Trade Flashcards
What is international trade (2)
Import and export of goods and services between countries
Increased 8X between 1980-2008
How is patterns changing (3)
Developed countries remain biggest traders
Emerging countries are catching up
China = largest exporter
Less developed - AFRICA countries chnage in trading (2)
1995 = African countries accounted for 2% world trade
2010 = over 3%
What is fair trade
Way of trading that supports people in lesss developed countries who make products exported to developed countries
What is foreign direct investment
When a person, company or groups ends money to another country in order to generate profit
What attracts foreign investors (4)
Size of the market
Stability if market
Possibility of extracting resources
Ability to access large financial sector
Rise in FDI
volume increased from $400 billion in 1996 to $1500 billion in 2016
Pattern of investment chnage (2)
Since 1980s = developed countries began investing in emerging economies and developing countries
China, India, Brazil some of largest investors
Change in we’re investment comes from
Emerging economies invest alot
What is trading bloc (2)
Free trad between member countries
Common external tariff in non members
Developed countries trade + how much (2)
Most trade occurs between developed
2013 = imports and exports between us and eu accounted for over 30% global product trade
Emerging economies sector that’s most important
Manufacturing sectors are increasingly important
Less developed countries trade with who
Mainly trade with less developed countries
What is access to markets (2)
How easy it is for countries and co panties to trade with each other
Determined by extent of barriers
What’s affects access to markets (3)
Wealth
Developed countries often put higher tariffs of goods imported to less developed C
Harder for less developed to access market
What increases access to market (2)
Trading blocs
Less developed may be left with high tariffs if not part of bloc
What are special and differential treatment agreements by wto (2+)
Let less developed countries bypass developed countries’ tariffs = greater market access
Example = EUs 2001 Everything but Arms agreement = allows least developed to export some products to EU w/o paying tariffs
Positive of SDT (2)
Less developed countries can diversify their range of industries
Introduce manufacturing or tourism
SDT agreements bad
Allow cheap imports into developed country
Different access to markets economic consequences (2)
Countries with poor access = can’t establish new industries = high tariffs
Dependant on selling low value primary products = low GNI
Different access to markets = social consequence (3)
Better access = higher paid jobs = higher y = higher SoL
Less = less money for healthcare + education = QoL is lower
Poorly paid work in less DC = Sweatshops
What is a TNC + how much trade when (2)
Companies that produce, sell or are located in multiple countries
80% global trade linked to TNC in 2013
Examples of TNC (3)
Primary industry = shell
Secondary industry = Toyota
Tertiary industry = Aviva
What do TNC bring to countries (4)
Investment
New tech
Promotes cultures
Job creation
How do TNC connect countries together (3)
Spatial organisation
Create a global supply chain because different parts of business located in different countries
Where are headquarters of TNC
Big cities in developed countries = skilled workers + transport
Research and development were TNC
In cities and towns were highly educated people = same country as headquarters
Where are factories located TNCs (2++)
Less developed countries where production costs are lower =Nestle have factory in Bangladesh
Some have were there market is = Nissan in uk = avoid import and export tax + reduce transport
What is a merger
When 2 companies agree to become 1 bigger one
What is acquisitions
One company buys another company
Using subcontractors + TNC
TNCs can use foreign companies to manufacture products w/o actually owning business
What linkages to TNCs create (3)
Mergers
Acquisitions
Use sub contractors
What is vertical integration (3+)
When a company takes over other parts of supply chain
Through mergers, acquisitions and FDI
She’ll owns every part of supply chain
What is horizontal integration
Company merges with or takes over another company at the same stage of production = retail chain takes over a retail chain
How do TNC expand operations to gain more control
Vertical and horizontal integration
Exmaple of horizontal integration (2)
Disney took over Pixar studios in 2006
Both film production companies
How do TNC take Adavanatges of supply chain (5+)
Economies of scale = most value for whole supply chain
Invest in C with:
Big natural resources to exploit = primary
Low labour costs + cheap land = secondary
Well educated pop = tertiary
Invest in countries with weak regulations
What is infra firm trading
One Dickson of a TNC trades with another part of the TNC
Example of intro firm trading (3)
Tech firm = intel
Some microchips assembled in cost rich but sells them to USA
Costa Rican subsidiary sells them to intel in USA
TNC multiplier effect (4+)
Open new factory = jobs = more y = helps local firms + gov (tax)
How do TNC take advantage of global marketing (3)
TNC = lots of money to spend on advertising
Change product to reflect national cultures = gain knowledge of local market = mcspicy in India
Aim = recognisable brand
