Unit 6 - International specialisation Flashcards
Specialisation [2]
When a country concentrates on producing a limited range of goods and services in which they’re really efficient at.
Advantage for consumers of specialisation [3]
- More g+s available, due to high outputs
- Higher living standards.
- Greater quality, lower priced
Disadvantages for consumers of specialisation [1–>1]
- If monopolies form –> High prices
Advantages for international specialisation [6]
- EoS (efficiency)
- Job creation
- More international trade
- Revenue to govt <– Taxes
- Wider markets
- Consumer sovereignty
Disadvantages for interal specialisation [5]
- Structural unemployment because some industries close
- Over-exploitation of resources –> environmental issues arise
- Threat of foreign competition
- Risk of over-specialisation –> High int. dependance on others
- Strategic vulnerability <–> Political/economic changes impacts
Absolute advantage [1]
If a country produces product using fewer resources than others
Comparative advantage [1]
If a country can produce its product at a lower opportunity cost
Changes in comparative advantage [2]
- Changes as relative costs change
- C.A May occur because new resources discovered
TARIFF
Tax on imports
Globalisation
- Process –> world becomes increasingly interconnected through trade and other links
Globalisation - advantages (3)
- Reduced transport costs
- Advances in communications
- Removal of some trade restrictions
Globalisation - disadvantages (3)
- Recession in one country can have impact on other countries
- Government policy constrained
- Loss of jobs
MNC - Multi National Companies (DEFINE)
- Business organisation producing in more than one country
Benefits of free trade
- No restrictions on products bought by firms and consumers aborad or products sold by firms to other countries and no imposition of special taxes
Methods of protection (8)
- A tariff
- A quota
- Embargo
- Exchange control
- Quality standards
- Expensive paperwork
- Voluntary export restraints (VERs)
- Subsidies
Quota (DEFINE)
Limit placed on imports or exports
Embargo (DEFINE)
A ban on imports or exports
Exchange control (DEFINE)
A limit on the amount of foreign currency that can be obtained
Voluntary export restraints (VERs) (DEFINE)
Agreements with other governments to restrict their exports to the country
Reasons and consequences of protection (7)
Protection of:
- infant industries
- declining industries
- strategic industries
- industries from low wage competition
- industries from dumping
- industries from other forms of unfair foreign competition
and
- Raising employment and improving the trade position
