Factors Affecting Global Trade Flashcards
What is resource endowment?
A country more of or more valuable resources.
What are some examples of resource endowment?
- Middle East, such as Russia, having a high production of oil.
- Better conditions to grow food, such as New Zealand relying on agricultural produce.
- Russia having 24% of world’s natural gas reserves.
How can resource endowment affect trade?
Those naturally with more resources are able to trade more easily. This can allow countries to earn and develop their diversity of trade.
What does locational advantage mean?
Closeness to area of demand, ports with a larger hinterland, near airports, strategic position on trade routes.
Makes trade mire efficient and easier.
Less important now as technology developed.
Give two examples of countries with good locational advantage.
Singapore for Asian trade routes, Russia in exporting gas and oil to Europe.
How can trade agreements affect global trade?
- Create tension as many countries belong to trade blocs.
- Free trade agreements and trade blocs make it easier/harder to trade.
- Tariffs and quotas ^^ eg India imposing agricultural tariffs of around 40% in 2020.
- HIC trade blocs more dominant.
How do historical factors affect global trade?
Colonial ties (eg between European countries and their colonies) previously meant that trade was dominated by resources from colonies and manufactured goods from the European countries. Prevented poorer African countries from developing by trade. This was extremely exploitative, and was ended by independence of colonies. France still trading with West-African countries (previous colonies) eg Niger.
How do changes in the global market affect trade?
- Some countries rely on FDI to trade, eg China DRC. FDI availability. Allows country to trade, however if FDI stops putting in money, nothing to trade.
- Product dumping, over production. Can happen if governments provide subsidies.
- Covid
- Global Financial Crisis (2007-2008)
- Russia Ukraine, war
