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INTERNATIONAL INTERNATIONAL TRADETRADE
TRADE WITH TWO OR MORE TRADE WITH TWO OR MORE COUNTRIESCOUNTRIES
REASONS FOR FOREIGN TRADEREASONS 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)
PROBLEMSPROBLEMS 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 TRADEFREE TRADE
Buying goods and services from all countries Buying goods and services from all countries without any barriers when they cross frontierswithout any barriers when they cross frontiers
REASONS FOR FREE TRADEREASONS 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 REASONS AGAINST FREE TRADEFREE 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 RESTRICTIONSTRADE RESTRICTIONS(PROTECTIONISM)(PROTECTIONISM)
1. TARIFFS - tax or customs duty on imported
or exported goods
2. QUOTAS - the limited amount of goods
3. SUBSIDIES – money paid by the government
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
VISIBLE TRADEVISIBLE TRADE
VISIBLES:
goods sold / bought
(visible exports/imports)
food, cars, books, furniture….
INVISIBLE TRADEINVISIBLE TRADE
INVISIBLES:
Services / investments
(invisible exports/imports)
banking, education, tourism,
insurance, transportation
THE BALANCE OF TRADETHE BALANCE OF TRADEThe 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.
or or
Visible exports +48 440 Visible imports -47 322 Balance of trade – surplus + 1 118
Visible exports +47 322Visible imports -48 440Balance of trade - deficit - 1 118
THE BALANCE OF THE BALANCE OF PAYMENTSPAYMENTS
A record of all transactions –goods and services and investments – between one country and the rest of the world overa particular period.
visible + invisible trade
It shows whether the country is making aprofit or loss in its trade
Write the words into the spaces in the sentences:
scale budget deficit quota surplus infrastructure trade barriers globalization WTO balance of trade balance of payments free trade subsidies1. 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. 134. Vocabulary – Match up the words and definitions
p. 135. For and against free trade
a) Classify the statements: in favour of / againstb) Which sets of arguments do you find the most convincing?
Trade Justice - why world trade rules need to change
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Play the video. Play the video. Take the quiz. Take the quiz. Answer the questions to the best of your ability. Print your Answer the questions to the best of your ability. Print your results and put them into your portfolio.results and put them into your portfolio.
Why do companies restrict trade?
1._____________________________
2._____________________________
3._____________________________
4._____________________________
5.___________________________