Unit 5- International trade Flashcards
International Trade
What is International Trade
This is the buying and selling of imports and exports between countries
International Trade
Why do countries trade with each other
Different countries can specialise in producing specific goods and services in a more effeicent manner than other countries
International Trade
What are the key drivers with international trade
- An increase in consumer knowledge and expectations
- Greater coopertaion between countries and organisations
- Technological change and advancement
- Transportation advancement costs
International Trade
What is Free Trade and Protectionism
Free Trade means international trade without any barriers such as tarrifs and quotas
Protectionism is the economic policy of restraining trade between countries through the imposition of barriers such as tariffs and quotas
International Trade
Forms of Protectionism
- Tarrifs- Tax on imported goods
- Quotas- Physical limit on good that is imported
- Voluntary export restraint- Quota put in place by exporters
- Non competitive purchasing by goverments- Buying from domsetic producers
- Embargos- Involves the complete or partial prohibition of commerce and trade with particular country
International Trade
Impact of Tariffs and Quotas
Tarffis can help goverment raise revenue to finance expenditure. They can also help restrict imports making it likely that they final price to the consumer will rise. This may mean that domestic subsitutes would be used
Quotas help domestic producers by increasing share of the market available for them. This leads to the price of good increasing due to limited supply
Trading Bloc and single markets
What is a trading bloc
These are a group of countries that promote and manage trading activites in their region. These are a form of free trade meaning trading without protectionsim being imposed. This encourages trading relationships
Trading Bloc and single markets
What is a single market
This is a free trade area that there is no tariffs quotas or taxes on trade but also a free movement of goods, services, capital and people in addition to this there is a common external tariff on goods enetring the market. This helps improve efficency raises quality and cut prices
Developing New International markets
What are the challenges for UK businesses
- Cultural diffrences: Language barriers; social structures
- Economic: Exchange rates; Levels of income
- Technological: Different standards; Product adaptation
- Competition: Established competition; Advertising to create awareness
