International trade and access to markets Flashcards
Describe the history of production
- 1954, 95% of manufacturing was concentrated in Western Europe, North America and Japan
- Over time decentralisation occurred due to FDI from TNCs
- This abled developing countries to take on manufacturing task at a competitive cost; lower land and labour costs and government incentives.
Define global shift
The filtering down of the manufacturing industry from developed countries to lower wage economies.
What are the consequences of global shift?
- Deindustrialisation in richer countries
- Loss of jobs in manufacturing sector
What other factors have caused a decline in manufacturing in developed countries?
- Outdated production methods
- Poor management
Give some factors which affect the location choice of manufacturing companies:
- availability of skilled and educated workers
- government incentives (e.g. tax breaks, enterprise zones)
- access to larger markets without tariff barriers; trade agreements
What is a free trade area?
Trade barriers reduced and trade of goods increased
What is a customs union?
- Countries group together to apply the same tariffs
- Once goods have cleared customs they can freely trade within the union
What is a common market?
A group of countries imposing few or no duties on trade with each other and a common tariff on other countries
What are the global advantages of nations joining together as trading entities?
- Improves world peace and reduce conflict
- Improved global trade
- Helps members develop their economies
What are the regional advantages of nations joining together as trading entities?
- To compete on a global level
- Bigger representations in global affairs
- People seeking work can easily move between countries
- To share technological advances
What is CAP and what was its aims?
Common Agricultural Policy
- High quality food
- Affordable food
- Safe food
Give some disadvantages of trade agreements:
- Loss of sovereignty (decisions are centralised)
- Loss of financial controls
- Pressure to adopt central legislation
What is expected to happen as distribution and consumption shifts to the Eastern countries in the future?
- India and China will become a strong trade route
- More of Asia’s exports will be to other Asian countries
- Western countries can benefit from the expansion of financial services in Asian countries
What is meant by a comparative advantage?
Countries should specialise in providing goods and services they excel at
Give some trade restraint examples:
- Import license, authorising imports from a specific source
- Import quotas, physical limit of the quantity of goods imported
- Subsidies, grants given to domestic producers to reduce their costs against imported goods
What is FDI and who does it help?
Foreign Direct Investment
Important source of funding for developing countries, making it easier to start economic growth
What are the benefits of trade agreements?
- Reduces costs of trading for businesses
- Everyone trades fairly, no bans can be implemented
- Variety of goods for the receiving country
What are the disadvantages of trade agreements?
- Reduces jobs as competition from abroad overrules manufacturing/services providers
- Small economic benefit
- Secret negotiations
What is the TPP?
Trans-Pacific Partnership
Who’s involved in the TPP?
12 countries including;
Canada, Chile, Japan, USA, Mexico, Singapore
Why has the TPP been criticised?
Negotiations lack transparency despite holding the status of being one of the most important trade agreements globally
What does the TPP intent to negotiate?
As well as traditional trade matters; investments, copyright, patents
What countries compromise Mercosur?
Brazil
Argentina
Uruguay
Paraguay
Whats the aims of Mercosur?
To allow free movement of labour between the members
Allows trade globally
