Flashcards in international trade Deck (21)
what does globalisation affect in terms of trade?
it affects the volume and pattern of international trade and investement
what has happened since the second world war?
the volume of trade has increased
what organisation was created near the second world war that may be linked to increase in trade?
what is international trade?
the movement of goods and services from a producer to a consumer
what are the different sectors in industry?
what is the primary sector of industry?
the extraction of raw materials
what is the secondary sector of industry?
the production of manufactured goods from food to electronics
what is the tertiary sector of industry?
it is the trade of services including legal and educational
aviva car insurance
what is comparative advantage?
the idea that one country is more able and efficient to manufacture/trade certain products compared to others
how does comparative advantage affect trade patterns?
people who have comparative advantage in one product will become the main producer and import products that they are less able to obtain inside their country
what is economies of scale?
producing a narrower range of products means that a country can produce in higher volumes and at a cheaper cost
how does an increase in trade affect pruchasing power?
there is increased competition that lowers the prices allowing consumers to buy more for their money
international businesses want as many consumers as possible as they can then become an economy of scale
what is the multiplier effect and how can this be created through trade?
(also in TNC section)
where when a business starts that exports
manufacturing will create jobs
local businesses benefit as more jobs are created so people have more money to spend
affecting government etc
what is the impact of trade on local businesses?
due to the size of large trading companies and low costs due to competition
local businesses may find it hard to be able to lower their prices to the same extent
how can competition and lowering prices result in 'product dumping'?
business may export their products for a much lower price in the foreign markets than the price sold domestically
resulting in a potential loss
who is at risk of product dumping?
farming in less economically developed countries `
why might de skilling take place?
manufacturing has become from technological based due to machines so traditional skills and crafts have been lost
how can trade exploit and produce labour intensive industries?
in most businesses labour is one of the biggest costs
reductions can be made in labour even when working conditions are compromised
who deals with the global rules on trade>
the world trade organisation
what do the world trade organisation do?
deals with global rules of trade between countries
facilitates international trade