3.2.1.3 International Trade and access to markets Flashcards
(101 cards)
1
Q
What is comparative advantage
A
- The principle that countries can benefit from specialising in the production of goods at which they are relatively more efficient or skilled
- Therefore consumers in each country gain max benefits
2
Q
What is free trade
A
- International trade left to natural course without tariffs, quotas or other restrictions
3
Q
What are tariffs
A
- Taxes on imports
4
Q
Why do people place tariffs
A
- To protect domestic industry and make domestic goods and services more affordable
5
Q
What is an import quota
A
- A physical limit set on the quantity of goods able to be imported
6
Q
What is an embargo
A
- Partial or complete prohibition of commerce with a particular country
7
Q
What are trade restrictions
A
- Import restricts based on quality standards or the way they re produced
8
Q
What does the WTO do
A
- Promote globalisation and free trade across the world
9
Q
Drawbacks of interdependence
A
- Butterfly affects- happenings somewhere effect other places more so
10
Q
How much did global trade increase by from 1980 to 2008
A
8x
11
Q
What did the recession in 2008 effect
A
- Multilateral trade agreements- harder to come by
12
Q
What is agglomeration
A
- Some industries clustering in geographical areas to share regional skills and specialist information
13
Q
How has the pattern of FDI changed
A
- Source of FDI often from NEEs such as China to African nations
14
Q
How much has total FDI risen by from 1996 to 2016
A
$1.1 Trillion
15
Q
Where have China been targeting their FDI
A
- Calabar, Nigeria (oil region)
16
Q
What how much FDI did china put into Nigeria
A
- $12 Bn
17
Q
Why have China put so much FDI into Nigeria
A
- Soft power
- Access to Nigeria’s markets
- More influence over oilfields
- More work for Chinese firms
18
Q
Examples of trading relationships between HDEs
A
- USMCA (US, Mexico, Canada)
- EU
19
Q
How many members in EU
A
- 27 members who trade freely with one another
20
Q
How much of trade done in EU is intra-regional
A
- 65%
21
Q
Information about China’s trade influence
A
- nearly 20% of global exports and around 15% of all global imports
- $1 trillion trade surplus reached
22
Q
China’s main trading partners
A
- US
- South Korea
- Japan
23
Q
China’s trading patterns
A
- Imports mainly raw materials from developing countries
- Exports mainly processed metals and manufactured goods to richer countries
- Main goods include broadcasting equipment, integrated circuits and computers
24
Q
Example of South American trading bloc
A
- Mercosur
25
Mercosur members
- Brazil
- Argentina
- Uruguay
- Paraguay
26
Most common exports from Mercosur
- Raw materials
27
Problems with relying on raw material exports
- Vulnerable to fluctuating global prices
28
Main markets of Mercosur
- EU
- NA
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Information about Mercosur
- Free movement of labour between member states
- GDP of $3.4 trillion
- Proposed deal with EU
30
Why do wealthier nations often have better access to markets
- Can afford to pay tariffs
- Can invest into international markets, increasing access
- Usually form trading blocs, allowing free trade within but barriers for those outside
31
Benefits of trade agreements
- Improves access to international markets
- LIC may be able to trade freely at lower prices
32
Disadvantages of trade agreements
- Restricts ability to negotiate new deals and expand beyond the members of the bloc
- Hard for LICs outside blocs who need benefits the most to trade- will have more barriers
33
What is the CPTPP
- The Comprehensive and Progressive Agreement for Trans-Pacific Partnership
34
Name 5 CPTPP members
- UK
- Australia
- Brunei
- Canada
- Chile
- Japan
- Malaysia
- Mexico
- NZ
- Peru
- Singapore
- Vietnam
35
Why did UK join CPTPP
- Lower trade barriers to a dynamic region expected to become increasingly significant in the global economy
- Already has bilateral trade agreements with 9 member states
36
Positive Economic impacts of differential access to markets
- HICs have greater market access
37
Negative economic impacts of differential access to markets
- LICs struggle due to tariffs
-LICs often stuck trading primary products- worth less
38
Positive social impacts of differential access to markets
- Access to greater range of goods/services/jobs- people wealthier, happier
39
Negative social impacts of differential access to markets
- Countries manufacturing low quality goods will font see poor working conditions in factories
40
What is fairtrade
- Approach to trade that seeks to provide greater equity and justice in the global system
- Focuses on farms and workers in developing countries to empower and improve their living standards
41
How does fair-trade differ from free trade
- Free trade- traditional market economy, focused on profit maximisation
- Fairtrade- Focused on helping those who produce fair products get fair wage and living standards
