Trade Flashcards
Exports
goods and services sold to another country e.g. Innocent smoothes
Imports
goods and services bought form another country e.g. bananas from Spain
Balance of Payments
a record of the value of a country’s exports, imports and financial transactions with the rest of the world over a year
Globalisation
the process of increasing international trade and economic interdependence between countries
Advantages of trade to the UK economy
- Income – more workers are needed so more jobs.
- Growth – increasing production, which leads to higher economic growth i.e.GDP will increase.
- Choice and product differentiation – UK citizens can choose from goods not otherwise available in the UK
- Prices – lower prices as lower cost production overseas.
- Competition and innovation – companies try to develop more attractive and better quality products.
- Raw materials – the UK is relatively poor in raw materials, so it is essential that we import materials (metals, gems, energy and so on) that we need
Disadvantages of trade to the UK economy
- Competition – may provide cheaper good but it also means more businesses to compete with for the available customers. This will be difficult as India, china, Brazil have lower production costs.
- Economic dependency – UK imports large amounts of food, if this is interrupted this might threaten our survival.
- Unstable commodity prices – this affects production costs and the prices to customers.
- Power of MNC’Cs – multinational corporations are becoming increasingly hard to control by national governments
Social and environmental impact of trade
International trade involves a carbon footprint – the total greenhouse gas (co2 equivalent) emissions caused by an individual product or good traded by the UK.
Carbon footprint comes from:
Direct emissions from activities the organisation can control e.g. vehicles or running production.
Indirect emissions – carbon emitted in the preparation and transportation of raw materials used, employees travelling to work.
