries. The primary
purpose of the WTO is to open trade for the MODERN FIRM BASED theories include
benefit of all. WTO is the precursor of the
General Agreement on Tariffs and Trade 1. Country similarity
(GATT), which was established by a 2. Product life cycle
multilateral treaty of 23 countries in 1947. 3. Global strategic rivalry
4. Porters national competitive advantage
Headquarters of WTO: Geneva, Switzerland.
There are also other theories, like liberalism,
WTO has 164 members and 22 countries. professionalism, free trade theory, and the
Each council, committee and working parties Leontiff Paradox. The evolution of what is
elects its own chairperson. recognized as the Standard Theory of
International Trade goes back to the years
Consensus on slates of chairpersons in 3
when ADAM SMITH’s Wealth of Nations
groups:
(1776) and DAVID RICARDO’s Principle of
1. Those directly involving the General Economics (1951) were published.
Council (including the bodies reporting
 One of the earliest efforts to develop an
to the trade Negotiations Committee)
economic theory, the theory is a
2. Those reporting to the Goods Council;
classical, country-based international
and
trade theory that states a country’s
3. Those reporting to the Service Council
wealth is determined by its holdings
One of the first decisions of the current of gold and silver.
President Joe Biden of the USA was to re-join
the Paris climate agreement. Biden also
conveyed strong evidence to support the
candidature of NGOZI
 Smith and Ricardo herald the
formulation of a theory of free trade.
Free trade, as opposed to the
mercantilist policies of protection, was
OKONJO-IWEALA, former finance minister of championed by them both as a route to
NIGERIA and a former World Bank senior
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achieve production efficiency at a global International Trade and Commercial

level. Policy, still considered to be one of the
 The possible dilemmas in terms of the oldest branches of economic thought.
need for monetary adjustments for
countries having a continuous trade
LESSON 1.2 BARTER
surplus could be shelved aside by
relying on the automatic adjustments as  Bartering involves a direct
posited by Smith’s contemporary, David trade/exchange of goods and services.
Hume (1776), when he offered the It is the process of trading services or
THEORY OF THE PRICE-SPECIE goods between 2 parties without using
FLOW MECHANISM. money in transaction.
 Division of Labor is the separation of  During the middle ages, the Europeans
work process into number of tasks, with started travelling across the globe and
each task performed by a separate used barter services to trade their goods
person or group of persons to boost like fur and crafts to the East, in
productivity and efficiency and exchange for perfumes and silk. The
enhance specialization. people of colonial America used wheat,
 Trade Surplus is the amount by which skin of male deer and musket balls to
the value of a country’s export exceeds do business.
the cost of its imports.
 Industrial Capitalism was the second Advantage of Bartering
phase of capitalism in which 1. It does not involve money and it is very
industries/factories became the simple
dominant factor in the production of 2. Bartering benefits companies and
goods. countries that see a mutual benefit in
 In a free trade system, individuals exchanging goods and services, rather
benefit from a greater choice of than cash.
affordable goods, while mercantilism 3. it enables those who are lacking hard
restricts imports and reduces the currency to obtain goods and services.
choicesd available to consumers. 4. in the case of a simple barter
 Absolute Advantage is the country’s transaction, there will be no cost.
inherent ability to produce specific 5. suitable for short-term borrowing needs.
goods efficiently and effectively at a
relatively lower marginal cost, lesser Disadvantages of Bartering
workforce, lesser time, and lesser cost 1. It is difficult to find people who need
without compromising the quality. what the other people have.
 Comparative Advantage refers to 2. There is no standard measure of value
country’s capability to produce the 3. Time Consuming
specific good at lower marginal cost and
opportunity cost compared to other Although trade and barter may seem almost
countries. archaic, they were the business solutions
 Marginal Cost is the cost incurred in for people who lived before the
producing an additional units of a convenience of money and the credit card.
product.

