Unit 10 Mini Case Studies Flashcards
Major exporters of goods
China: the largest exporter in the world with exports valued at about $3.59 trillion accounting for 18% of global exports (electronics, machinery, textiles)
Germany: exports totaled $1.66 trillion representing 34% of GDP (cars, machinery, chemical products)
US: exported valued at $2.1 trillion representing 9% of GDP (aircraft, machinery, pharmaceuticals)
Major importers of goods
US: largest global imported worth $3.96 trillion mainly from China (electronics, machinery, consumer goods)
China: valued at $2.69 trillion which accounts for 17% of global imports (raw materials and high tech products)
Germany: totaled $1.56 trillion representing 32% of GDP (machinery, vehicles, energy products)
Trade in services
India: exports valued at $323 billion contributing to 13% of GDP (IT and business outsourcing)
US: financial services, entertainment and education exports are worth $914 billion with services contributing to 80% of the economy
UK: export financial services, legal expertise and insurance with service exports totalling $418 billion, about 15% of GDP
Key global trade flows
High volumes of electronics and consumer goods flow from China, Japan and South Korea to the US and Canada. China exported $583 billion worth of goods to the US in 2022
Machinery, pharmaceuticals and luxury goods from from Germany, France and Italy to the US with Germany exporting $146 billion in goods to the US in 2022
Africa’s exports of raw materials to China totaled $106 billion in 2022 due to China’s demand for resources
Trade imbalances
US has a significant trade deficit importing $900 billion more than it exported in 2022 driven by imports from China
Germany operates with a trade surplus exporting $100 billion more than it imported in 2022 due to its strong manufacturing sector
Regional trade agreements
EU facilitates free trade between member countries like Germany, France and Italy. Intra-EU trade is 64% of total EU trade
NAFTA/USMCA strengthens trade between the US, Canada and Mexico with trade within the bloc reaching $1.5 trillion in 2022
ASEAN promotes trade within Southeast Asia including Indonesia, Thailand and Vietnam reaching $3.6 trillion in 2022 or 7.5% of global trade
Emerging markets
Vietnam: rising as a key exporter of electronics and textiles with exports valued at $372 billion and 94% of GDP
Brazil: a major exporter of agricultural products worth $335 billion and 19% of GDP
South Africa: a leading supplier of minerals and precious metals with exports valued at $123 billion and 24% of GDP
Challenges in global trade
Tensions between the US and China have led to tariffs on hundreds of billions of dollars of goods affecting global supply
COVID-19 and the Ukraine conflict have disrupted trade flows. Global container shipping costs increased by 200% during the pandemic
Many developing nations rely heavily on exporting low value raw materials while importing expensive finished goods limiting economic growth potential
Examples of product reputations
German cars
Scotch whisky
Swiss watches
Japanese high tech products
Belgian chocolate
Manufacturing industry in Canada
The manufacturing industry in Canada benefits from the proximity of the large American market
Tourist industry in France
The tourist industry in France benefits from the large populations of neighbouring countries that can reach France relatively quickly and cheaply
Singapore strategic location
Singapore, at the southern tip of the Malay peninsula is situated at a strategic location along the main trade route between the Indian and Pacific Oceans
Rotterdam strategic location
Rotterdam in the Netherlands is located near the mouth of the River Rhine. Many goods brought in by large ocean carriers are trans-shipped onto smaller river vessels and other modes of transport at Rotterdam or refined or manufactured in various ways in the ports industrial area
Examples of colonial ties
The UK still maintains significant trading links with Commonwealth countries because of the trading relationships established at a time when these countries were colonies. Other European countries such as France, Spain, the Netherlands, Portugal and Belgium also established colonial networks overseas and have maintained these ties in the post colonial period
Australia terms of trade
In December 2014 the Australian treasurer stated that Australia was in the grip of the biggest fall in the terms of trade since records began in 1959 because of a drastic fall in commodity prices
Foreign exchange reserves examples
China alone holds 30% of foreign reserves. The US is now the world’s biggest debtor
Trade blocs and regional trade agreements examples
NAFTA is a free trade area. Mercosur is a customs unions joining Brazil, Paraguay, Uruguay and Argentina in a market of 200 million people. The EU, NAFTA, ASEAN and Mercosur are regional trade agreements
The EU
The EU is an economic union but its current level of economic integration was achieved in several stages. When Denmark, Ireland and the UK joined in 1973 it was a common market. The increasing level of integration has been marked by changes in the name of the EU. Initially it was the European Economic Community, then the European Community and from November 1993, the European Union. Some nations have been more in favour of greater integration than others
Result of globalisation in Africa
If Africa increased its share of world trade by 1% it would earn $61 billion. The benefits of globalisation are not passed onto Sub-Saharan Africa, even exacerbating its problems
Asia-Pacific Economic Cooperation Forum (APEC)
Its 21 members border the Pacific Ocean including Canada, the USA, Peru, Chile, Japan, China and Australia which have pledged to facilitate free trade
The Cairns Group of Agricultural Exporting Nations
Formed in 1986 to lobby for freer trade in agricultural products including Argentina, Brazil, Canada, New Zealand, Australia, the Philippines and South Africa
Benefits of free trade for exporting countries
Since joining the WTO in 2001 China has become the world’s largest exporter benefitting from reduced trade barriers and investment inflows. Its economy has grown rapidly lifting hundreds of millions out of poverty. The export driven model based on manufacturing and technology has strengthened its positions as a global economic leader.
