Global Systems & Governance - International Trade & Access to Markets Flashcards
What is international trade?
International trade is the import and export of goods and services between countries.
Why has the volume of global trade increased dramatically since the 1980s?
The volume of global trade has increased dramatically since the 1980s - its value increased by nearly eight times between 1980 and 2008.
How has the pattern of global trade changed?
Developed countries remain the biggest global traders, but some emerging economies are catching up - China is now the largest exporter of goods in the world, largely due to the rapid growth of its manufacturing sector.
Why has there been an increase in fairtrade?
There has also been an increase in fairtrade - this is a way of trading that supports people in less developed countries who make products that are exported to developed countries. Since the 1970s, nearly 1000 fairtrade producers have been set up in less developed countries. These groups trade with developed countries, who sell their products in shops and supermarkets.
What is Foreign Direct Investment (FDI)?
FDI is when a person, company or other groups spends money in another country in order to generate a profit.
Why has the pattern of investment changed?
Until the 1980s, developed countries mainly invested in other developed countries. Since the 1980s, developed countries have begun investing more in emerging economics and developing countries. In the past 10 years, China, India, Brazil and Mexico were some of the largest recievers of foreign investment.
What is ethical investment?
Ethical investment is when a person, company or group only invests in areas that are considered socially responsible e.g. companies that causes envrionmental or humanitarian harm are generally avoided by ethical investors.
What are the trading relationships of developed countries?
Most trade in the world takes place between developed countries - in 2013, imports and exports between the US and EU accounted for over 30% of the global products trade. Most of these products e.g. machinary or chemicals, require a lot of money and expertise to make.
What are the trading relationships of emerging economies?
Emerging economies like China and India are increasingly important to global trade. China’s manufacturing sector has grown rapidly, and a highly educated population has grown India’s service sector.
What are the trading relationships of less developed countries?
Most less developed countries trade mainly with emerging economies and developed countries. E.g. Bangladesh mainly exports to the US and EU and imports from China and India, rather than from less developed countries.
Who are the global trade rules set by?
The World Trade Organisation (WTO)
What are trading blocs?
Trading blocs are associations between different governments that promote and manage trade. Trade blocs remove trade barriers between their members, while keeping common barriers to countries who aren’t part of the bloc.
What are Special Economic Zones (SEZs)?
SEZs increase the volume of trade with emerging economies and less developed countries. SEZs are areas that have different trade and invetsment rules to the rest of a country e.g. companies investing there may pay lower taxes on land and goods. SEZs increase trade while keeping barriers in the rest of the country.
What is access to markets?
Access to markets is about how easy it is for countries and companies to trade with one another. International access to markets is determined by the extent of export and import barriers between two countries.
What is access to markets affected by?
Access to markets is affected by wealth. Developed countries often put higher tariffs of goods imported from less developed countries, this makes it harder for less developed countries to access the market. Developed countries also have more money to invest, so they can avoid high tariffs imposed by developing countries by opening factories within them.
What are Special and Differential Treatment (SDT) agreements?
A SDT refers to trade rules and arrangements that give developing countries special treatment in global trade, particularly under the WTO framework. These let least developed countries bypass developed countries’ tariffs, which gives them greater market access.
What are some economic impacts of differential access to markets?
- Its hard for countries with poor market access to establish new industries as they face high tariffs when they sell abroad, making their products uncompeitive and they may be undercut in their domestic markets by TNCs producing similar products cheaper
- Countries with high levels of market access tend to see more economic growth because they can trade more, this means their citizens are wealthier and they can afford to imprt a range of products and they can develop high-tech industries which boost their economies further.
What are some social impacts of differential access to markets?
- People in countries with better market access tend to have higher-paid jobs, giving more disposable income
- Countries with less market access have less money available for education and healthcare etc, so quality of life is generally lower.
How does trade and market access affect people’s lives around the world?
- Trade benefits developed countries more than developing countries
- Trade and high levels of market access also mean that a wide range of goods are available in developed countries, increasing people’s standard of living
- Trade also creates more interdependence between countries - if something goes wrong, other coutnries are affected.
Greece & The EU
- Greece became close to leaving the EU in summer 2015 due to debts of over 4 billion euros, including over 3 billion to the European Central Bank
- Economy returned to recession in 2015
What is an example of specialisation?
The Umbrella City, Shaoxing, China
What is a TNC?
Transnational Corporations are companies that produce, sell or are located in two or more countries.
What is the spatial organisation of TNCs?
TNCs connect countries together because of their spacial organisation, they create a global supply chain because the different parts of their businesses (from manufacture to retail) are located in different countries.
How do TNCs organise production to take advantage of the global supply chain?
- TNCs create a global supply chain, this gives economies of scale and means they get the most value from the whole of their supply chain
- TNCs in primary industry = often invest in countries with natural resoruces that they can extract
- TNCs in secondary industry = often invest in countries with low labour costs and cheap land, especially where governments encourage investment with tax breaks
- TNCs in tertiary industry = often invest in contries with well-educated population
- TNCs also often invest in countries with weak labour and environmental regulations
