Ireland And The Interantional Environment Flashcards
Open economy
Engages in international trade
International trade
Refers to the buying and selling of goods and services between countries.
Why is an open economy important
• fuels economic growth
• creates employment
• improves the standard of living
Imports
Goods and services bought from other countries eg cars
Visible imports
Buying physical products from foreign countries
Invisible imports
Buying services from from foreign countries eg insurance
Reasons why goods are imported to Ireland
• production
• climate
• natural resources or raw materials
• consumer choice
• brand availability
Exports
Goods and services sold to other countries eg food
Visible exports
Physical goods sold by businesses and people based in Ireland to customers in other countries
Invisible exports
Services sold by businesses and people based in Ireland to customers in other countries
Reasons why goods are exported from Ireland
• profitability
• earn money
• increased employment
• diversification
Methods of reducing a balance of payments deficit
• increase import substitution
• increase exports
• government agencies
Increase import substitution
A trade policy that replaces imports with domestically produced goods and services eg goodfellas pizza instead of Chicago town
Importance of international trade to Irish business
• larger market
• economies of scale
• increased efficiency
• increased competition
Importance of international trade to Irish consumers
• choice and variety
• lower prices
• higher quality goods
• increased standard of living
Importance of international trade to the Irish economy
• increased world output
• economic growth
• foreign currency
• international co-operation
Free trade
When countries can buy and sell goods and services without any barriers to trade such as tariffs or embargoes
Trading bloc
A group of participating countries that allow free trade between them eg the European Union
World trade organisation
The organisation responsible for promoting fair trade between countries. It negotiates between member states by encouraging the removal of barriers to trade
Barriers to trade ( protectionism)
Refers to government actions and policies intended to protect domestic industries from foreign competition by imposing barriers to trade eg tariffs
Tariff
A tax on an import eg custom duties