42
How does fair-trade impact the lives of Cocoa farmers
- In 2020, 440,000 small scale farmers helped by fairtrade
- provide essential training to farmer organisations
43
How much is fairtrade premium (cocoa)
- $240 per tonne of cocoa
44
What does SDT stand for
- Special and differential treatment
45
What do SDTs mean for LDEs
LDEs should:
- Enjoy privileged access to the markets of their trading partners, particularly developed countries
- Have the right to restrict imports to a greater degree than developed countries
- Be allowed additional freedom to subsidise exports
46
Issues with SDTs
- Cause unfair trade as many emerging economies, such as china, still have 'developing country' status, and refuse to give up SDT rights
47
Summary of trading characteristics of HDEs
- Tertiary sector taking over- makes up 4/5 of UK economy
- Trade in 'hi-tech' products
48
Summary of trading characteristics of NEEs
- Rapid factory expansion/industrialisation allows for trading of manufactured goods, rapidly growing their share of world trade
- eg China and Bangladesh 'workshops of the world'
49
Trading characteristics of LDEs
- Agricultural/ raw material goods still important
- Climatic factors still have large impacts on value of trade
- Industries such as tourism encouraged as alternate source of income
50
What does RTA stand for
- Regional trade agreement
51
What was GATT
- General agreement on tariffs and trade
52
What has happened to trade agreements more recently
- Becoming increasingly difficult to reach- not regained pace of 90s and 2000s
- Global recessions caused trade to stall
53
Which countries account for nearly 50% of global trade
- G7 countries
- UK
- Canada
- Italy
- France
54
What is FDI useful for
- Funding for less developed economies to catch up
55
What is the hierarchal model
- Imposes top-down decision making
- The top are initiating change, the bottom carry it out
56
Benefits of TNCs operating in multiple countries
- To escape tariffs- eg Nissan
- To find lowest COP
- To take advantage of foreign exchange rates
- To exploit minerals or resources in other countries
57
Where to TNCs often base HQ
- Major city in home country
- Have subsidy HQs in each continent
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Where to TNCs often base research and development
- Near centres of high education in origin country
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Where do TNCs often base branch plants
- Overseas, in LDEs where land, labour and material costs are lower
60
What is outsourcing
- Subcontracting part of business operation to another company, usually where costs are lower
61
What is offshoring
- Relocating part of the organisation to an overseas location where costs are lower
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Why do TNCs manufacture in LDEs
- Often resources which are unavailable in origin country
- Cheaper labour costs
- Different work ethics
- Govt incentives
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What is subcontracting
- Bringing outside firms to do part of the operation so a new production system doesn't have to be created
64
What are mergers and acquisitions
- Business transaction where ownership, or part ownership, of a company is transferred to another company
65
What is reshoring
- Retiring to their origin countries, rethinking offshoring strategies
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Why is glocalisation effective
- Makes locals feel more welcome and comfortable, making them more inclined to go there
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Examples of Glocalisation
- Mcdonalds- McItaly burger in Italy
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Social costs of TNCs
- Abandoned production locations create derelict land
- Workers on low wages may be exploited, suffering poor health
- May cause cultural erosion/homogeny eg Americanisation of places
- TNCs may outcompete local businesses
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Economical costs of TNCs
- Outsourcing TNCs may become unpopular causing sales to fall
- TNCs may pay no or little taxes eg Amazon, Apple
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Environmental costs of TNCs
- New locations become polluted as environmental laws are weak
- Environmental pollution from factories is 'exported' overseas
- Transportation of goods leads to increased greenhouse gas emission
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Social benefits of TNCs
- Raised living standards as FDI increases productivity, leading to higher wages
- Success of global companies leads to jobs in HQ, research and development
- TNCs demand infrastructure and comms that will benefit locals
- Multiplier effects may occur, leading to further job creations
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Economic benefits of TNCs
