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Flashcards in Ads + Dis of World Trade Deck (12):

Main advantages of World Trade?

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


Main disadvantages of World Trade?

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


Describe De skilling

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


Describe Protectionism

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


Describe Product Dumping

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


Describe Worker Exploitation

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


Describe Over Specialisation

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


Describe Increased Employment

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


Describe Economies of Scale

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


Describe Transfer of Technology (TOT)

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


Describe Competition

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


Describe Comparative Advantage

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