International Trade

interdependence, global economies

Q: What is Globalization?

A: The process of increased ___ and integration of ___.

trade, investment, technology, cultural exchange

Q: Globalization is often facilitated by what? (4)

nations

Q: What is International Trade?

A: The exchange of goods and services between ___.

comparative advantage, consumer demand

Q: International trade is driven by what factors? (2)

World Trade Organization, eliminate tarrifs

Q: Who handles Int. Trade and what is their goal?

trade barriers, free trade

Q: What is trade liberalization?

A: The removal or reduction of ____ to promote ____.

E: The North American Free Trade Agreement (NAFTA), which eliminated trade restrictions between the U.S., Canada, and Mexico.

tariffs, quota

Q: What are examples of trade barriers?

A:

1. ____ - A tax on imported goods.

2. ____ - A limit on the quantity of a good that can be imported.

multiple countries, production costs, markets

Q: What are Multinational Corporations

A: Companies that operate in ___, benefiting from lower ___ and wider ___

E: Coca-Cola, which produces and sells beverages worldwide.

increased market access, lower costs and higher efficiency, technology advancements and faster trade, foreign direct investment, consumer benefits

Q: What are five positive effects of globalization on int. trade?

worldwide, higher revenues, business expansion

Q: What does it mean to have an increased market access?

A: Companies can sell products ___, leading to ___ and ___.

E: Tesla exports electric vehicles to Europe and China, expanding its global market reach.

cheap labor, resources, different regions, production costs

Q: What does it mean to have lower costs and higher efficiency?

A: Businesses benefit from ___ and ___ in ___, reducing ____.

E: Clothing brands like Nike manufacture products in Vietnam and Bangladesh due to lower labor costs.

Growth Companies, foreign countries, jobs, economic growth

Q: What does it mean to benefit from Foreign Direct Investment (FDI)?

A: ___ invest in ___, creating ___ and ___.

E: Toyota establishing car manufacturing plants in the U.S. and Europe.

Consumers, diverse products, competitive prices

Q: What does it mean to have consumer benefits?

A: ___ have access to ___ at ____.

E: The availability of smartphones from various brands (Apple, Samsung, Huawei) in different countries.

job displacement and outsourcing, income equality, environmental concern, trade dependency and vulnerability, cultural erosion

Q: What are the five (5) negative effects of globalization on Int. Trade?

low-cost countries, job losses

Q: What is job displacement and outsourcing?

A: Companies relocate manufacturing to ____, leading to ___ in high-cost regions.

E: Many U.S. factories closed as companies moved production to China and Mexico.

corporations, skilled workers, low-income workers

Q: What happens if there is income inequality caused by Int. Trade?

A: While globalization boosts overall wealth, it often benefits ___ and ____ more than ___.

E: A textile factory closes due to cheaper imports, leaving low-skilled workers jobless while multinational firms and skilled professionals continue to profit.

production, transportation

Q: How does Int. Trade concern the environment?

A: Increased ___ and ___ lead to pollution and climate change.

E: Fast fashion brands contribute to textile waste and water pollution.

economic risks

Q: What happens if countries are trade dependent and vulnerable?

A: Countries reliant on foreign supply chains face ___ during disruptions.

E: The COVID-19 pandemic disrupted global supply chains, affecting industries like automotive and healthcare.

Western, local cultures

Q: How does Int. Trade culturally erode countries?

A: Globalization promotes ___ brands and lifestyles, sometimes overshadowing ___.

E: The dominance of McDo and Starbucks in various countries, reducing local food traditions

lower opportunity cost

Q: What is comparative advantage?

A: The ability of a country to produce a good or service at a ___ than another country.

E: India has a comparative advantage in IT services due to its skilled workforce and lower labor costs.

fewer resources

Q: What is absolute advantage?

A: When a country can produce a good more efficiently—using ___—than another country.

E: Saudi Arabia has an absolute advantage in oil production because of its vast natural resources.

alternative

Q: What is opportunity cost?

A: The value of the next best ___ foregone when choosing to produce one good over another.

E: If a country uses land to grow wheat instead of corn, the lost corn production is its opportunity cost

advantage

Q: What is specialization?

A: The focus on producing specific goods or services where a country has an ___, leading to increased efficiency.

E: Japan specializes in high quality electronics and automobiles, exporting them globally.

David Ricardo in the early 19th century

Q: Who introduced comparative advantage and when?

coffee production, car manufacturing

Q: How does comparative advantage explain trade between Brazil and Germany?
A: Brazil has a comparative advantage in ___, while Germany excels in ___. Each exports what they specialize in.

technology and aircraft, consumer electronics

Q: Give an example of comparative advantage between the U.S. and China.
A: The U.S. specializes in advanced ___, while China specializes in manufacturing ___. Both benefit by trading these goods.

English-speaking , lower labor costs

Q: Why does India have a comparative advantage in IT services?
A: Because of its skilled, ___workforce and ___.

cheap labor, strong infrastructure, large-scale production capacity

Q: Why is China considered to have a comparative advantage in manufacturing?
A: Due to ___, ____, and ____.

natural oil, extraction

Q: How does Saudi Arabia demonstrate comparative advantage in oil?
A: Its vast ___ reserves and low ___ costs give it dominance in global oil exports.