lesson 7 Flashcards
define ‘term of trade’
coast of goods that a country has to import vs price of goods they export (imports vs exports, profits)
define a ‘trading bloc’
an arrangement among a group of nations to allow free trade between member countries but to impose tariffs (charges) on other countries that may wish to trade with them
define FDI (foreign direct investment)
the amount of capital invested in foreign countries
2022- China, USA, Brazil received most FDI in 2022
Give three advantages of international trade:
- increased employment d2 increased production (multiplier effect- more jobs created across a global economy)
- economies of scale- narrower range of goods-> higher volume, cheaper costs
- purchasing power- increasing trade-> more competition= lowers prices, consumers buy more for their money
3 disadvantages of international trade:
- over-specialisation- if demand falls/some goods can be produced cheaper overseas, production must shift-> specialised production centres= less flexible/cannot adapt
- de-skilling- trad jobs lost as production tech replaces workers, ‘screwdriver jobs may dominate’
- stunted/declining growth in local industries- local/emerging industries find it difficult to grow d2 existing foreign comps lower prices
how does demography shape the overall nature of trade?
- demographic changes-> new markets and labour opportunities
NEES- demographic dividend due to an increase in young adult workers while HIC- ageing population - labour forces have changed- (more women and educated workers)
how has investment shaped the overall nature of trade?
- investment in infrastructure caused increasing new players in international trade
- public investment (taxes) in infrastructure reduces trade costs
- doubling in of surface roads and airports in a country can boost trade by 13-14%
how can technology shape the overall nature of trade?
since 1990s= services have grown massively as research and development in these have increased- trade is made easier through new tech= advertising, marketing= reduce trade costs
how can energy and other natural resources shape the overall nature of trade?
- energy, land, and water resources affect pattern and growth of global grade-> distributed unevenly= conflict e.g. China and USA
- changing pattern in natural resources- negative effect on economic activity and international trade-> expensive for consumers
- energy needs are expected to rise by 1/3rd by 2050
how can transport costs impact the overall nature of trade?
- declining transport costs increase the range of goods available for international commerce
- Latin America-> 10% decline in transport costs= 10% increase in exports
- countries that are land locked experience declines in trade volume by 40%
- innovation of transport e.g. jet engines decreased transport costs by ten-fold, containerisation
How have differential access to markets shaped the overall nature of trade?
since WWII- increase in trading blocs-> greater market access BUT deny some members access to certain markets
1. free trade agreements e.g. NAFTA= lowest level of integration
2. A customs union e.g. Mercosur- closer form of integration, a common external tariff of imports- all countries trade the same
3. A common market- trade freely, common external tariff AND free movement of people and money
4. An economic union- EU, common political policies across countries in EU, closest form of integration
