(6.2.1 A) Patterns + Consequences of trade

What are exports?

goods and services produced in one country and shipped to another

What are imports?

goods and services brought into one country from another

What are tariffs?

taxes imposed on imports

What are quotas?

limits on the amount of goods imported

What are subsidies?

benefits given by the government usually in cash/tax reduction

What are trading blocs?

groups of countries working together to promote free trade between the members

What is interdependence?

When countries are linked together in a complex web, rendering them reliant on one another

What are primary goods?

products that grow- raw materials

What is the general role of HICs/NICs in the global economy?

• Import primary goods

• Export manufactured goods

• Set tariffs and quotas on imported goods

• Give subsidies to farmers within HICs

What is the general role of LICs in the global economy?

• Import manufactured goods

• Export primary goods

• Depend on trade but are rarely within influential trade blocs

What to their respective roles in global trade mean for HICs/NICs/LICs?

HICs/NICs

• earn high incomes from their exports

• do not have to pay as much for imports of primary goods

• protect those in their country manufacturing primary goods

• can invest that trade surplus into the country, developing

LICs

• earn low incomes from primary goods

• high dependency on few products mean a fluctuation has huge consequences

• difficult to compete with HIC trade blocs

• skilled workers migrate to more attractive HICs/NICs

• trade deficit → inability to invest, higher debt, inability to invest in the country

Why are countries exporting primary goods getting so little back?

• cheap selling price

• fluctuations in cost over time- unlike manufactured goods

• imbalance means lots of primary goods need to be sold to equal a manufactured good

• leading to a trade deficit

How have trading blocs exacerbated global inequality?

HICs, which are part of large trading blocs,

avoid importing goods from countries outside it, mainly LICs and NICs

which means they receive low incomes and lead to low incentive to set up a manufacturing economy

when there is no demand for LICs to supply

What is the main issue with relying on a limited number of exports?

For a given demand, the rise and fall of supply greatly affects the price.

What are the 2 countries used as case studies for the consequences of protectionist policies on one LIC and one NIC?

NIC- The Gambia

LIC- India

What products does The Gambia export? Where to?

Exports:

• a largely primary goods exporter

• 41% travel and tourism

• 58% of exports are services

• 31.5% of exports are from agriculture

• all other products are below 10% and largely agriculture

To:

• ~$1B to India/China

• ~$1M to Americas and some African nations

What does The Gambia’s export make-up mean for its economy?

high reliance on tourists → pandemic, war, disaster will impact them greatly

reliance on agriculture → climate change, disaster will harm economy

What products does The Gambia import?

• secondary goods

• 35% agriculture

• 17% textiles

• 9% metals

What does The Gambia’s imports mean for their economy?

A trade deficit ($364M to $1.6B) → cannot invest in manufacturing industries

Disparity in prices of imports vs exports → cannot invest in improving primary goods industry

What changed in India’s economy between 2000 and 2014?

GNI per person : 2000 → 5760

Agriculture: 25 → 17.9

Industry: 30 → 24.2

67% of people in agriculture, to 49%

What are India’s main exports? (2022 stats)

Services - 41.97%

Minerals - 12.21%

Chemicals - 9.43

(agriculture, textiles, stone, metals, machinery)

Why do NIC governments want to encourage investment in secondary industry?

more reliable income as more expensive goods are manufactured for exporting

How did Tata Steel buying Corus in 2006 help India?

Accessed the European market, breaching the trade bloc

How do HICs trade blocs still hinder NICs?

In agriculture, HICs will pay their farmers subsidies to keep costs low

protecting the agricultural industry within HICs, despite importing from NICs being cheaper.

With trade blocs, NICs are unable to compete on the global market.