International trade

Countries engage in international trade to sell and get paid for producing goods. Plus they need products and services that they can't produce themselves.

International trade is the movement of goods and services across borders.

Imports

 * Money always Out

 * Physical goods/service

 * Surplus

Exports

 * Money always in

 * Physical goods

 * Surplus

Balance of Trade

Visible exports - Visible imports

Balance of Payment = Total exports + less Total imports

Ireland needs to trade because

  •  * Climate - we don't have climate to grow certain goods

  •  * Natural Resources

  •  * Skills - we don't have the skills or industries for certain items.

  •  * Price - people look abroad for lower prices

  • For Consumers

  •  * Access to goods that can't be made or grown in Ireland

  •  * More choice

  •  * Better value

  •  * Higher standard of living due to increase in products and services

  • For Business

  •  * Access to supplies of essential raw materials that are not available

  •  * Access to a larger market to sell goods and services

  • For Economy

  •  * Increasing production means more jobs are created

  •  * Foreign trade brings revenue into the country from goods and services sold abroad

  • Downside Of An Open Economy

  • Closure of Irish businesses: they may struggle to compete internationally against large global companies

  • Potential unemployment: With Irish companies closing more people may become unemployed and require social welfare payments

  • Environmental costs: high environmental costs of international trade.  e.g. CO2 emissions caused by logistics and the production of goods and services at lower prices will mean that goods are more disposable which will mean increased waste and the use of scarce resources

Political Questions

Challenges For businesses engaging in international trade

Risks in transit and trade can cause major issues

Increase in Costs: transport, customs duties, tariffs, marketing and currency exchange rates

Credit Checks of foreign customers can be more difficult leading to bad debts

International Relations: political relations can be important

Open economy: This is one in which people and businesses can trade goods and services freely with other countries.

Closed economy: One that has no trading activity with outside economies.

Import Substitution: Replacing imported goods with domestically produced goods to have market share

Barriers to Trade:

 * Free Movement of goods, people

 * Tariffs - Taxes on trade

 * Quotas - Limit on Quantity

 * Embargo's - Ban on trade

 * Administrative - Forms, Rules to follow

 * Red tape