Component 3 - International trade Flashcards
Explain : What is meant by international trade
International Trade - The exchange of goods, services, and capital between countries, It involves Exporting and Importing.
Explain : The reasons for international trade
New Resources - Countries that lack natural resources, technology, or skilled labour can import goods and services they need from other countries where they are abundant.
Comparative advantage - Countries specialize in producing goods and services they have a comparative advantage in, This means they can produce and sell them at a lower price, which can benefit both the exporting and importing countries.
Increased market size - Provides access to larger markets, which can increase the potential customer base for businesses.
Explain : What is meant by free trade and protectionism
(including tariffs and quotas)
Free Trade - Allowing goods and services to move freely across national borders without any restrictions or barriers such as tariffs, quotas or other government regulations.
Protectionism - The use of barriers to trade such as tariffs, quotas, and other restrictions to protect domestic industries from foreign competition.
Explain : What is meant by a trading bloc and a single market
Trading bloc - A group of countries that have an agreement to promote trade and economic cooperation, Through elimination of barriers to trade.
Single market - A trading bloc + the adoption of common policies and regulations, such as;
1) Product Standards
2) Labour laws
3) Tax rules
Evaluate : Free trade and protectionism to UK businesses and their stakeholders
Evaluate : The decision of a business to develop new
international markets for its products
