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INTERNATIONAL TRADE. TRADE WITH TWO OR MORE COUNTRIES. REASONS FOR FOREIGN TRADE. different natural resources climate geographical position different capital resources - factories - machinery - roads / infrastructure.

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International trade

INTERNATIONAL TRADE

TRADE WITH TWO OR MORE COUNTRIES


Reasons for foreign trade
REASONS FOR FOREIGN TRADE

  • different natural resources

    climate

    geographical position

  • different capital resources

    - factories

    - machinery

    - roads / infrastructure


  • labour force (skilled/unskilled)

  • greater efficiency

  • a greater variety of goods/services

  • greater output

  • greater employment through expanding

    export markets

  • higher living standards (higher income)


Problems
PROBLEMS

  • documentation – more documents

  • foreign languages – labels, leaflets,

    brochures, instructions

  • foreign currency –

  • debt collection – the language, legal

    system

  • distance and transportation – extra

    packaging, time

  • duties and restrictions


FREE TRADEBuying goods and services from all countries without any barriers when they cross frontiers


Reasons for free trade
REASONS FOR FREE TRADE

  • ABSOLUTE ADVANTAGE

    resources are put to their best possible

    use - the highest productivity, the ability to produce more of a good or service than any other country

  • COMPARATIVE ADVANTAGE

    low-cost production – countries produce

    more cheaply than others


Reasons against free trade
REASONS AGAINST FREE TRADE

  • cheaper production in some countries

    leads to destruction of industries and jobs

    in other countries

  • countries may protect their own industries

    from international competition

    PROTESTS AGAINST GLOBALISATION


Trade restrictions protectionism
TRADE RESTRICTIONS(PROTECTIONISM)

  • TARIFFS- tax or customs duty on imported or exported goods

    2. QUOTAS- the limited amount of goods

    3. SUBSIDIES – money paid by the government to reduce the cost of producing goods to keep prices low


4. EXCHANGE CONTROL - limiting the amount of local currency that people can sell or the price at which they can sell

5. EMBARGO - official order to prevent trade with another country


Reasons for restrictions
REASONS FOR RESTRICTIONS

  • protect home producers

  • safeguard jobs

  • resist dumping

    (selling large amounts of goods in a particular

    country at unfairly low prices)

  • correct the Balance of Payments


Visible trade
VISIBLE TRADE

VISIBLES:

goods sold / bought

(visible exports/imports)

food, cars, books, furniture….


Invisible trade
INVISIBLE TRADE

INVISIBLES:

Services / investments

(invisible exports/imports)

banking, education, tourism,

insurance, transportation


The balance of trade
THE BALANCE OF TRADE

The difference between a country’s visible imports and exports.

The balance is favourable (in surplus) when exports are higher than imports.

The balance is adverse (in deficit) when imports are higher than exports.


The balance of payments
THE BALANCE OF PAYMENTS

A record of all transactions –

goods and services and investments –

between one country and the rest of the world over

a particular period.

visible + invisible trade

It shows whether the country is making a

profit or loss in its trade


Visible exports +48 440

Visible imports -47 322

Balance of trade – surplus + 1 118

Visible exports +47 322

Visible imports -48 440

Balance of trade - deficit - 1 118


Write the words into the spaces in the sentences:scale budget deficit quota surplus infrastructure trade barriers globalization WTObalance of trade balance of payments free trade subsidies

1. The _____________________has established rules of trade between nations.

2. A country exporting more than it imports has a trade ____________________ .

3. Countries that export a lot of oil tend to have a positive ________________________

4. A limit to the quantity of goods that can be importde is a _______________________.

5. The import and export of goods is called the _________________________.

6. Producing in large quantities becomes cheaper because of economies of _________

7. „The world is one big market“ . This is one way of describing __________________.

8. The absence of trade barriers is known as ____________________________ .

9. Import tariffs and quotas are types of _________________________.

10.Buildings, roads, railway lines, telephone netwirks and power supplies are all part of a

country's ______________________.

11. If government expenditure is higher than government income, the result is a

_____________________.

12. European farmers receive large sums of EU money in the form of________________


Mk p 135 for and against free trade which sets of arguments do you find the most convincing
MK, p.135. For and against free tradeWhich sets of arguments do you find the most convincing?


Http www youtube com watch v ldzwgdxtsmk feature related
http://www.youtube.com/watch?v=ldZwGDXTsmk&feature=related

Trade Justice - why world trade rules need to change

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