4.1.3

How does comparative advantage show a benefit of specialisation?

If countries specialise in what they're best at producing, there will be global economic growth

What can trading and specialising lead to?

Economies of scale

What are some other benefits of specialisation and international trade?

- different countries can make use of different factors of production
- greater choice
- greater competition (incentive to innovate)

Why is over-dependence sometimes a problem?

If there are large price falls in the exports or if imports are cut for political reasons

How can international trade lead to structural unemployment?

Jobs are lost to foreign firms who are more efficient and competitive. The less mobile the workforce, the higher the chance that changes in demand due to trade will reduce output and employment over long periods of time

What are some other disadvantages of specialisation and international trade?

- environmental damage
- loss of sovereignty due to international treaties/trading blocs
- loss of culture

What are the 7 most significant changes due to international trade?

growth of trading, emergence of MICs, deindustrialisation, changes in comparative advantage, emerging economies, growth of trading bloc and bilateral trading agreements, changes in relative exchange rates

What are some trading blocs?

EU and NAFTA

Which emerging countries have become significant global players?

India and China

Why have traditional western nations seen a period of deindustrialisation?

Comparative advantage has shifted to China, India, and the Far East

What do developed economies focus on producing?

Tertiary sector services, leading to increased standards of living

What will a long term change in a country's exchange rate affect?

The relative competitiveness of that country's goods and services and influence trading patterns