Trade blocs

Question 1

Positive impacts on firms

Answer 1

Access to free trade, encourages specialisation
Access to knowledge, workers, components, EOS
Take advantage of favourable differences (taxes, labor costs)
More demand for bloc firms (trade diversion)

Question 2

Negative impacts for firms

Answer 2

Non-tariff barriers
Rules and regulations
Not all countries have same power
Increased competition, could damage domestic industries
Imports from non members more expensive

Question 3

Issues with growing interdependence

Answer 3

Could result in global recessions

Increased vulnerability to external shocks, members affect each other (Global financial crisis)

Question 4

Trade creation

Answer 4

Lowered trade barriers between countries within an agreement, changes trade pattern
Producers get cheaper access to raw materials and technologies

Question 5

Trade bloc

Answer 5

Countries collaborate for mutual benefits of trade