International Trade and Access to Markets

Question 1

What is outsourcing? What are negative consequences of this? - International Trade

Answer 1

Outsourcing is where organisations are subcontracted to carry out functions for a larger organisation to reduce cost and increase efficiency.
Outsourcing leads to environmental damage, exploitation of labour, deindustrialisation in HICs, unemployment.

Question 2

What is comparative advantage? Give an example - International Trade

Answer 2

Comparative advantage is when countries specialise in producing particular commodities that they excel at producing. They then trade for goods that they do not excel at producing.
An example is the Umbrella City in China.

Question 3

What are barriers to trade? Why are these used? - International Trade

Answer 3

Barriers to trade are government-imposed restraints on the flows of goods and services internationally. These are used to protect domestic industries, production and labour against international competition.

Question 4

What are import licences/import quotas? - International Trade

Answer 4

Import licences are licences which allow goods to be imported from specific sources. This allows the regulation of goods.
Import quotas are where the quantity of goods imported from a certain country are restricted to help protect domestic production.

Question 5

What are subsidies/tariffs? - International Trade

Answer 5

Subsidies are grants and allowances made available for domestic producers to allow them to reduce costs and make products more competitively than foreign producers.
Tariffs are taxes imposed upon imports.

Question 6

What are voluntary export restraints/embargoes? - International Trade

Answer 6

Voluntary export restraints are restrictions on volumes of a good that an exporting country may export to another country at that country’s request.
Embargoes are government orders barring trade with another specific country or on specific goods. Attempt to isolate and undermine countries.

Question 7

What is a trading bloc? Give examples - International Trade

Answer 7

A trading bloc is a group of countries within a certain region that protect themselves against imports from non-members.
Examples include the EU, NAFTA and the Trans-Pacific Partnership.

Question 8

What are trends in the concentration of international trade in terms of developed and undeveloped countries? - International Trade

Answer 8

Developed countries are increasingly seeing the majority of international trade occur between them, isolating developing countries from international trade. This is because the world’s largest and wealthiest markets exist in HICs, meaning that trade is concentrated here.

Question 9

What was the value of Chinese exports in 2021? What does this indicate about China’s role in the global economy? - International Trade

Answer 9

Chinese exports in 2021 totalled $2.5tn, indicating that China is a dominant influence on global trade, alongside the BRIC countries.

Question 10

What are advantages of international trade? - International Trade

Answer 10

International trade can reduce the number of domestic monopolies that exist on certain goods, can transfer technology globally, promote economies of scale (allowing countries to produce narrower ranges of goods but more efficiently), increases employment globally, increases purchasing power due to the global fall in production price.

Question 11

What are disadvantages of international trade? - International Trade

Answer 11

Specialised production centres can be vulnerable to change in demand or overseas production cost falls, foreign competition can seriously stunt domestic industries from developing, certain industries may be heavily exploitative

Question 12

Why have volumes of international trade grown in recent years? - International Trade

Answer 12

Volumes of international trade have grown recently due to the increased spread of neoliberal ideas and removal of barriers to trade, as well as the increased ease of transport globally allowing goods to move around the world more.

Question 13

What is fair trade? - International Trade

Answer 13

Fair trade is a social movement looking to help producers receive a fairer price for goods, as well as better trading conditions to promote sustainability.

Question 14

What products are focussed on by fair trade? What regions? - International Trade

Answer 14

Fair trade focuses on agricultural and mineral-based products coming from developing regions, such as Africa, South America and the Caribbean.

Question 15

Why has fair trade been needed in terms of prices? - International Trade

Answer 15

Producers in developing countries previously had little market influence on price due to the ability for buyers to be able to force down prices. Given that producers are heavily reliant on incomes from these goods, they had previously been forced into taking low prices for their produce.

Question 16

How does fair trade succeed in creating more equitable costs of goods and development from produce farmed in developing nations? - International Trade

Answer 16

Fair trade pays higher prices to producers by creating cooperative groups with greater bargaining powers against buyers, allowing this to increase the value of their goods. This money can then be reinvested in increasing social and environmental standards in developing areas.

Question 17

What is ethical investment? - International Trade

Answer 17

Ethical investment is a form of ethical consumerism where investors make a deliberate choice to invest capital in a firm on the basis of particular social or environmental activities and responsibilities of an organisation.

