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Business Studies A2 > 7.5e Economy: International Trade > Flashcards

7.5e Economy: International Trade Flashcards

1
Q

What is the European Union?

A

A collection of 28 European countries who have agreed, in different ways, to unite their economies

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2
Q

The EU allows free movement of what between its member states?

A
  • Labour/people
  • Capital
  • Goods
  • Services
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3
Q

Opportunities for UK businesses from EU:

A
  • Large potential market
  • Economies of scale
  • More competition - forces increased efficiency
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4
Q

Threats for UK businesses from EU:

A
  • More legislation
  • Increased competition
  • Low wage rates means lower costs for businesses in other countries
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5
Q

When did the UK vote to leave the EU?

A

June 2016

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6
Q

Examples of free trade areas:

A
  • EU
  • ASEAN - Association of South-East Asian Nations
  • NAFTA - North American Free Trade Agreement
  • Tripartite Free Trade Area (proposed)
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7
Q

Opportunities of free trade:

A
  • More potential for exports
  • Economies of scale
  • More competition
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8
Q

Threats of free trade:

A
  • Less potential for exports
  • Diseconomies of scale
  • Fewer local jobs as multinationals expand abroad
  • Countries may use child labour to keep costs down to compete internationally
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9
Q

What does protectionism do?

A

Places controls over the level of imports that come into a country

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10
Q

Methods of protectionism:

A
  • Tariffs
  • Quotas
  • Embargoes
  • Non-tariff policies
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11
Q

Tariffs definition

A

An additional tax placed upon the price of a product to make it more expensive and so less competitive

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12
Q

What are the two types of tariffs?

A
  • Ad valorem tax

- Specific tax

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13
Q

What is ad valorem tax?

A

An added percentage tax on the price

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14
Q

What is specific tax?

A

A fixed amount added to the price

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15
Q

What do quotas do?

A

Limit the amount of a product that can be imported into the country (can be a fixed value or % of the market share)

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16
Q

What are embargoes?

A

The complete banning of a product

17
Q

What are non-tariff policies?

A

Subtle attempt to restrict imports

18
Q

Example of non-tariff policies

A

Making sure all labelling and packaging only uses local language

19
Q

Opportunities of protectionism:

A
  • Protects domestic business from foreign competition

- Keeps money from leaving the country via imports so AD/GDP doesn’t fall

20
Q

Globalisation definition

A

The process that allows businesses to operate all over the world

21
Q

Methods of international growth:

A
  • Exporting direct to international customers
  • Selling via overseas agents or distributors
  • Opening an operation overseas
  • Joint venture or buying a business overseas
22
Q

Example of overseas agents or distributors

A

Sandpiper

23
Q

Opportunities of globalisation:

A
  • Higher profits
  • Better market access
  • Extends product life-cycles by producing and marketing in new countries
24
Q

Threats of globalisation:

A
  • More competitive market

- Low costs of factors of production in some countries creates competitive disadvantage for UK businesses

25
Q

Emerging markets definition

A

A country or area that has the capacity to grow

26
Q

Examples of emerging markets:

A
  • BRIC: Brazil, China, Russia, India
  • Mint: Mexico, Indonesia, Nigeria, Turkey
  • CIVETS: Columbia, Indonesia, Vietnam, Egypt, Turkey, South Africa
27
Q

Opportunities of emerging markets:

A
  • Lots of potential to sell to an expanding customer base
  • Source of lower cost raw materials
  • Could become a pioneer and leader in an economy that is just getting off the ground
28
Q

Threats of emerging markets:

A
  • Potentially weak infrastructure
  • Corruption
  • Increasingly competitive market
29
Q

What is the result of the EU customs union?

A

The same custom duties apply to all goods entering the EU no matter which country they came from

30
Q

What is protectionism?

A

When a government protects businesses and jobs from foreign competition by giving them subsidies, while imposing tariffs and quotas on imports

31
Q

Disadvantages of protectionism:

A
  • Prices of imported goods rise due to decreased supply

- If you restrict a country’s trading in your country, they might restrict your trading in theirs

32
Q

Reasons globalisation is increasing:

A
  • Internet allows businesses to communicate
  • Air travel and giant cargo ships
  • EU citizens can work in any other EU country

Business Studies A2 (74 decks)

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