global interdependence

human geo topic 4

visible trade

trade of goods

invisible

movement of services

global patterns of trade in value (3)

china : top visible trader of total $875 bn USA : top invisible trader of total $275bn generally us and european economies stagnating with asian, south american and some african emerging economies

comparitive advantage

the resource which a country can produce most efficiently, they have a comparitive advantage in that sector. if each country specialises in what it does best and exports some everyone will end up more prosperous

free trade

allows a country to trade competitively with another country without restrictions to exports or imports,

protectionism

creates barriers to imports and exports, restrictions to trade

absolute advantage

ability to produce more or better goods at a lower oppurtunity cost

advantages of free trade

creates lower prices and hopefully more market innovation through global competition allows for comparitive advantage which allows the most goods to be available for consumption because each country is able to specialise in the industry theyre defficient in can drive faster economic growth

how is trade controlled

• through the natural market forces - through economic and trade blocs such as in the eu - subsidies - tarrifs and protectionist measures

example of subsidies

farmers in the EU - CAP - makes homegrown production cheaper than importing foreign market produce

reasons for protectionism (3)

to prevent over-specialisation which can lead to inflexibility and worker dissatisfactionto become less reactive to external shocks and the pricing of othersto protect jobs and domestic industries especially infant industry or newly emerging industries from the global trade sphere

uk exports trends (3)

• bigger increase in imports (25%) than exports (19%)

• overall trade deficit of about 77bil

• most sig imports from non-eu least significant exports to non-eu

• service sector has grown more quickly than goods (260 bil) but we still export more goods (11 billion) in 2021

uk export partners

netherlands, germany, ireland, (around £40bil), china (£27 bil), japan, canada (£12 bil)

main uk export goods - 3 + two facts

mechanical power generators, crude oil and medicinal and pharmaceutical products by value 11.5% of registered non-financial business is exported. fourth in global export ranking

import origins uk

germany (11%), netherlands, france, norway (around 4%)

imports top 5 uk

cars, gold, crude oil, refined petrol, natural gas

resource endowment examples- opec and raw materials

• middle east dominate the export of oil with venezuela and nigeria - form opec - cartel controlling petrol policies and oil prices- wealth of countries such as canada and australia has been heavily built on export of raw materials

locational advantage examples

location of markets influence trade patterns as it is advantageous for an exporting country to be close to the markets for its productstourist industry in france benefits from the large populations of neighbouring countries and connections such as singapore or rotterdam

investment influencing trade examples

mics such as brazil and south africa have increased their trade substantially by attracting FDI increasing their trade to GDP ratios significantly

historical factors of trade examples

• often based on colonial ties e.g. uk remains trading relationships with commonwealth countries- started a trading relationship dicated by european countries leading to trade dependencies.

terms of trade examples

countries like kenya are dependent on a small amount of primary products which are subject to price fluctuations this means they lack stable income flow to develop, many LICs are worse now than two decades ago with greater trade deficits.

changes in the global market (4)

• 'developed world' grew an average of 2.1% 2000-2010 - trade as a share of global GDP has fallen- emerging markets doubled in size- hics control of the global economy has reduced from 64% in 1990 to 52% in 2009- BRICS holds 42% of foreign exchange reserves - china holds 30% alone

trade blocs

exist to increase the volume and value of trade by eliminating barriers to trade

free trade area

trade freely amongst them but with individual barriers with countries outside the FTA eg. USMCA

looser trade groupings examples

asia-pacific economic cooperation forumcarins group of agricultural exporting nations - formed in 1986 to promote agricultural trade liberilisation in the uruguay trade talks

customs union

countries are no longer fully sovereign over their trade policy - more economic integration common external tariff applied to all countries outsidd the trade bloc

common market

customs union with free trade

economic union (4)

well integrated e.g. EUe.g. Common Agricultural policy of the EUfixed exchange rate regime, common currency often likelty to be some form of political integration - overarching policitcal authority

trade and development (one example)

generally +ve correlation - 2002 oxfam predicted that if Africa increased its share of world trade just 1% would gain £49 bil /year

WTO background (3)

founded jan 1995 replacing GATThq in geneva166 countries

core functions of the WTO

• trade negotiations- dispute settlement- monitoring and transparency (publishes trade data)- capacity building (e.g. DRC cobalt mines)- promotes fair competition

WTO aims

• boosts global trade- supports economic development- stabalises the global economy

how do tarrifs affect global trade

• promote self-sufficiency - may push price of manufacturing up making domestic goods more expensive- tend to reduce global trade- change trading partners e.g. china may make stronger trading allies than the USA

why do countries subsidise sectors of industry (2)

• promote it esp in infancy to protect from competition - meet e.g. environmental goals

what is fairtrade

aims to address poverty and inequality by establishing a fairer trade relationships between producers in low-icome and consumers in high-income countries

pros of WTO (6)

• free trade for developed economies- provides proper platform for trade decisions- members encompass 98% of all trade- solves disputes e.g. may have prevented 2008 trade war- 22% exports increase since 1995- provides concessions for LICs

cons of WTO (6)

• lics cant use trade barriers to protect developing economy - no 'tarrif period'- largely focus on the UK and EU - most powerful members- slow progress- promotes TRIPs (intellectual property rights) that make medication expensive for LICs- favours multi-nationals- expensive legal system

fairtrade foundation aims (5)

• sets social economic and environmental standards- certifies products and ingredients- works with companies own schemes- lobbies governments to campaign for LICs- drives public awareness through ads and education

operation of fair trade foundation

Small farmers group into co-operative groupsCo-op groups have high social and environmental standardsCo-ops talk to companies directly – cut out middle man, demand higher priceIn most cases there is 100% price increase for company, and cost is passed back to consumerHigher price achieved provides greater living standards and money to invest in the farms of producers and their communities

fairtrade pros examples (6)

study of small-scale tea farmers in India found that participation in FairTrade schemes led to higher incomes and improved access to healthcare and education.women who participated in FairTrade schemes Ecuador (bananas) had greater decision-making power within their households and communities and improved access to education and healthcare ghana (cocoa) - those who participated in fairtrade schemes had higher incomes and better access to credit and technical assistance than non-participants. a study of FairTrade certified coffee farms in Costa Rica found that they had higher levels of tree cover and biodiversity than non-certified farms. has generated $700 mil in premiums (paid for consumer used to fund SEE development)promotes diversification of industry e.g. in East Africa through technical training reducing impact of market shocks

cons of fairtrade (3)

• extra cost for consumers and farmers- coops must meet standards so poorest farmers can't participate- price guarantees can lead to overproduction