Trade

Question 1

Coyle 2001

Answer 1

Since 1950, international trade has replaced the internal supply of goods at an ever increasing rate.

Question 2

What are the global trade risks?

Answer 2

• Supply and demand (Changes prices making income unpredictable)
• Competition (Drives prices up and down)
• Politics and fashion (Those in rich countries often change demand)
• Poor countries often rely on products that are vulnerable to natural disasters (Producers usually have no insurance)

Question 3

What is fair trade?

Answer 3

A movement to try and alter the terms of trade so that producers in developing countries receive a higher proportion of the profits.

Question 4

What are the principles of fair trade?

Answer 4

• Environmental stability
• Good working conditions and pay
• No forced child labour
• Trade union recognised
• long term relationship between producers and consumers
• Workers allowed to organize democratically, eg. as a cooperative
• A premium paid to producers’ organizations or to improve social conditions
• Prices that cover the cost of production, usually guaranteeing a minimum price to producers

Question 5

What are neo-liberals view on fair trade?

Answer 5

They’re opposed to fair trade as it interferes with the operations of the market.

Question 6

What are neo-liberals view on free trade?

Answer 6

It will reduce poverty and improve living standards.

Question 7

Sidwell (2008)

Answer 7

• Neo-liberal

- Fair trade is an invention in the market and creates unfair advantages and disadvantages.

Question 8

What are modernization theorist view on trade?

Answer 8

• Argues that developing countries needs to become much more involved in international trade.
• This is one of the ways western countries have developed in the past so the developing countries should follow the same path.

Question 9

What are dependency theorist and the radicals view on trade?

Answer 9

• Trade is one of the ways in which the North ensures the neo-colonial exploration of the south.
• Under colonialism, the economies of the colonies were used for the benefit of the colonial power, by providing primary products

Question 10

What do dependency theorist and the radicals say on how the rich use their dominance in the world trade system?

Answer 10

The rich use its dominance in the world trade system to ensure the prices that the developing world can get are low. The profits from such exports will never be sufficient to fund development, or even to keep many people out of poverty.

Question 11

What is trade liberalization?

Answer 11

• A neoliberal movement that wants to open all world markets to free trade and market forces.
• Refers to the removal of barriers to free trade, such as tariffs and subsidies.
• This will ensure that those who can produce goods ,for which there is a market, and at a price that consumers are willing to pay, will do well.

Question 12

Burundi

Answer 12

• 70% of Burundi’s national income is from coffee production.
• This means that their main product isn’t something they need to survive, leaving them at the mercy of trade.
• The process of trade- the ‘supply chain’ syphons off the coffee’s value leaving Burundi with a very small cut.

Question 13

Ghana

Answer 13

• Ghana once produced about a third of the world’s cocoa.
• In the late 1970s when the world coca price fell, many Ghanaians switched to farm crops for themselves and sold locally in order to make enough money to survive.
• The ghanian government had relied of tax revenues from exported cocoa and now found itself in economic difficulty.
• It accepted a structural adjustment programme from the IMF and world bank to rescue the economy which involved the removal of subsidies to cocoa farmers thereby increasing their difficulties.
• Chocolate producers in the west were also decreasing their cocoa content in their chocolate which decreased the demand for cocoa causing further struggles.