Monetary crises fueled the revival of this

 Opportunity Cost means the value you system and the current recession has once
will get from an alternative that you did again set a stage for its comeback. There are
not choose. now swap markets and online auctions.
 The Standard Theory of International  Early Humans had very little needs.
Trade has evolved into the Theory of They used leaves and animal skin as
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clothes and ate vegetables, fruits, fish,  First recognizable metal coins
and animal meat. There was no need appeared in CHINA during 1000BC.
for exchange of goods, as their needs The earliest currency of China of the
were limited. eighth century BC was consisted of
 Intergroup interaction started and this miniature hoes and billhooks (pruning
paved the way for a system trading, implements), with inscriptions indicating
where groups started exchanging their the authority
goods for what they needed, which the  Around 770 BC, miniature replicas of
groups had. tools and weapons cast in bronze were
 After years of NOMADIC LIFE used by the Chinese as a medium of
(migratory, mobile, wandering), people exchange. The small bronze celts
started settling down in areas, where (prehistoric tools resimbling chisels) and
they began growing plants and raising bronze rings played a monetary value.
farm animals. As cultivation and Due to impracticality, these tiny
farming flourished, people then had daggers, spades, and hoes were
enough time to spend on other work, eventually abandoned for objects in the
like pottery, carpentry, weaving, and be shape of circle. These objects became
like. some of the first coins.
 Around 700 BC, the Chinese moved
HISTORY OF BARTER
from coins to paper money. By the time
Can be traced back to 6,000 BC. It was MARCO POLO (the venetian, explorer
introduced by the tribes of MESOPOTAMIA, and writer) visited China in
then adopted by the PHOENICIANS who aaproximately AD 1271, the emperor of
bartered their goods to people in other cities China had a good handle on both the
located across the oceans. money supply and various
denominations.
IMPROVED SYSTEM of bartering was  The first region of the world to use an
developed in BABYLONIA. industrial facility to manufacture coins (a
People used to exchange their goods for mint) was in EUROPE in the region
weapons, tea, spices, and food items. called LYDIA.
Sometimes, even human skulls¸ were used MINTING is the process of making a coin by
for barter. Another popular item used for stamping metal.
exchange was salt. Salt was so valuable at
that time that the salary of Roman Soldiers  In 600 BC, around the time China
was paid in salt. started using paper money, Lydia’s
KING ALYATTES minted the first
official currency, non-standardized
LESSON 1.3 ORIGIN OF MONEY coins from electrum (a naturally
occurring alloy of gold and silver)
Even trade was done through barter, people  KING CROESUS (son of King Alyattes)
started confronting some problems with the of Lydia is credited with installing the
system. So people started stacking certain world’s first bimetallic monetary
valuable things that were acceptable for a system
majority. They unclude salt, metal, farm
animals, and the like. Materials like
of pure gold and pure silver coins,
the CROESEID.
shells, feathers, and animal teeth were also  Foundation deposit of the Artemisium
used as money. However, it became difficult (temple of Artemis) at Ephesus shows
to carry and use these materials. SO traders, that electrum (which the Greeks called
wanted something that was not perishable “white gold”) coins were in production
and easy to carry, and this led to use of even before Croesus, possibly under
metal pieces as money. King Gyges.
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 The European colonial governments in  Legal tender means currency, such as

North America issued the first paper coin and paper money, is valid and
currency in Canada (then a French sufficient for the payment of debts.
colony). Instead of going back to a  Inflation means increase in prices,
barter system, the colonial governments reducing the purchasing power of
issued IOUs (promissory notes) that money.
traded as a currency.  In 1717, all debts and contract in
 The first regular system of exchange in Canada became payable in monnoye de
Canada involving Europeans occurred France.
in Tadaoussac in the seventeenth  Copper coins were introduced in 1722,
century, where French trades barteres but they were not well received by
each year with the Mantagnais people merchants. Notes issued by private
(also known as the Innu) trading individuals also circulated as money.
weapons, cloth, food, silver items,  The government issued promissory
and tobacco for animal pelts, notes called ordonnances (replaced
especially those of the beaver. later by card money) and treasury
 The forst colonial settlement at Quebec notes called acquits, which began to
was established by Samuel de circulate as money.
Champlain in 1608.  Bills of exchange drawn on the
 The beaver pelt was the one universally Treasury were used for payments of
accepted medium of exchange in expenses in Canada.
Quebec, although wheat and moose  Settlement of the paper obligations
skins were also employed as legal issued by the colonial authorities in
tender. As the colony expanded and its Canda was included in the Treaty of
economic and financial needs became Paris, signed in February 1763, which
more complex, coins from France ended the war between Great Britain
came to be widely used. and France.
 Silver and copper coins, apparently  The advent of paper money led to an
intended only for the West Indies, was increase in international trade.
minted in 1670, believed to have
circulated in Canada, but could not be
circulated in France.
 The West Indies are a chain of islands
in the Caribbean Sea and Atlantic
Ocean divided into three groups: The
Bahamas, the Greater Antilles, and
the Lesser Antilles.
 During the mid-1600s, Spanish dollars
(piastres) represent the first distinctive
Canadian coins.
 The livre (Franch for “pounds”) was the
currency of the Kingdom of France
and
its predecessor state of West Francia
from 1781 to 1794.
 In 1685, Jacques de Meulles,
Intendant of Justice, Police, and France
came up with the card money in
Canada, just as coin did in France, but it
was only in March 1729 that card
money became legal tender and
replaced the ordonnances in circulation.

