1) International Trade - MMT Flashcards
what are exports?
goods and services produced by businesses in a particular country but then sold to economic agents in a different country
what are imports?
when economic agents within our country demand goods and services that are produced within a different country
exports are a i…
injection in to AD
imports are a w…
withdrawal
what is international trade?
the movement of goods and services between countries
why are exports good for the country?
the earn income for the country, increasing AD, real GDP and RDI levels
what do imports do for households?
- increase choice
- improve the quality of life for households within an economy
how do imports increase efficiency?
imported competition increases the efficiency of domestic businesses - they have to raise their game to help them compete with overseas companies
how do exports increase efficiency?
domestic businesses have to compete in efficiency and quality or they won’t gain orders
what do imports do to the price?
reduces the price for consumers; more competition is vital in preventing the growth of domestic monopolies who could charge higher prices
what 3 things does international trade allow for all countries?
1) access to key resources
2) specialise
3) co-operation
why is it good that international trade allows all countries to access key resources?
because they may not have them themselves, eg oil,gas
why is it good that international trade allows all countries to specialise?
because it greatly increases efficiency and productivity
why is it good that international trade increases co-operation between countries?
reducing risks of wars/conflicts
Pattern 1: why is it argued international trade has grown enormously in the modern age?
up to about 150 years ago (say 1870), international trade consistently accounted for about 10% of global GDP. By 1970, this figure had reached 25%. In 2022, it was almost 60%.
Pattern 2: why is it argued that in recent years, the rapid growth of international trade has slowed down a little, even slightly declined?
In the last 15 years the growth in international trade has slowed down. The peak year was 2008 where trade was 61% of global GDP. Since then it’s ranged from a low of 52% (2020) to an average of 56/57%
Pattern 3: why is it argued that a growth in Intra-regional trade and a relative decline in inter-regional trade?
In the last 20/25 years, there had been a movement towards countries trading more with neighbouring countries and less with faraway countries. This has been enhanced by an increase in regional trading blocs (the EU, NAFTA, ASEAN) and the relative decline in importance of institutions like the British Commonwealth
what is Intra-regional trade?
within a region eg USA to Mexico
What is inter-regional trade?
between different parts of the world
Pattern 4: why is it argued that a big growth in the value of international trade in services, though it remains lower than trade of goods?
Trade in services also continues to grow. Major examples are transport, tourism and financial services. Although the increases in this aspect of trade is significant, the value of international trade in services is considerably lower that then the value of international trade in goods. Many services lend themselves mainly to local provision
Pattern 5: why is it argued that a growth in developing and emerging economies are now a much bigger player in the world of international trade?
A highly significant change in the parents of international trade surrounds the relative importance of different types of economy. In 1990, exports from developed economies (eg Japan/Germany etc) accounted for 66% of all transactions. In 2022, this had fallen to 52%. By contrast, the % of international trade exported by emerging (India) or developing economies (eg Congo) increased from 33% to 48%
what are the advantages of developed economies in international trade?
greater choice/lower prices for households
what are the advantages of emerging economies in international trade?
more jobs, higher GDP, higher RDI, increased standards of living
what are the advantages of developing economies in international trade?
improvements in infrastructure and basic services- higher RDI, better standards of living, higher HDI
what are the disadvantages of developed economies in international trade?
loss of jobs, especially in manufacturing
what are the disadvantages of emerging economies in international trade?
environmental harm, higher levels of inequality
what are the disadvantages of developing economies in international trade?
- environmental harm
- lack of sustainability - eg exploitation by MNCs based in developed countries
