International Trade

Question 1

What is international trade?

Answer 1

The import and export of goods and services between countries.

Question 2

How has the volume of trade increased since the 80s?

Answer 2

Increased by 8x

Question 3

How is the pattern of global trade changing?

Answer 3

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.

Question 4

At what rate are less developed countries beckoning bigger traders?

Answer 4

Growth is slow.
The poorest 49 countries makeup 10% of the worlds population but only 0.4% of trade.

Question 5

What is fair trade?

Answer 5

A way of trading that supports people in developing countries who make products exported to developed countries.

Question 6

What is FDI?

Answer 6

Foreign direct investment is when a person or a company spend money in another country to generate a profit.

Question 7

What might attract FDI?

Answer 7

-Size of the market
-Stability of the market
-Ability to access financial services

Question 8

How has the volume of FDI increased?

Answer 8

1996: $400 billion
2016: $1500 billion

Question 9

How has the pattern of investment changed?

Answer 9

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.

Question 10

What is ethical investment?

Answer 10

When a person company or group only invests in areas that are considered social responsible.

Question 11

How has ethical investment grown?

Answer 11

Ethical investment has tripled in 11 years.

Question 12

What is protectionism?

Answer 12

When countries limit trade and tariffs to shield their industries from foreign competition.

Question 13

What does WTO stand for?

Answer 13

World trade organisation

Question 14

Why was the WTO set up?

Answer 14

You increase trade and help resolve trade disputes between member countries.

Question 15

What 4 rules did the WTO set up?

Answer 15

-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

Question 16

What is a trading bloc?

Answer 16

An association between countries between different governments that manages trade and removes trade barriers between their members.

Question 17

What are regional trading blocs?

Answer 17

Training agreements between neighbouring countries.

Question 18

Give an example of a regional trading bloc.

Answer 18

Germany trades more with EU countries than non EU countries.

Question 19

What are specific economic zones?

Answer 19

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.

Question 20

Where does most of the trade in the world take place between?

Answer 20

Developed countries
2013: 30% of global products trade was between the US and the EU.

Question 21

What are the main trading relationships of less developed countries?

Answer 21

Less developed countries mainly trade with emerging economies and developed countries.

Question 22

What are the trading relationships in emerging countries?

Answer 22

Trade with both developed and developing countries but their role of becoming increasingly important as their manufacturing and services sectors have grown.

Question 23

What is access to markets?

Answer 23

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.

Question 24

What is access to markets affected by?

Answer 24

-Wealth of country
-Being a member of a trading bloc

Question 25

How does wealth of a country affect access to markets?

Answer 25

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.

Question 26

How is access to markets affected by being a member in a trade bloc?

Answer 26

Members of trade blocs have access to wealthy buyers however less developed countries may have to pay higher tariffs to export goods.

Question 27

What is an SDT agreement?

Answer 27

A special and differential treatment let’s least developed countries bypass expensive tariffs to give them greater access to markets.

Question 28

Give an example of an SDT agreement.

Answer 28

EUs Everything but Arms agreement allowed the least developed countries to export some products to the EU without tariffs.

Question 29

Which is better trade blocs or SDT agreements?

Answer 29

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.

Question 30

How has differential access to markets cause economic impacts to developing countries?

Answer 30

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

Question 31

What does GNI stand for?

Answer 31

Gross national income

Question 32

How has differential access impacted developed countries economically?

Answer 32

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.

Question 33

How does differential market access attract countries socially?

Answer 33

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.