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Public Ledger- This records all

transactions accessible to everyone who is
associated with the system. Once a user
joins that blockchain network, he gets a
copy of the blockchain since its initiation

LESSON 1.6 VIRTUAL CURRENCY

FOUR MAJOR COMPONENTS
OF A BLOCK
 Data- these are like entries in a ledger,
documenting who sent what to whom.
 Hash- it’s a unique identifier generated
via cryptographic function that serves as
a digital fingerprint of the current block
and is used to secure that block’s
contents.
 Previous Hash- this creates a secure
link that connects a block to its previous
block, ensuring the integrity and
Centralized cryptocurrencies are governed
continuity of the entire chain.
by a central authority or entity, often a
 Nonce- a term stands for “number used
company or government, which controls the
once”. A numerical value that miners
network, transactions, and policies.
adjust during the process of mining a
block. VS
BLOCKCHAIN
Blockchain started in 1991, a
decentralized system used to store and
secure digital data.
Blockchain is an open ledger that
several parties can access at once.
In simple terms blockchain is a chain of
blocks that contain information.
Characteristics of Blockchain
Decentralization- Distribution of authority
is spread across the network, not controlled
by a single entity. Decentralized cryptocurrencies, on the other
Security- Protection against unauthorized hand, operate on a distributed network of
access, tampering, or fraud through nodes with no single controlling authority,
cryptographic techniques. providing increased security, transparency, and
Details- Presentations are tools that can be resistance to censorship.
used as lectures.
Transparency- Open visibility of data and
transactions to all participants in the
TOP SIX 5-STAR RATED DIGITAL
network.
CRYPTOCURRENCY
Immutability- Resistance to change or
alteration once information is added to the 1. Tether (USDT)
blockchain.  Tether is a stablecoin pegged to
the US Dollar. A stablecoin is a

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type of cryptocurrency whose

value is pegged to another fiat
currency like the US Dollar or to a
commodity like Gold.  The Ethereum network,
 Tether is the first stablecoin to be moreover, is formed by each and
created and it is the most popular everyone of the computers that
stablecoin used in the work verifying operations in the
ecosystem. It has the largest blockchain, also called miners.
stablecoins by circulation and These miners receive Ether as a
market capitalization. reward for executing the
operations of the platform.
 While Ether is a relative
newcomer, it has risen up the
ranks, thanks to its superior
technology and its ability to
create "smart contracts." It is
the cryptocurrency of the
Ethereum blockchain, a
technologically advanced version
of Bitcoin, that stands to grow
even faster.
Who created Tether?
Tether is controlled by Tether Holding Limited 3. Bitcoin (BTC)
or known as Tether Limited. The CEO is JL  Many call Bitcoin the gold
Van Der Velde, the CFO is Giancarlo cryptocurrency. It was released
Devasini and the general counsel is Suart in 2009 by the pseudonymous
Hoegner. Satoshi Nakamoto and quickly
became the standard for virtual
How does Tether work? currencies. Until today, the
Tether was originally based on the Omni true identity of Satoshi
Layer, a transport protocol on the Bitcoin Nakamoto has not been
blockchain. Therefore, the original version verified.
of Tether is characterized by the inherent
stability and security of the longest established
blockchain network.

