Ads + Dis of World Trade

Question 1

Main advantages of World Trade?

Answer 1

• Increased employment
• Comparative advantage
• Economies of scale
• Competition
• Transfer of Technology (TOT)

Question 2

Main disadvantages of World Trade?

Answer 2

• De skilling
• Product dumping
• Over specialisation
• Protectionism
• Worker Exploitation

Question 3

Describe De skilling

Answer 3

Disadvantage of Trade
- new technology can result in the loss of traditional skills and crafts. As these skills are not required to operate machines in factories producing goods for export

Question 4

Describe Protectionism

Answer 4

Disadvantage of Trade
- to protect home markets some countries can introduce tariffs (trade taxes) to combat deindustrialisation and urban decline. So some markets now made inaccessible to trade

Question 5

Describe Product Dumping

Answer 5

Disadvantage of Trade
- Over production can lead to products being sold at very low prices in foreign markets. This can impact negatively upon ‘local’ business

Question 6

Describe Worker Exploitation

Answer 6

Disadvantage of Trade
- If goods are produced for export in a competitive trading environment then labour costs must be kept low. This can lead to exploitation by some TNCs who may threaten to relocate

Question 7

Describe Over Specialisation

Answer 7

Disadvantage of Trade
- If conditions change and demand falls for a product then countries have no fall-back position if they only produce a small range of goods

Question 8

Describe Increased Employment

Answer 8

Advantage of Trade
- If goods are sold outside the home market this is likely to increase demand and lead to more employment where the goods are produced

Question 9

Describe Economies of Scale

Answer 9

Advantage of Trade
- If countries specialise in producing only a narrow range of goods which are good at producing then they can produce large amounts at low unit costs

Question 10

Describe Transfer of Technology (TOT)

Answer 10

Advantage of Trade

- New technologies become widely available and this can bring down production costs and prices for consumers

Question 11

Describe Competition

Answer 11

Advantage of Trade

- If competition is increased as a greater choice of goods are available then prices for consumers are likely to fall

Question 12

Describe Comparative Advantage

Answer 12

Advantage of Trade

- A country can specialise in producing only things that it can do efficiently and at low cost.