International Trade Topic 4.1

notes from school work book and also an econplusdal video

key features of a developing economy

low GDP
low HDI
high poverty
high unemployment
more primary sector exports than imports

key features of an emerging economy

medium GDP per capita
high rate of volatile economic growth
average HDI
economic focus is specifically manufacturing

key features of a developed economy

high gdp per capita
more imports than exports
current account deficit
economic speciality is in the tertiary sector

advantages of international trade for all 3 types of economies

higher exports—> high AD—> AD shifts rights—> high economic growth

extra adv of international trade for developed economies

don’t have as much adv as they have a high current account deficit and they focus on tertiary sector production which doesn’t have much global export demand—> however, international trade increases consumer choice due to cheaper primary sector imports, leading to more consumer choice which means higher household utility

disadvantages of international trade for developing economies

-reliant on primary sector exports like agriculture which can be volatile, especially with increasingly unpredictable weather and political aliments like the war in Iran

disadv of international trade for emerging economies

-economy can be at risk of shocks and potential collapse due to extreme reliance on trade, shocks like the 2008 finical global crash or Trump’s 2024 tariffs

disadv of international trade for developed economies

-loss of manufacturing jobs in that country
-may worsen a current account defecit, e.g. UK is a developed economy that does more imports than exports and it has the 2nd biggest defecit in the

general developmental adv of international trade

-developing economies can exploit their comparative advantage if they have big access to natural resources—> increase exports—> increase AD—> increase growth
-production will be more competitive, meaning that consumers will not only have more choice but potentially lower prices too.
-chance for greater political relations to be fostered as trade ties are fostered too—> like China and African countries and their close relationship