trade theory Flashcards
What is merchandise?
physical goods and products which are traded
What are Services?
a system supplying a public need
e.g. transport, ICT, Financial advice etc
What is capital?
Movement of money for the purpose of investment
How can international trade increase stability?
Increase co-operation of countries, for example through trading blocks such as the EU
Can increase political stability of countries involved in trade
Reduce price fluctuations
How can international trade increase growth
optimum use of natural resources - oil - not always for example blood diamonds
Specialisation in certain industries and markets
Competition promotes efficiency
Creates lower prices
How does trade promote development?
Trade means a wide range of goods are made available through imports
Promotes exchange of technical knowledge and develops a greater understanding of industries
Requires development of transport networks
Raises living standards through economic multiplier effect
How are patterns of trade are changing globally?
Increased N-S trade - 40%
Increasing S-S trade - 35%
Decreasing proportion of N-N trades - 25%
Intra regional - Trading blocs
Globally - FTA
How international trade causes inequalities
TNCs - economic leakages
Land grabbing - ACs take land in LIDCs and EDCs making it hard for small scale farmers to compete
Those not involved in trading blocs are much less likely to get trade due to being outcompeted
Some places benefit more from trade
How trade causes conflict
If profit from resources are not distributed proportionally amongst a population
Some may fight to have access to resources to trade - blood diamonds in sierra leone
Disputes over wages and conditions
How trade causes injustices
LIDCs economically exploited for cheap labour
Sometimes goods are exported for foreign exchange but are in short supply
Land grabbing - injustice for local farmers
What is globalisation?
Increased interconnectedness and interdependence of countries at a global scale
