Topic 4.1 - International Trade Flashcards
Define International Trade
The exchange of goods and services across international borders and markets.
Explain the patterns of International Trade over time
- Since WW2, International Trade has increased significantly.
- There are many more emerging markets, such as China and India
- There are many more Trading Blocs (ASEAN, USMCA)
- Allows free trade between members in the bloc
- Previous communist nations now trade more
- Deindustrialisation in countries like the UK mean that manufacturing has shifted to other countries like China & India
- The UK now mainly focus on providing services (banks & teaching)
- China has a trade surplus with the US, since 2006 this has narrowed
Explain how International Trade has affected the UK
The UK has deindustrialised meaning it no longer focuses on the production of good but mainly on providing services like banks and teaching.
Since Brexit occured, the UK started trading more with different continents
Explain China’s International Trade Pattern over time
China have focused on manufacturing goods & services for many years now.
This occurred because they offered lower taxes and lower costs of production to large manufacturing firms.
Hence they moved their factories to China, allowing China to increase its trade of goods internationally.
Describe a Developed Country
A country with a strong economy, advanced technology and a high quality of life
-> High GDP
-> High GNI per Capita
-> High Quality Industrialisation
-> Advanced Technology
-> Stable Economy
-> High Standard of Living
-> Good Education
Countries are classed as developed when they have a GNI per Capita of $12,536 or higher
Describe a Newly Emerging Country
A country with some characteristics of a Developed Country but not all.
-> Growing GNI per Capita
-> Growing HDI
-> Beginning to Industrialise
Describe a Developing Country
A poor, agricultural country seeking to become more advanced economically and socially
-> Low standard of Living
-> Low GNI per Capita
-> Low HDI
Explain the Advantages of International Trade to Developed Countries
- Increased labour force size
-> Increase in LRAS - Cheaper costs of production
-> Increase in SRAS & LRAS - Increased Competition
-> Productive Efficiency
-> Better Quality of Goods
-> Economies of Scale
-> Lower Prices - GDP Growth
-> Increase in Net Exports - Better Balance of Payments position
-> Increase in Trade in Goods & Services
-> Increase in Current Account
Explain the Disadvantages of International Trade to Developed Countries
- Structual Unemployment
-> Cheaper labour costs in Foreign Countries - Vulnerable to Shocks
-> If we rely on another country to import / export goods, if their economy suffers, we will suffer too
Explain the Advantages of International Trade to Emerging Countries
- Shared Knowledge of Production
-> Productive Efficiency
-> Economies of Scale - More Potential for Exports
-> Increased GDP
-> Increased BOP position
-> Increased Profits for firms - More Employment
-> More Income
-> Better Economic Development
Explain the Disadvantages of International Trade to Emerging Countries
- Risk Of Monopolies
-> Multinational Corporations (MNCs) produce in LIC as lower labour costs
-> Harder for new firms to join market
-> Labour Exploitation
-> Environmental Concern
Explain the Advantages of International Trade to Developing Countries
- Gain Funding and Investment (FDI)
-> Helps country move away from primary sector (farming, mining)
-> Move to Secondary Sector (Manufacturing)
-MNCs Move to country
-> Increase Exports
-> More Jobs available
-> More income
-> Increased GDP & BOP
BUT
-> Labour Exploitation
-> Harder for new firms to join market
- Vulnerable to External Demand Shocks
-> If a country that purchases a lot of goods suffers, the supplying country also suffers
Explain the Disadvantages of International Trade to Developing Countries
MNCs
-> Environmental concern
-> Labour Exploitation
-> Hard for new firms to join market
