International Trade Flashcards
What is international trade?
The import and export of goods and services between countries.
How has the volume of trade increased since the 80s?
Increased by 8x
How is the pattern of global trade changing?
Developed countries remain the biggest global traders but some emerging countries are catching up. Eg: China is now the largest exporter of goods in the world due to the rapid growth of its manufacturing sector.
At what rate are less developed countries beckoning bigger traders?
Growth is slow.
The poorest 49 countries makeup 10% of the worlds population but only 0.4% of trade.
What is fair trade?
A way of trading that supports people in developing countries who make products exported to developed countries.
What is FDI?
Foreign direct investment is when a person or a company spend money in another country to generate a profit.
What might attract FDI?
-Size of the market
-Stability of the market
-Ability to access financial services
How has the volume of FDI increased?
1996: $400 billion
2016: $1500 billion
How has the pattern of investment changed?
Before:
Developed invested in other developed countries.
Now:
Developed invest in emerging economies like China India and Brazil.
Emerging economies have now began to invest in other emerging countries.
Eg: China invested into Africa.
What is ethical investment?
When a person company or group only invests in areas that are considered social responsible.
How has ethical investment grown?
Ethical investment has tripled in 11 years.
What is protectionism?
When countries limit trade and tariffs to shield their industries from foreign competition.
What does WTO stand for?
World trade organisation
Why was the WTO set up?
You increase trade and help resolve trade disputes between member countries.
What 4 rules did the WTO set up?
-Countries can’t give another country special access to their market without doing the same to all countries unless they’re in a trade bloc.
-Countries should promote free trade
-Countries should behave predictably
-There should be fair competition
What is a trading bloc?
An association between countries between different governments that manages trade and removes trade barriers between their members.
What are regional trading blocs?
Training agreements between neighbouring countries.
Give an example of a regional trading bloc.
Germany trades more with EU countries than non EU countries.
What are specific economic zones?
Areas with different trade and investment rules to the rest of the country they increase trade while keeping barriers to the rest of the country.
Where does most of the trade in the world take place between?
Developed countries
2013: 30% of global products trade was between the US and the EU.
What are the main trading relationships of less developed countries?
Less developed countries mainly trade with emerging economies and developed countries.
What are the trading relationships in emerging countries?
Trade with both developed and developing countries but their role of becoming increasingly important as their manufacturing and services sectors have grown.
What is access to markets?
How easy it is for countries and companies to trade with one another this is determined by the extend of export and import barriers between 2 countries.
What is access to markets affected by?
-Wealth of country
-Being a member of a trading bloc
How does wealth of a country affect access to markets?
Developed countries put higher tariffs on goods imported from less developed countries making it harder for them to access the market so they have to rely on loans.
How is access to markets affected by being a member in a trade bloc?
Members of trade blocs have access to wealthy buyers however less developed countries may have to pay higher tariffs to export goods.
What is an SDT agreement?
A special and differential treatment let’s least developed countries bypass expensive tariffs to give them greater access to markets.
Give an example of an SDT agreement.
EUs Everything but Arms agreement allowed the least developed countries to export some products to the EU without tariffs.
Which is better trade blocs or SDT agreements?
SDTs have a negative impact on developed countries as they allow cheap products into the market.
Trade blocs allow less developed countries to negotiate process collectively to improve their market.
How has differential access to markets cause economic impacts to developing countries?
Countries with poor market access cannot establish new industries due to competition and high tariffs so they are dependent on selling low value products (agricultural) that can fluctuate in price.
=They have a low GNI
What does GNI stand for?
Gross national income
How has differential access impacted developed countries economically?
Countries with high market access see more economic growth because they can trade making their citizens wealthier and developing high tech industries to boost their economy further.
How does differential market access attract countries socially?
Better access:
-high paid jobs with more disposable income increasing standards of living.
Less access:
-Less money for education and healthcare.
-unregulated trade in developing countries has led to sweatshops with bad conditions.