Question 18

What rank of most important food product in LICs are bananas? How many people are these a staple food for? - International Trade

Answer 18

Bananas are the 4th most important food produced in LICs, being a staple food for 400 million people.

Question 19

Which country do most banana TNCs come from? Give examples - International Trade

Answer 19

Most banana TNCs come from America. These include Chiquita, Del Monte, Dole and Fyffes.

Question 20

Which regions are the world’s largest importers of bananas? - International Trade

Answer 20

The world’s largest importers of bananas are the EU and the USA.

Question 21

What % of the price paid for bananas stays in richer countries and does not reach producers? - International Trade

Answer 21

90% of the price of bananas remains with wealthier countries and does not go to producers.

Question 22

What event had severe consequences for the trade in bananas in the Windward Islands? How many producers remain active there? - International Trade

Answer 22

2010 saw a hurricane destroy banana plantations on the Windward Islands, causing banana growers to abandon their farms. This saw only 3000 producers remain active here.

Question 23

How did the EU further impact the banana trade in the Windward Islands? - International Trade

Answer 23

The EU lowered trade barriers on South American banana producers, allowing TNCs located here to dominate the banana market and further damage producers in the Windward Islands.

Question 24

What are the environmental harms caused by banana production? - International Trade

Answer 24

Banana production creates 2 tonnes of waste for every 1 tonne of bananas produced, causes extreme deforestation and monoculture (harming biodiversity). Can also lead to droughts.

Question 25

How can trade wars develop from banana production? - International Trade

Answer 25

Previously trade barriers had been placed on South American banana trades by the EU while former colonies had preferential trading arrangements for bananas with the EU to encourage development. The WTO then ruled against the EU, creating a trade war between the US and EU.

Question 26

How can the trade in bananas create a ‘race to the bottom’? - International Trade

Answer 26

The banana trade has seen large TNCs relocating to areas with lower labour regulations and standards such as West Africa. They also seek to avoid environmental regulations. This means that, by searching for profits, companies devalue labour and environmental protections.

Question 27

What is the El Guabo Association of Small Banana Producers? - International Trade

Answer 27

Formed in SW Ecuador, the El Guabo Association exports fairtrade bananas to the USA and Europe. This ended a practice whereby family farms had previously sold bananas through intermediaries at a price too low to cover basic living costs.

Question 28

What are social benefits of the El Guabo Association of Small Banana Producers? - International Trade

Answer 28

Creates provision of educational/medical supplies and services, provides support for the poorest groups, improves living standards, helps to provide employment opportunities for marginalised groups.

Question 29

What are the economic benefits of the El Guabo Association of Small Banana Producers? - International Trade

Answer 29

Guarantees fair wages, creates social security systems that support those in need, migrant labourers are helped, incomes are stabilised and secured.

Question 30

What does Apple do? Why is it successful? - International Trade

Answer 30

Apple produces, manufactures and sells electronic devices under its ‘i’ brand. It is the world’s 2nd largest IT company by revenue. It is successful because it provides stylish and well-designed products which fit the needs of consumers. It also markets and brands these products well.

Question 31

Where are Apple’s Headquarters/R&D/European HQ? - International Trade

Answer 31

Apple’s HQ is in Silicon Valley, where its products are designed. Its R&D is in California. Its European HQ is in Cork, Ireland.

Question 32

Where are Apple’s manufacturing centre and retail stores located? - International Trade

Answer 32

Apple outsources its manufacture to Foxconn in China (mainly in Shenzen’s Special Economic Zone). Its retail stores are located globally, with most of these located in Europe, North America and the Middle East.

Question 33

What positive economic impacts does Apple have on its host countries? - International Trade

Answer 33

Apple has employed 4000 people in Cork, as well as attracted investment in infrastructure in the city. It has also led to jobs being provided in manufacture in Shenzen and led to the development of China through tax revenues here.

Question 34

What negative economic impacts does Apple have on its host countries? - International Trade

Answer 34

Apple repatriates most of its profits to its HQ, meaning that host countries do not tend to benefit, also accused of avoiding corporation tax through operating across multiple countries. Many of those employed in Cork are EU migrants, hence Apple’s presence is not benefiting locals.

