Factors affecting global trade Flashcards
What is Resource Endowment?
Resource endowment refers to the natural resources a country possesses (e.g., oil, minerals, agriculture). Countries rich in resources often have a comparative advantage in exporting those resources.
How Does Locational Advantage Affect Global Trade?
Countries with strategic locations, such as access to major shipping routes or proximity to large markets, have a trade advantage. Ports and transport links help reduce transportation costs, boosting trade.
What Role Do Historical Factors Play in Global Trade?
Historical factors, such as colonial ties, influence global trade by creating established trading patterns and networks. Former colonies often trade more with their colonizers due to shared infrastructure and trade agreements.
How Do Trade Agreements Affect Global Trade?
Trade agreements (e.g., NAFTA, EU agreements) reduce tariffs, promote trade liberalization, and foster economic cooperation between countries, leading to increased trade between member states.
How Do Changes in the Global Market Affect Trade?
Changes in the global market, such as shifts in demand, new technologies, or economic crises, can alter trade patterns. For example, a rise in demand for electronics from Asia has boosted trade with countries like China and South Korea.
