Trade • Trading is the Buying (importing) & Selling (exporting) of different products between countries. • An Open Economy is an economy that engages in international trade.
Trade • Domestic Trade is the buying and selling of goods & services in our own country. • Foreign trade (or international trade) means selling goods and services to, and buying goods and services from, other counties.
International Trade • Some countries have a natural advantage over other countries in the production of one or more good or services. • Can you think of examples of these countries? • Countries tend to concentrate on the production of the goods & services in which they have an advantage & import the other goods they need.
International Trade • International trade is subdivided into visible and invisible trade. • Visible trade deals with physical products that can be seen going out of, or coming into the country. • Invisible trade deals with services. No physical product can be seen going out of, or coming out of the country as a result of the sale or purchase of services.
Trading game • You are a country and on your card you have a certain amount of commodities such as Energy, Manufactured Goods, Food & Nuclear Waste. • On your card is what you need to achieve – the amount of commodities stated on your Country Card. • You have to trade with each other in order to achieve your needs. • There is no stated exchange rate – you decide on what you will buy and sell commodities for.
Imports • An import is any good or service purchased by the residents of a country that causes money to go out of the country. • Importing: buying goods & services from other countries. • Foreign goods and services that we buy in Ireland. • Money leaves Ireland.
Visible Imports • Goods which are bought from other countries. • Money leaves the country. • Examples include: • Citrus fruit • Wine • Cars
Invisible Imports • Services that are bought from other countries. • Money leaves the country. • Examples include: • Irish person on holiday in USA • JLS playing in concert in Dublin • French horse winning Irish Grand National
Exports • An export is a good or service provided by the residents of a country that causes money to come into the country when sold. • Exporting: selling goods & services to other countries. • Irish goods and services that we sell to foreign countries. • Money comes into the country.
Visible Exports • Irish goods that are sold to foreign countries. • Money comes into the country. • Examples include: • Irish beef sold abroad. • Guinness sold to France • Waterford Crystal sold to USA.
Invisible Exports • Irish services that are sold to foreign countries. • Money comes into the country. • Examples include: • Bressie playing a concert in Wembley in London. • US citizen on holiday on Ireland. • Irish horse winning the English Grand National.
Homework 22.02.13 • Find an example of an import (visible/invisible) and an export (visible/invisible) over the weekend and take a photo of it using a camera phone. • Share the file using Google drive so we can make a class video explaining what imports and exports are.
Homework 22.02.13 • For example, Irish farmer selling eggs in Tesco in England – visible export.
Homework 22.02.13 • For example, Irish person travelling to England for a gig – invisible import.
International Trade Monday, 25th February 2013
Homework Corrections • Get a new Business Studies copybook! • Your book was printed in 2010 but our economic situation is constantly changing. Your book outlines the advantages of economic growth but not the consequences of negative economic growth (recession). • State & explain, expand & give an example. • Don’t forget to state whether your budget is a surplus/deficit. • 28 mins per question!
Visible Exports and Visible Imports Visible exports are physical products produced by the residents of a country that cause money to come into the country when sold. Examples of Ireland’s visible exports are: Visible imports are physical goods purchased by the residents of a country that cause money to go out of the country. Examples of Ireland’s visible imports are:
Invisible Exports and Invisible Imports Invisible exports are services provided by the residents of a country that cause money to come into the country. Examples: incoming tourists and the sale of financial services abroad. Invisible imports are services purchased by the residents of a country that cause money to go out of the country. Examples: outgoing tourists and “foreign” pop groups playing in Ireland.
The Balance of Trade • The Balance of Trade is the difference between the value of visible exports and visible imports. • Ireland’s Balance of Trade figures (1990 – 2011)
The Balance of Trade • If the value of visible exports is greater than the value of visible imports Positive figure Surplus Favourable Balance of Trade
The Balance of Trade • If the value of visible exports is less than the value of visible imports Negative figure Deficit UnfavourableBalance of Trade
The Balance of Trade If the value of visible exports equals the value of visible imports Balanced Balance of Trade
Balance of Invisible Trade • The Balance of Invisible Trade = Invisible Exports – Invisible Imports
Balance of Payments The Balance of Payments is the difference between the value of all goods and services that Ireland exports and imports. The BOP shows both visible and invisible trade.
Balance of Payments can be……. • Surplus: Exports ________________ Imports • Deficit: Imports ________________ Exports • Balanced: Exports ______________ Imports
2NK Business Studies Friday, 1st March 2013
Group Work Exercise • As a group, you need to decide whether the items on your Country card are visible imports or exports? • When you have decided what category the item belongs to – you need to calculate the country’s Balance of Trade, Balance of Invisible Trade and the Balance of Payments.
Overcoming a Balance of Trade Deficit • Increase exports • Reduce imports • Buy Irish (import substitution) • Source raw materials at home • Only use Irish services
Import Substitution What is Import Substitution?
What is Import Substitution? • Import Substitution is the replacing of imported goods with domestically produced goods on the home market. • Buying Irish goods instead of foreign goods. • Eg. buying Irish potatoes instead of Spanish potatoes.
Benefits of a Balance of Payments Surplus • More money coming into the country. • This money can be used to pay off some of our debt or reduce tax. • More money and jobs and a better standard of living for Irish people.