2. ETHEREUM
 Ethereum or Ether (ETH) was
first described in a 2013
whitepaper by Vitalik Buterin.  What is needed is an electronic
Buterin, along with other co- payment system based on
founders, secured funding for the cryptographic proof instead of
project in anonline public crowd trust, allowing any two willing
sale in the summer of 2014 and parties to transact directly with
officially launched the each other without the need for a
blockchainon July 30, 2015. trusted third party. Transactions
that are computationally
impractical to reverse would
protect sellers from fraud. The
system is secure as long as
honest nodes collectively control

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more CPU power than any 2024 it goes down to the sixth
cooperating group of attacker place.
nodes.
5. Stellar (XLM)
4. Ripple (XRP)  Stellar (XLM) is a decentralized
 Ripple better known as XRP, is blockchain platform for faster and
the odd duckling of the cheaper cross-border payments.
cryptocurrency world. It is a It aims to connect banks,
centralized Cryptocurrency payment systems, and individuals
founded in 2012 mined,managed for seamless money transfer. It is
and administered by Ripple Labs developed by the Stellar
used by Ripple payment network. Development Foundation and
established in the year 2014.
 Its success comes from XRP's
Misfortune. In january, the office
of the Comptroller of the
Currency (OCC) allowed banks to
start using the independent node
verification networks. The same
week, the Ukrainian government
announced a partnership with the
stellar development to create a
national digital currency which
results Xrp being the top
cryptocurrency for 2021
 The Value of 1 XLM now .13
 XRP is designed to allow a large dollars and 7.52 in terms of
sum of money to be sent securely Philippine Peso Stellar is the Fifth
and quickly at a little cost. The Biggest in the top 6 5-star cryptos
currency is used by financial in terms of Market Capitalization
institutions as an alternative to in 2020.
SWIFT ( Society for Worldwide Cryptocurrencies are generally designed
Interbank Financial with a purpose in mind. XRP is the Token
Telecommunications network). used by Ripple to facilitate banking
 In 2021 here is the list of banks transactions, while XLM is used to facilitate
and payment providers which use cross-border and cross-asset transactions
the XRP: American Express on the Stellar blockchain.
bank, Bank of America Merill
Lynch, HSBC, Barclays,Royal 6. Cardano (ADA)
bank of Scotland,Santander,  Cardano (ADA) is one of the
UniCredit, moneygram and also largest third-generation
Visa. As of the year 2023, here is cryptocurrencies, and it is packed
a list of financial Institutions with plenty more upside potential
including banks and e-wallets in 2021. Third-generation
that are considered as crypto- cryptocurrency may also be
friendly here in the Philippines called Blockchain 3.0. ADA,
Gcash, Maya, RCBC( Rizal which runs on the Cardano
Commercial Bank Corp), Security network, was established in
Bank, Union Bank, Uno Digital 2017.
Bank  It is one of the most
 Ripple (XRP) Market Data* XRP technologically exciting
is the 4th Largest in terms of cryptocurrencies to date. And its
Capitalization in 2020 But as of use of smart contracts means
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that it can keep track of  It was introduced on December 6,

transactions like Bitcoin while 2013, and quickly developed its
handling payments like own online community.
Ethereum. In short, it is a third- DOGE has become the fifth
generation coin that improves on largest cryptocurrency by market
its predecessors. Its proof of capitalization of US$ 41 billion
stake system means it can costing 3 cents per transaction
operate more efficiently than the with each coin costing US$
standard proof of work system. 0.3175. It registered a 2020
 ADA is the fourth largest of the return of 118%.
top six 5-star cryptos based on  Dogecoin is an internet meme
market capitalization, It has an turned cryptocurrency, teaching
approximate market capitalization the world about making money.
of US$ 27 billion, each coin costs In 2013, IBM software engineer
US$ 1.56, and the transaction Billy Markus and Jackson Palmer
cost is 7 cents. It registered a decided to create a payment
2020 return of 441%. system as a joke, making fun of
the wild speculation in
Three key areas make it a top cryptocurrency
cryptocurrencies at the time.
for 2021. First, ADA has momentum. Second, it
sits at just US$ 1.56 per coin, making it a
tempting target for punters to run up. Finally, it
has the ability to handle transactions and smart
contracts.
7. Dogegoin (DOGE)
 Dogecoin is an internet meme
turned cryptocurrency, teaching
the world about making money.
In 2013, IBM software engineer
Billy Markus and Jackson Palmer
decided to create a payment
system as a joke, making fun of
the wild speculation in
cryptocurrencies at the time.
 Dogecoin was originally created,
at least in part, as a lighthearted
joke for crypto enthusiasts, and
took its name from a once-
popular meme. A meme is an
idea, behavior, style, or usage
that spreads from person to
person within a culture.
 Despite this unusual origin story,
it has exploded in popularity in
2021 and despite its satirical
nature, some consider it a
legitimate investment prospect.
DOGE is a cryptocurrency
featuring a likeness of the Shiba
Inu dog from the "Doge" internet
meme as its logo and namesake.

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