Anaylse The effects of international trade Flashcards
Effects…
Because of an understanding of comparative advantage and specialisation total word GDP/ output increases
International trade definition…
The buying and selling of goods and services from other countries
Effects…
International trade and economies of scale- higher production for global market will reduce average unit cos of production, possibly creates lower prices.
However…
This can make it difficult for infant industries to break into the market
Effects…
Increased trade leads to increased competition which leads to a downward pressure on prices, there is an incentive for firms to become more efficient, could result in job losses. Also an increased incentive to be innovative
Effects dynamic efficiency…
This relates to a change that occurs overtime. World bank report that countries who were more open to trade grew more than those who remained closed. Knowledge and technology transfer helps this growth as well as licensing agreements
