Edexcel-International trade and business growth 4.1 Flashcards
International trade
Exchange of goods and services.
Who does trade take place between?
Economic agents
Economic agents
Businesses
Governments
Consumers
What can International trade do?
Sustain GDP growth
Sustain employment
Rise living standards
Benefits of international trade
Help to reduce poverty
Low prices for consumers
Raises productivity
Why does international trade help to reduce poverty?
Because it exports revenues and jobs.
Why does international trade low prices for consumers?
Because markets are more competitive.
Why does international trade raise productivity?
Because technology is spread.
Drawbacks of International trade
Transport costs.
Pressure on wages and working conditions.
Risks from global external shocks.
Imports
Goods and services bought by people and businesses from one country to another.
Exports
Goods and services sold by domestic businesses to another country.
Who does imports generate money for?
Foreign businesses
Who does exports generate money for?
Businesses selling abroad
Specialisation
When a country or business decides to focus on providing a particular good or service.
Example of a business specialising
Apple focuses on technological products and services.
Examples of a country specialising
Ghana focuses on providing coco.
What can specialisation do?
Increase the quantity and quality of goods and services.
Benefits of specialisation
Lower unit costs.
Lower prices for consumers.
Excess ouput can be sold abroad.
Why is there lower unit costs?
due to economies of scale.
Why is there lower prices for consumers?
Because there is lower unit costs.
What can specialising lead to?
A competitive advantage
Why can specialising create a competitive advantage?
Due to an increased value of goods and services.
Foreign direct investment
Investment by foreign firms which result in more than 10% share of ownership of domestic firms.
What do foreign direct investments grow through?
Merger
Takeover
Partnership
What are FDI’s created with?
Other foreign countries
What do FDI’s do?
Enter new markets.
How do countries benefit from FDI’s?
Increased economic growth
Increased job opportunities
Access to knowledge and expertise from foreign investors
How do businesses benefit from FDI’s?
Access to new markets
Access to resources
New partners
Inward FDI
When a foreign business invests in the local economy.
Outward FDI
When a domestic business expands it’s operations to a foreign company.
Why are some countries better at specialising than others?
Relatively less opportunity costs in comparison to another country
Country more productively efficient than another.
Inward FDI example
Overseas business decides to build a manufacturing factory in the UK.
Outward FDI example
Uk business expands into overseas market by opening a new production facility.
