Theme 4- International trade Flashcards
4.1.2
1
Q
What are imports?
A
- Products bought overseas
- Causes money to flow out of an economy
2
Q
Benefits of importing
A
- Cheap
- Increases variety
3
Q
What are exports?
A
- Products sold overseas
- Results in money flowing into an economy
4
Q
Benefits of exporting
A
- Simple
- Least risky way to access overseas market
5
Q
What is FDI?
A
- When a firm in one country invests in business
from another country
6
Q
What is horizontal FDI?
A
Investing in same type of business in another country
7
Q
What is vertical FDI?
A
Investing in a different stage of a supply chain
8
Q
Benefits of FDI for businesses
A
- Access to new markets
- Cost savings ( reduced labour costs)
- Firsthand knowledge
- Can overcome trade barriers
- Skilled labour
9
Q
Benefits of FDI for a country
A
- Boosts economic growth
- Improves infrastructure
10
Q
What is a competitive advantage?
A
Allows a business to generate more sales/ be more profitable than rivals
11
Q
What is specialisation?
A
Where a firm focuses on producing just one product
12
Q
Benefits of specialisation
A
- Improves efficiency
- reduces cost per unit
- producing higher quality products allows higher
prices and therefore higher profits
13
Q
Limitations of specialisation
A
- Businesses risk loosing sales if demand
decreases as they have nothing else to gain
revenue from - High costs for training staff as employees may
need extensive training