- TNCs lead to higher profits and more tax being paid, which host govts can use
- Causes economic growth due to more jobs and consumption
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Environmental benefits of TNCs
- TNCs have international brands to maintain and set high environmental standards as a result
74
How is Apple Park environmental
- 780,000 square ft of solar panels
- 80% of campus is greenspace- drought resistant plants
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Where is Apple Park located
- Cupertino, California
- Silicon valley
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How many employees at Apple park
- 12,000
77
What companies do Apple Outsource with
- Foxconn
- Pegatron
78
Where are Pegatron factories located
- Located on outskirts of Shanghai
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How many does Pegatron employ
- 50,000
80
Average weekly hours of Pegatron workers
- 55
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What did 2014 investigation by BBC of pegatron Show
- Exhausted workers falling asleep
- Undercover reporter had to work 18 days in a row despite requests for a day off, with 16 hour shift being the longest
82
Where do Apple source their raw materials
- Bangka island, Indonesia
- 30% of world's tin produced here
83
Affects of tin mining in Bangka island
- lead to 65% of forests and 70% of coral reefs being destroyed
- 1 miner a week killed on average
84
Where is Apple's European HQ
- Cork, Ireland
85
Key info on Cork HQ
- Employs 6000 workers, focused on iMac production
- Company's presence here attracted other high tech firms in the area, creating highly skilled
- 90 Different nationalities work here
86
Distribution of coffee producers
- Grows in hot, wet areas, close to the equator
- Mainly South America, South/Central Asia and Africa
- Arabiza bean (better quality) mainly in South America and East Asia
87
Largest distributers of coffee
- Brazil
- Colombia
- Vietnam
- Indonesia
- Ethiopia
88
How much of price of coffee goes to farmers
- 7-10%
- Have little power to dictate prices, as raw coffee beans not worth much
89
What do TNCs do in coffee bean market
- Process the beans and sell them on for a higher price, taking most of the profits
90
Examples of TNCs controlling coffee markets
- ECOM
- Louis Dreyfus
- Neumann
- Volfafe
91
How does fairtrade act in coffee industry
- Aims to set min price which will go to farmer to cover costs
- Viewed as more ethical purchase- people look for fairtrade logo
- Pays additional fund for local communities to help them develop
- Means LDEs can invest in computers, machinery and education
92
Who are the 'winners' in the global coffee market
- TNCs
- Luckier farmers who benefit from fairtrade
93
Who are the 'losers' in the global coffee market
- Small scale farmers in less developed countries who earn a very small % of final coffee sales
94
Global trade patterns of coffee
- Mammy consumed by developed countries, but produced in less developed countries
- Brazil exports roughly 20% of coffee
- US imports roughly 20% of worlds coffee
- Price fluctuates based on supply/demand
95
How is Fairtrade certification system biased
- Favours Latin America over Africa and Asia
- Certification cost relatively more expensive for LDCs
- Mexico First Nation where FT was tried out despite having a higher GDP than all of sub saharan Africa- biased from start
96
Why are there concerns about Mexico having access to FT certification
- They are one of the richest developing nations, closer to France in terms of GDP than other LDEs
- Poorer countries should be more focused
97
What was the crucial 'mistake' made by FT founders
- What worked in South American context would similarly be effective in other regions
98
How does international trade affect my life
- Better variety of goods available
- Job opportunities created locally due to greater range of goods/businesses on high street
- Online shopping- amazon, Temu
- More tech available for cheaper prices
99
How does international trade affect other peoples lives around the world
- Can create inequalities
- Small fluctuations of price could be detrimental
- Helps supply local producers get a higher wage with more opportunities to sell- particularly with fair-trades involvement
- Environemental harm
- More likelihood of virus spread
100
Advantages of international trade
- Comparative advantage
- Economies of scale
- Purchasing power- increased competition lowers prices
- Fewer domestic monopolies- single firm less likely to control domestic market
- Transfer of tech
- Increased employment
101
Disadvantages of international trade
- Overspecialisation- less flexible and less able to diversify if demand falls
- Product dumping- Exporting for a lower price than domestic price
- Less growth of local and emerging industries
- Protectionism and tariffs
- De-skilling- skills and crafts may be lost
- Explosive and labour intensive industries