Question 35

What negative social impacts is Apple having on its host countries? - International Trade

Answer 35

200,000 workers in Shenzen work on less than $100/month for more than 60 hours a week, sweatshop style conditions are used, uses child and student labour to manufacture products, 50 workers poisoned in manufacture in 2010.

Question 36

What responses have Apple taken to concerns over its ethical practices? - International Trade

Answer 36

Apple settled with claimants out of court over poisoning allegations, has since created a supplier code of conduct which aims to ensure that working practices are improved with Apple and their suppliers.

Question 37

What negative environmental impacts is Apple having on its host countries? - International Trade

Answer 37

Uses toxic chemicals in its manufacturing processes, factories discharge high levels of pollutants during the manufacturing process into Chinese water supplies, does not use renewable energy in its manufacture.

Question 38

What action has been taken by Apple to improve its environmental practices? - International Trade

Answer 38

Apple now uses 75% renewable energy in its manufacture process and has invested in solar panels to power its data centres. It has removed toxic substances from its products and is promoting the recycling of its products.

Question 39

What are TNCs? What do they aim to achieve? - International Trade

Answer 39

TNCs are companies that operate across a range of countries. They do this in order to avoid trade barriers, access cheap labour costs, reach foreign markets, exploit natural resources, utilise weaker labour/environmental regulation and benefit from economies of scale.

Question 40

What is horizontal integration? What is vertical integration? - International Trade

Answer 40

Horizontal integration is where a TNC acquires multiple different companies completing the same function through mergers, takeovers and expansions.
Vertical integration is where a TNC oversees all aspects of a product’s manufacture and sale within its own business structure by owning all parts of its operations.

Question 41

How do TNCs create unequal flows of people? - International Trade

Answer 41

TNCs encourage migrants from other countries/regions to relocate in an area to fill labour, leading to a drain on labour in their places of origin.

Question 42

How do TNCs create unequal flows of money? - International Trade

Answer 42

TNCs invest in areas where it is most profitable to do so through tax incentives and having a skilled labour force, depriving other areas of investment. They also repatriate profits away from host countries of their organisations, depriving them of tax revenues to aid development.

Question 43

How do industrialising countries and TNCs benefit from globalisation respectively? - International Trade

Answer 43

Industrialising countries - nations have developed rapidly due to investments from corporations and companies.
TNCs - TNCs have become globally politically important due to their contributions to national and global economies. They have also been able to expand their operations across the world through globalisation.

Question 44

How do regional trading blocs and international organisations benefit from globalisation respectively? - International Trade

Answer 44

Regional blocs - mutual benefits of trade agreements for all countries have seen their usage grow, has liberalised trade between countries and made access to goods better.
Intl. organisations - IMF, World Bank, WTO now involved in and contributing to globalisation, have significant influence over global affairs.

Question 45

What benefits are there of free trade as promoted through globalisation? - International Trade

Answer 45

Free trade creates lower consumer prices, creates greater choice over products, provides better economies of scale trough specialisation (increasing efficiency).

Question 46

What disadvantages are there of free trade? - International Trade

Answer 46

Free trade provides inefficient protection of developing industries due to international competition, workers are often exploited through poor working conditions, DISECONOMIES OF SCALE (where costs rise due to the difficulty of coordinating multiple companies).

Question 47

What risks are there of economic interdependence? - International Trade

Answer 47

Economic shocks and poor global performance can quickly spread to all other countries, creating a global economic downturn. This has been even in the 2008 Financial Crisis.

Question 48

What negative environmental consequences are there of globalisation? - International Trade

Answer 48

Globalisation tends to ignore environmental impacts in favour of economic gain: greater transportation of goods produces GHGs, environmental standards are often lower where TNCs operate, there are often weak controls on pollution, finite resources are depleted by increased production.

Question 49

What negative social and cultural impacts are there from globalisation? - International Trade

Answer 49

Globalisation can result in placelessness and the homogenisation of urban spaces as brand spread globally. This can result in the world becoming a single corporate identity.

Question 50

What positive social and cultural impacts are there of globalisation? - International Trade

Answer 50

There are now greater sharing of ideas, cultures and traditions which had not previously been available as a result of te increased spread of ideas.