4.1.5 Trading Blocs

Question 1

Trading blocs

Answer 1

Group of countries in specific regions that manage and promote their activities
Lead to trade liberalisation and trade creation between members, since they’re treated fabourably in comparison to non members
EU
NAFTA
ASEAN
etc

Question 2

Trading blocs - Freedoms of the EU

Answer 2

Free-trade in goods
Mobility of labour
Free movement of capital
Free trade in services

Question 3

Trading blocs benefits

Answer 3

increase in FDI - benefits economies of participating nations
economies of scale - larger markets
competition - trading blocs seek to reduce protectionist measures stimulating demand
market efficiency
greater trade - reduce protectionist measures

Question 4

Potential impact of BREXIT

Answer 4

weaker exchange rare - sterling fall against US dollar and Euro = over 50% imports = from EU
lower economic growth - weak demand in supply chains - business being cautious
housing market - may dent mortgage demand, possibly decline in overseas demand although weaker £
unemployement - month after Brexit unemployment fell below 5%

Question 5

Trading blocs advantages

Answer 5

+ Free movement of goods and services - enables firms to be cost competitive internationally - able to lower prices without reducing profit margins
+ Access to larger market - increases size of customer base - benefit from economies of scale - lower cost per unit - higher sales from lower prices - increased market share and strength of brand
+ Factor mobility in single market enables firms to employ high skilled workers without incurring additional costs

Question 6

Issues of trading blocs