310 International Trade Flashcards
what is international trade?
international trade consists of buying/selling of imports and exports between countries.
6 benefits of international trade?
creates jobs
offers customers more choice
reduced supplier power
more markets to sell to
increase tax revenue for gov
greater innovation
better quality
lower prices
5 drawbacks of international trade?
may price out domestic businesses
increased competition
loss of domestic jobs
may exploit employees
drives out domestic culture
less revenue for gov as international businesses take their profit home.
what are 4 reasons why there is increased demand for international trade?
consumer expectations raising
technological changes.
falling cost of transporting goods (containerism).
cross border deregulation - eg EU.
development in developing countries.
globalisation.
decreased market research costs.
spreads risk.
what is free trade?
international trade conducted without barriers to trade such as tariffs, taxes or quotas. members don’t have common external tariff on goods entering area.
what is the difference between free trade and a single market?
free trade means a business can freely trade with anyone outside of the trading agreement at own negotiated cost. a single market is when there is a common external tariff for goods which all in agreement have to pay (eg EU)
what is a single market?
has no tariffs, quotas or taxes on trade, but common external tariff on goods entering single market.
what is protectionism?
opposite of free trade, economic policy of restraining trade between countries through imposition of barrier to trade like tariffs/quotas.
what is a tariff?
taxes on imports/exports from one country to another.
what is a quota?
government impose limits on imports/exports.
what is non-competitive purchasing by government?
only hiring and purchasing from own country’s firms.
what are embargos?
complete ban on trade with specific countries.
what are benefits of free trade to UK SMEs?
low barriers to entry
reach wider markets
drawback of free trade to UK SMEs?
highly competitive
increased market research costs.
benefits of free trade to customers?
lower costs
more choice
drawbacks of free trade to customers?
loss of domestic culture
risk of unethical practices abroad
benefits of free trade to UK gov?
attract global businesses
economic growth
encourage innovation
drawbacks of free trade to UK gov?
loss of tariff revenue
trade deficit if imports exceed exports
benefits of free trade to suppliers?
opportunity to supply globally
access to cheaper raw materials
drawbacks of free trade to suppliers?
more competitive
domestic industry declining
benefits to PLCs of free trade?
reach wider markets, economies of scale
low production costs
drawbacks to PLCs of free trade?
vulnerability to economic/political insatbility
may get bad PR for offshoring.
benefits of protectionism to UK SMEs?
less competitive
lower market research costs (not researching global markets)
drawbacks of protectionism to UK SMEs?
more expensive imports
less innovations
benefits of protectionism to customers?
more support for local culture
easier to check is business is ethical
drawbacks of protectionism to customers?
increased costs
less choice
benefits of protectionism to UK gov?
more jobs in the UK
tariff revenue
drawbacks of protectionism to UK gov?
less tax revenue raised
benefit of protectionism to suppliers?
more supplier power
drawbacks of protectionism to suppliers?
less efficiency due to decreased competition.
less access to cheaper materials
benefit of protectionism to PLCs?
greater gov support
drawbacks of protectionism to PLCs?
harder to expand
higher production costs.
what is a trading bloc?
a group of countries which work together to provide special deals for trading, promoting trade between them, eg EU. ASEAN, NAFTA
3 challenges a business could face when trading internationally?
cultural differences
exchange rates
different health and safety rules
distribution issues
