GS&GG Bk5 - International Trade and Access to Markets Flashcards
What is comparative advantage?
Theory that countries should specialise in providing goods and services that they excel in
- otherwise trade goods + services
What is economic Rationale of Trade?
Potential economic benefits of international and inter-regional trade
What are the 7 barriers to trade?
- Tariffs
- Import licence
- Import quotas
- Subsidies
- Voluntary export restrains
- Embargoes
- Trade restrictions
What are tariffs?
A tax on imports
What is an import licence?
A licence issued by a national government authorising the importation of goods from a specific source
What is an import quota?
The physical limit on the quantity of goods that can be imported into a country
What are subsidies?
Grants / allowances usually awarded to domestic producers to reduce their costs and make them more competitive against imported goods
What are voluntary export restrains?
is a diplomatic strategy offered by the exporting country to appease the importing country and deter it from imposing trade barriers
What are embargoes?
Partial or complete prohibition of commerce and trade with a particular country
> particular reasons
What are trade restrictions?
Import restrictions based on quality of standard or how a product is produced > child labour
What are the trends in the volume and patterns of international trade?
- incr mobility
- incr capital
- RTA’s (regional trade agreements)
- WTO > free trade aim
Since what year has their been difficulty reaching trade agreements and why?
2008
- global financial crisis
What % of world trade do…
1. US, Japan and Germany account for?
2. + UK, Canada, Italy, France
- 25%
- 50%
What is investment? And what is it attracted by?
Money spent on another country to generate a profit
ATTRACTED BY:
- lower min wages > specialisation
- closer to consumer markets + natural resources
- reduced laws + legislation = gov policy
- actively encouraged by the domestic policy to move
- market size
What is glocalisation?
The adaptation of a global product for a local market place. The world comes from an amalgamation of the world globalisation and localisation
What is globalisation?
The spread of economic, cultural and social ideas across the world
What is free trade?
2mn farmers > 68 countries > 1900 producer organisations
FREETRADE
- Main goal
- Focuses on
- Primarily benefits
- Critics say
- Major actions
- Producers compensation determined by
- Supply chain
- Key advocate organisation
- Incr nations economic growth
- Trade policies between countries
- Multinational corporations, powerful business interests
- Punishing to marginalised people + environment, long term sacrifices
- Countries lower tariffs, quotas, labour and environmental standards
- Market + government policies
- Many parties between producer and consumer
- WTO, World Bank, IMF
FAIR TRADE
- Main goal
- Focuses on
- Primarily benefits
- Critics say
- Major actions
- Producers compensation determined by
- Supply chain
- Key advocate organisation
- Empower marginalised people and improve quality of life
- Commerce among individuals and businesses
- Vulnerable farmers, artisans and workers in LICs
- Interferes with the free market, too small scale to impacts, inefficiencies
- Businesses offer producers favourable financing, long-term relationships, min prices + high labour and environmental standards
- Living wage and community improvements
- Include fewer parties, more direct trade
- Fair trade Labelling Organisations International, World Fair Trade Organisations
What are the two factors of ethical trading?
- Employment status (fair trade working conditions, fair trade, no child labour)
- Environmental focus
TRANS-PACIFIC PARTNERSHIP (TTP)
1. Number of countries
2. Examples of countries
3. Criticism?
4. What topics are included that are extended beyond trade?
- 12
- USA, Brunei, Canada, Chile, Japan etc
- Lack of transparency
- Copyright
TRANSATLANTIC TRADE AND INVESTMENT PARTNERSHIP (TTIP)
1. What is it
2. Whose it between
3. What type of agreements are they
4. What rules do they include
- Free trade agreement
- EU and USA
- Bilateral trade agreements
- Food safety laws, banking regulations
What has China been doing recently?
- member of the G20 group
- TNCs investing in African countries
- gave a voice to member developing countries
What are the aims of China? (3)
- Represent the interests of the worlds poorest countries
- Help development in these countries
- Reduce poverty + disease + improve human rights
What is the importance of the role of China? (3)
- Common interest with the poorest 77 in reducing poverty
- Increased influence of world affairs
- Group needs a powerful ally
What are the positives (5) and negatives (4) to the host country of investment e.g. from China?
POSITIVES
1. Access to more resources
2. Regulations + laws
3. Lower costs of production
4. Positive reputation
5. Ease of trade (trading blocs)
NEGATIVES
1. Employment (direct + indirect)
2. Investment into infrastructure
3. Multiplier effect
4. Improved infrastructure can be used by all sectors
What are the positives (3) and negatives (4) to the country doing the investment e.g. China?
POSITIVES
1. Loss of finances from central economy
2. Less control e.g. other governments
3. Loss of jobs > industrialisation
NEGATIVES
1. Loss of natural resources
2. Too much power of TNCs e.g. corruption
3. Leakage of the profits
4. Exploitation
3 key things that the Provision of Special and Differential Treatment (SDT) Agreements enable the poorest countries to do?
- Tackle structural handicaps
- lower levels of income > employment types
- mainly exporting primary goods - Engage in world trade on a more advantageous level by:
- providing incentives for export diversification
- allowing more stable export revenues - Promoting faster income growth and development
Vulnerable or Prosperity and Creative consequences of differential access to markets?
VULNERABILITY
1. Covid
2. Environmental considerations
3. Conflicts > Russia/Ukraine, Gaza/Israel
PROSPERITY AND CREATIVE
1. Global sporting events > Olympics
2. WFH > surrounding businesses fail
3. Space stations
4. Global commons > Antarctica
Why do TNCs operate in more than one market? (6)
- Incr market share
- Larger labour workforce > skilled
- Less stringent H+S / weaker environmental laws
- Resources
- Trade deals
- 24/7 operations (time zones)
3 key characteristics of TNCs?
- HQ in HICs
- Manufacturing > NEEs
- Logo and slogan
Examples of two key TNCs and their worth?
Apple - $3.5tr
Microsoft - $3.2tr
What are primary resources?
- location is where the resources are still exploited
- finite resources
- new demands e.g. lithium and EVs
What is secondary sector production?
- low labour costs
- investment in education
- work ethic
- government incentives
What are the two types of integration?
- Vertical
- Horizontal
What is vertical integration? + example
Supply chain of a company is owed entirely by that company from raw materials to finished product
- control over supplies and stocks
- reduces the cost
BP own the oil reserves + pipes
What is horizontal integration? + example
A strategy where a company diversifies its operations by expansion, merger or takeover to give broader capability at the same stage of production
- complementary or competitive
Kraft foods took over Cadburys
Who are the beneficiaries of the process of globalisation? (4)
- NEEs
- TNCs
- International organisations > WTO, IMF, The World Bank
- Regional Trading Blocs
