Theme 4 - 4.1.2 - International Trade And Business Growth

Question 1

What is importing ?

Answer 1

It is when a country is importing goods from other countries - this is called importing

This is because some countries specialise in producing certain goods for example Russia with gas

Question 2

What are exports ?

Answer 2

It is when countries trade with other countries - they send products abroad - this is called exporting

Question 3

What does the Uk export ?

Answer 3

• Medical supplies
• Cars
• Gas turbines
• And gold

Question 4

What is Specialisation ?

Answer 4

It is the process of concentrating on and becoming expert in a particular subject or skill

In terms of countries this means that a country will have industries in which it will lead the world in so be the best it - so for example China is the best at manufacturing and most manufactured goods come from China because they have low labour costs - they pay their labourers low - a country might be the leading country in that field because of things such as low cost of raw materials, historical ability or access to raw materials etc

Question 5

Why might a country decide to specialise in a particular industry or sector ?

Answer 5

A country may decide to specialise in a particular industry or sector because of something they have so for example if they have a lot of raw materials such as coal and fossil fuels then they might try to be the leading country in the fossil fuel industry

For example India specialises in IT due to a huge number of IT graduates from its universities

This means that they can set up call centres for overseas companies staffed by English speaking graduates who are on a fraction of the wages required in the UK

Question 6

What are commodities ?

Answer 6

A commodity is a product or a raw material traded ion bulk usually with a common price

Question 7

What is a comparative advantage ?

Answer 7

It is the ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals

Question 8

What are the pros of specialisation for India ?

Answer 8

• Increased productivity and output - this means reduced average costs and EOS
• As more resources are devoted to the industry rather than being spread out - the scale of production can be increased to gain the EOS - this is because when you invest money into something then it will become more efficient and then this will mean that you can produce more products and therefore you can reduce unit costs and then you will reap profits - CHECK if analysis is true
• This gives the Indian call service industry comparative advantage over the next best country
• The increased productivity will lead to the GDP growth and increasing sales will boost economic growth

Question 9

What are the cons to specialisation ?

Answer 9

• A country may become over reliant on the industry and place all of its eggs in one basket and and this is very risky because what if a problem occurs ion the industry and then if its the leading one then the country will suffer from a bad economy
• Other countries may become cheaper in the same industry and it may be harder to compete
• If the business grows too big it Kay suffere from DEOS thriough lack of communication and co-ordination

Question 10

Whats FDI ?

Answer 10

FDI is the foreign direct investment - this means that a business from one country decides to establish themselves in another country

FDI may decide to build factories or other business premises which will create jobs for the host nation e.g. Microsoft, Facebook and Amazon all have setups in India - they make call centres in India and then pay Indians to do be in the call centres because of the low labour costs