Trade Flows and Trading Patterns Flashcards
What are visible exports?
Actual goods which are sold to other nations
give some examples of visible exports?
agricultural goods, extracted minerals, coal and oil
what are invisible exports?
services which are sold to other nations
give some examples of invisible exports?
Banking and financial services, insurance, education, tourism
What is the trade balance?
the difference between the monetary value of the exports and imports of output of a country
what is positive trade balance and what is it called?
when a country exports more than it imports. This is called a trade surplus
what is a negative trade balance and what is it called?
when a country imports more than it exports. This is called a trade deficit
what happens in the country when there is a trade surplus?
there is a flow of money into the country and employment and national income go up. Trade deficit is the opposite
what are some of the factors that affect the balance of trade?
resource endowment locational advantages historical advantages currency exchange rates trade agreement and tariff barriers
what do Europe and Asia contribute to the global exports
Europe: 41%
Asia: 38%
what areas of the world are net exporters of invisible trade and which are net importers?
North America and Europe are net exporters while the rest of the world are net importers
How have LICs become better in recent years in terms of world trade?
they are far more likely to specialize in an aspect of manufacturing rather than just be the providers of primary resources
why have LICs got little capital to develop their economies?
many are still primary product dependent so they have to charge a low price compared to manufactured goods.
The prices of primary products also vary massively each year while manufactured goods have risen steadily over time
what are the factors which affect global trade?
Locational advantage
historical factors
resource endowment
Trade agreements and free trade
how does resource endowment give countries a global trade advantage
countries such as Russia have been blessed with lots oil and gas which is in demand so they can charge high prices
some countries have used there resource endowment advantage to invest in making a more balanced economy rather than just being dependent on there resources
how does a locational advantage give countries a global trade advantage?
- Close to the market or area of demand
- ports with a large hinterland eg. Rotterdam has access to France, Germany, Netherlands, Belgium etc within a short distance
- strategic position on trade routes eg. Singapore is located on the tip of the Malay peninsula where shipping routes in the Indian and Pacific oceans cross.
how does historical advantages give countries a global trade advantage?
Trade links between the former colonial powers and the former colonies often remain strong eg. Uk and commonwealth
how do trade agreements and free trade give countries a global trade advantage?
Trade Blocs such as the EU are groups of countries which have joined together to stimulate trade between them and has led to economic regionalism
Quotas and tariffs can protect countries own economies
What have been the changes in the global market?
- TNCs have allowed many countries to increase their trade to GDP ratio
- BRIC countries are exporting more manufactured goods and a more affluent population means a growing domestic demand including for imported goods
when was the World trade organisation started?
1995
how many members does the WTO have?
159
What does the WTO do?
- Provides the rules for trade in goods
- Seeks to reduce tariffs and other trade barriers
- A place where members settle trade disputes
what are the WTO principles?
Non Discrimination
Openness
Stability, predictability and transparency
More competition
what is fair trade?
a movement whose goal is to help producers in LICs achieve better access to markets and sustainability. Higher prices are paid to exporters
what has been the impact of the fairtarde label?
global sales have rose from $230000 in 2000 to $2.4 billion in 2007
what rules must suppliers comply to in fairtrade?
- employees must be paid fairly
- No forced or child labor
- employees may join unions and bargain collectively
- health and safety requirements are met
what are the criticisms of fair trade?
- Fair trade coffee can be sold in the shop at any price so nearly all the extra price paid by customers is kept in the country
- Fairtrade certification brings extra costs to farmers
- Leads to lower prices for other farmers who cant afford fairtrade certification
what are the problems with cocoa farming in the Ivory coast?
- Trees need to be replaced when they get disease such as black pod
- Outdated farming methods
- Fluctuating world prices
what advantages has fairtrade brought to the cocoa farmers of the ivory coast?
- Discounts on pesticides, Machetes and rubber boots
- Guaranteed fairtrade prices help to balance price fluctuations
- in the village of Tiemokokro, 90 percent of the cooperative members have access to training on good agricultural practices
how many people in Africa, Latin America and Asia benefit from fair trade?
over 7 million
