International Trade

Question 1

What are some advantages of International Trade?

Answer 1

• Increase global interdependence
• More consumer choice
• More competition, therefore lower prices
• Encourages foreign investment
• Allows poorer countries to develop
• Increases jobs; trade has globally increased jobs by 24%, decreasing poverty

Question 2

What are some disadvantages of International Trade?

Answer 2

• Language barriers eg branding
• Trade dependency eg European countries on Russia for energy. Since Russia Ukraine war, countries having to develop own energy.
• More powerful countries in control
• Different laws across countries

Question 3

What is a ‘Free Trade Agreement’ ?

Answer 3

An agreement between at least two countries to reduce trade barriers.

Question 4

What is ‘De-skilling’ ?

Answer 4

A reduction in the level of skill required to do a job.

Question 5

What is a ‘tariff’ ?

Answer 5

A tax or duty that raises the price of imported products.

Question 6

What is ‘Product Dumping’ ?

Answer 6

Selling exports at too low a price. eg China selling toys at too low a price.

Question 7

Why do some argue that “The Rich Stay Rich” ?

Answer 7

• Raw materials are often sourced from LICs at low prices, and then processed by HICs, meaning there is added value.
• HICs having more input on WTO.
• HICs having more control over tariffs and quotas.

Question 8

Give a stat about countries dominating trade.

Answer 8

Over half of all global trade is accounted for by just 10 nations.

Question 9

Give a HIC and LIC example of trade.

Answer 9

Germany - Exports 16% of vehicles eg Volkswagen
Nepal - Big exporter of palm oil.

Question 10

Why can trade barriers be good?

Answer 10

• Encourages local production
• Reduces foreign trade dependency
• Reduces foreign competition of jobs
• Prevents foreign firms from product dumping

Question 11

How has the Russia v Ukraine War affected trade?

Answer 11

Very little, as Europe relies heavily on Russia for gas.

Question 12

How are China and DRC linked by trade? (an example of FDI)

Answer 12

China needs cobalt for manufacturing technology. DRC has most plentiful supply in world; >70% of world’s cobalt. China invested lots of money into cobalt mining in DRC (Sicomines). Invested less money than promised. Caused low wages for staff, increased inflation, but have developed DRC trade.

Question 13

How has trade grown/slowed down?

Answer 13

From 1950-2000 grew 22x, slowed down in 2008 because of global financial crisis.