The removal of trade barriers under free trade agreements has allows Vietnam’s textile and electronics industries to expand creating jobs and attracting FDI
Challenges of free trade for exporting countries
When the COVID-19 pandemic disrupted supply chains, Bangladesh’s garment industry suffered as Western retailers cancelled orders. In countries like Cambodia, garment workers often earn very low wages despite producing goods for major global brands
Benefits of free trade for importing countries
In the UK, removing tariffs on food imports from the EU under the EU Single Market meant lower prices for shoppers. The availability of cheap electronics from Asia has helped businesses and consumers in Europe and North American access advanced technology at lower costs
Challenges of free trade for importing countries
The decline of the EU steel industry has been partly attributed to cheap steel imports from China leading to job losses in manufacturing towns. The US has faced persistent trade deficits with China, raising concerns about economic dependency
WTO and wealthy nations
The US and EU have heavily subsidised their agricultural sectors making it difficult for farmers in poorer countries like Ghana to compete
Africa’s struggle in global trade
Many African countries export raw materials but lack the infrastructure to develop high value industries. Under free trade, African nations remain suppliers of low cost commodities while wealthier countries profit from manufacturing and branding. While Cote d’Ivoire is the world’s largest cocoa producer, most of the profits from chocolate production go to companies in Europe and North America
NAFTA and Mexico
NAFTA increased trade between the US, Canada and Mexico. While it boosted Mexico’s exports, many small farmers struggled to compete with subsidised US agriculture leading to job losses in rural areas
Multilateral debt relief initiative
Helped Ghana, Tanzania and Ethiopia but some fell into new debt cycles from ongoing borrowing
Zambia debt situation and opportunities
Previously qualified for HIPC debt relief but still struggles with debt
Resource rich but vulnerable to price fluctuations
High poverty, reliant on commodity exports
Potential for diversification and infrastructure investment
Ghana debt situation and opportunities
Benefited from MDRI but still borrows heavily
MIC with oil and agriculture
Increasing debt due to new loans for development
Strong economic growth, investment in education and healthcare
Argentina debt situation and opportunities
Defaulted on debt multiple times, negotiated restructuring
Upper MIC, industrialised economy
History of economic crises, inflation and IMF bailouts
Large atricutlural exports, tourism potential
Haiti debt situation and opportunities
Received debt relief but remains one of the poorest nations
Developing economy reliant on aid
Natural disasters, weak infrastructure, political instability
Tourism potential, remittances from diaspora
China debt situation and opportunities
Major creditor rather than debtor
Worlds second largest economy
Lends to many developing nations, faces issues of debt sustainability
Controls large reserves, invests in global infrastructure
Zambia increased investment in education
After HIPC and MDRI debt relief in 2005, Zambia made primary education free leading to a large increase in school enrolment
Government spending on teacher recruitment and classroom construction improved access to education
Literacy rates improved though challenges remain in rural areas
More students were able to complete basic education, increasing future job prospects
Zambia expansion of healthcare services
Debt relief allowed Zambia to hire more healthcare workers and expand access to hospitals and clinics
Increased funding for HIV/AIDS treatment and prevention programs, reducing infection rates
Maternal and child healthcare services improved leading to lower infant mortality rates
Investment in vaccination programs and disease prevention helped reduce cases of malaria and other illnesses
Zambia development of infrastructure
More funds were available for road construction and electrification projects, improving connectivity
Water supply systems were expanded, giving more rural communities access to clean drinking water
Investments in agriculture infrastructure boosted food security
However, later government borrowing led to new debt challenges, affecting future infrastructure expansion
Zambia long term economic challenges and lessons
While initial debt relief freed up money for development, new borrowing for infrastructure projects led to rising debt again
Some infrastructure projects were not well planned leading to high costs and inefficient spending
Zambia’s reliance on copper exports meant that economic downturns still affected government revenue
Highlights the importance of sustainable financial management after debt forgiveness to avoid falling back into debt
