International Trade

Question 1

Trade

Answer 1

. Imports and exports of goods and services between countries

. Developed countries are the biggest global traders but some emerging are catching up- China Is now the largest exporter

. Less developed countries are also becoming bigger traders but growth is slow

. There is a rise to fair trade ( supporting small farmers in less developed countries)

Question 2

Investment

Answer 2

. FDI- may be attracted by the size of the market, the stability of the market and the possibility of extracting resources

. Pattern of investment changed- until 1980s developed countries mainly invested in other developed, then they started to invest more in emerging economies ( e.g china, Mexico, Brazil ( BRICKs) )

. Ethical investment is when a person, company or group only invest in areas that are considered to be socially responsible ( cause no environmental and humanitarian harm)

Question 3

World trade organisation ( WTO) rules

Answer 3

. Countries should promote free trade by removing as many barriers to trade as possible

. There should be fair competition- one company/ country shouldn’t get an unfair advantage over rivals

Question 4

Trading blocs

Answer 4

. Different governments promote and manage trade
. Many trade blocs are regional ( makes it easier to trade with neighbours- e.g German exports to other EU countries were €708 billion compared to € 501 billion outside the EU)
. Trade bloc such as OPEC standardise prices to prevent countries undercutting one another with cheaper prices
. Trade block like Eu single market, USMCA

Question 5

Advantages

Answer 5

. Économies or sale- producing a narrower range of goods and devices means that a country can produce higher volumes and at cheaper cost per item

.increased employment- increased production for export is likely to increase employment

Question 6

Disadvantages

Answer 6

. Over specialisation- if demand falls for if the same goods can be produced more cheaply overseas, then production needs to shift to other products

. De skilling- traditional skills and carders may be lost when production technology replaces manpower.

Question 7

Developed countries have greater access to markets

Answer 7

. Developed countries often put higher tariffs on goods imported from less developed countries- this makes it hard for less developed countries to access markets

. Access increases by being a member of trading bloc- member countries have access to the market of all the other member countries- however less developed countries outside the trade bloc may have to pay high tariff to export their goods

Question 8

SDT agreements give less developed countries greater market access

Answer 8

. The WTO forms special and differential treatment ( SDT)- let the less developed countries bypass developed countries tariffs

. Negative impact is that it allows cheap imports into the country- suggests that regional trade bloc are more effective at improving their market access

Question 9

Economic consequences

Answer 9

. It’s hard for countries with poor access to market to establish new industries- they face high tariffs, making their products uncompetitive

. Countries with high market access tend to have more economic growth because they can trade more

Question 10

Social consequences

Answer 10

. People in countries with better market access have better paid jobs

. Countries with less market access have less money availability for education and healthcare

Question 11

Terms of trade

Answer 11

The value of a counties exports relative to its imports