International markets and access to trade Flashcards
What is protectionism?
One way for a country to develop s through producing products from within the country instead of relying on imports.
- Governments create policies to protect industries from foreign competition.
What are protectionist methods?
- A quota is a limit on the amount if a product that can be imported or exported.
- A tariff or a duty is a tax paid on imports or exports which increases the cost of foreign goods.
- A subsidy is a payment by a government to a producer which allows them to sell their products more cheaply.
What is free trade?
Free trade emphasises the idea that there should not be protectionist policies, comes from the idea that a country should specialise in what in can produce efficiently.
- This would the most efficient production systems to develop.
What are trade blocs?
Are groups of countries who agree to trade freely within the bloc. They work together to maximise trade between themselves.
What is fair trade?
Fair trade is a separate set of ideas which emphasise the importance of profit reaching the actual producer of the goods.
Advantages of trade?
- Increased employment- goods being sold worldwide is likely to increase demand and increase employment were goods are produced.
- Country can specialise in producing what it can do efficiently at a low cost.
- Countries can start to benefit from economies of scale when they specialise in products.
- Transfer of technology and new technologies can bring down production costs and prices for consumers.
- Increased competition means prices will fall for consumers.
Disadvantages of trade?
- Worker exploitation may occur by TNC’s in order for them to keep costs low.
- Over specialisation may occur if demand falls for products and a country has no fall back so can only produce a small range of goods.
- Protectionism protects a countries industries but may have negative impacts elsewhere.
- De-skilling occurs as new technology results in the loos of traditional skills as they’re no longer needed.
- Product dumping occurs when over production leads to products being sold in foreign at very low prices
What are global patterns of trade and investment?
The value and volume of trade has increased significantly over the past 50 years:
- Export value has increased 117 X from $157bn to $18,301bn.
Huge reason for increased global trade is the the concept of free trade and the removal of trade barriers.
Theory behind this is countries should sell what they are best at producing, the theory of comparative advantage.
What will global trade look like by 2020?
A) World trade goods could be worth $35 trillion
B) World trade services could be worth $6 trillion
C) Fastest growth will be in Asia
How do governments set up trading relationships and have access to markets?
Countries have to reach agreements in order o be able to trade with others.
Can develop relationships such as:
A) Bi-lateral agreements
B) Trading blocs
C) International agreements through the WTO
What are BI-lateral agreements?
Countries negotiate directly with another.
E.G. UK with China after Brexit.
What are international agreements through the WTO?
WTO sets and manages ‘rules of global trade’ to work to achieve its goals of global free trade.
- Made up of 160 countries (75% LICs)
- Critics say is takes too long to reach agreements and core members often refuse propositions which disadvantage them.
What are trading blocs?
These are groups of countries who have agreed to have free movement of trade between them and remove all or most trade barriers.
What are special and differential treatment agreements?
These allow the poorest countries access to the world markets by removing trade barriers on their goods.
- E.G. ‘Everything but arms agreement’. EU gave LDCs tariff free access to their markets on all goods except arms and ammunition.
