4.1.2 International trade and business growth

Imports

Goods or services that are made in other countries and brought into the UK

Crude Oil

A raw material that is extracted from the earth and used in various products, particularly in energy.

Exports

Goods and services manufactured in the UK and sold abroad

Specialisation

Becoming special and highly skilled in a particular industry or sector

Comparative Advantage

States that a country should specialise in the goods or services it can produce at the lowest opportunity cost and then trade with another country

Benefits of Specialisation

Increased productivity and output, reduced average costs, GDP growth and increasing sales boost economic growth

Drawbacks of Specialisation

A country may become over reliant on one industry; other countries may become cheaper in the same industry and it will be harder to compete; if it grows too big it may suffer from DEOS through lack of communication and coordination

FDI

Foreign direct investment

Greenfield FDI

Build a completely new factory or business. The best kind as it creates new jobs

Brownfield FDI

Buy an existing business and grow it. Helps get new technology and business innovation

FDI benefits to its hosting country

Brings high paying, new jobs; brings new market technology and creates new markets; increases exports