4.1 Flashcards
International trade
Flow of goods and services between countries e.g. imports and exports
Why may trade increase?
- Globalisation or change in transport and communication
- Trade liberalisation (No tariffs)
- Specialisation benefits of other countries (low costs)
Advancing economies
- Most work in terrible sectors
- Educated high intensity levels
- Longer life expectancy
- Good infrastructure
Emerging economies
Growth is rapid but there is a lot of risk
- Move away from primary sectors
- Rising levels of capital investment
- Collaborations with multi-nationals
- Attractive production and location to sell to
GDP
Value of goods/services (output) produced in a country within a year
+Measured frequently/widely
+ Insight in countries economies
- Hidden markets e.g. black market
- Distribution of wealth
- Growth may not be sustained
- Ignores living conditions
Import quota
Limit on the total quantity of imports that can be brought into a country in a given time period
Trading barriers
- Government legislation
- Tariffs
- Domestic subsidies
Factors contributing to increased globalisation
- Reduction of international trade barriers
- Political change
- Reduced cost of transport and communication
- Increased investment flows (FDI)
- Migration (within and between economies)
- Growth of the global labour force
- Structural change
Foreign direct investment (FDI)
When one country invests in another meaning more job opportunities and less unemployment
Trading blocs
Group of countries that work together to provide special deals for trading. This promotes trade between specific countries within the bloc
EU and single market
By removing technical, legal and bureaucratic barriers, the EU also allows citizens to trade and do business freely
ASEAN
Intergovernmental organization of ten Southeast Asian countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
NAFTA
North American Free Trade Agreement (NAFTA) is an agreement that brought together three North American countries, i.e., the United States, Canada, and Mexico
Trading blocs pros and cons
+ Lower costs
+ Freely trade with countries
+ Higher growth
+ Economies of scale
- Increased competition
- Retaliation from non-member countries
- Economic dependence
- Loss of sovereignty
Literacy rate
The percentage of adults (over 15) that can read and write
Specialisation
A production strategy where a business focuses on a limited scope of products or services. This results in greater efficiency, allowing for goods and services to be produced at a lower cost per unit.
Globalisation
The growing integration of the world’s economies
World trade organisation
An international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers. It policies free trade agreements, settles trade disputes between governments and organises trade negotiations.
Administrative barriers
Rules and regulations (such as trading standards and strict specifications) that make it difficult for importers to penetrate an overseas market
Infant industries
New industries that have yet to establish themselves
Common market
A market where goods, labour and capital can move freely across the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least reduced
Free trade area (FTA)
A region where member states remove all trade barriers between themselves, but each member state nevertheless keeps different barriers against non-member states
Regional trade agreement (RTA)
Agreement made between two or more countries within a geographical region, which is designed to facilitate trade by bringing down barriers
Single market
A market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country
