CGP International Trade

• International Trade and Investment have Changed Dramatically
• Chabalisation affects the volume and pattern of irational trade and investment
• International trade

  The import and export of goods and services between countries
• The volume of global trade has increased dramatically since the 1900s- is value increased by nearly eight times between 1980 and 2008
• The pattern of global trade is also changing Developed countries remain the biggest global raders, but some emerging economies are catching up-China is now the largest exporter of goods in the world, largely due to the rapid growth of its maniacturing sector
• Less developed countries are also becoming bigger vades, but growth is lo accounted for around 2% of world trade, whereas in 2010 they accouned for just over 3%. The poorest in 1995, African countries 49 countries make up 10% of the world's population, but still only account for 0.4% of world trade
• More countries are opening themselves up to international trade by removing barriers so trade isee p.1301. This is partly due to the formation of trade blocs see net pagel
• There has also been a rise in fair trade-tha is a way of trading that supports people in less developed countries who make products that are exported to developed countries. Since the 1970s, nearly a thousand fair trade producer groups have been set up in less developed counties. These groups trade with developed countries, who sell their products in shops and supermarkets
• Foreign direct investment (FDD)


  When a person, company or other group spends money in another country in order to generate a profit, eg by opening a new branch of their business or investing in local infastructure
• Foreign investors may be attracted by the size of the market how many people they can sell to the stability of the market jeg not in a war zone, the possibility of extracting resources for themselves leg from mines in Airical or the ability to access financial services, as in countries like Luxembourg with large banking sectors.
• The volume of FDI rose dramatically from about $400 billion in 1996 to nearly $1500 billion in 2016.
• The pattern of investment has also changed. Until the 1960s, developed countries mainly invested in other developed countries. Since the 1950s, developed countries have begun investing more in emerging economies and developing countries. In the past ten years, China, India, Brazil and Mexico were some of the largest receivers of foreign investment.
• Another big change has been where the investment has come from. Emerging economies now invest heavily in less developed countries, eg. China invests a lot of money in countries in Africa and South America.
• Ethical investment


  When a person, company or group only invests in areas that are considered socially responsible-eg companies that cause environmental or humanitarian ham are generally avoided by ethical investors
• Ethical investment has grown since the 1990s - the amount of ethical imesament by US companies almost tripled between 2005 and 2016
• Protectionism

  When countries limit trade using tariffs and non-tariff barriers to shield their industries from foreign competition
• Free trade


  The policy of removing trade barriers
• The World Trade Organisation (WTO) was set up to increase trade and help resolve trade disputes between member countries. It sets rules about how countries should trade with each other:
• WTO rules

  • Countries can't give another country special access to their market without doing the same for every other country in the world. However, there are some exceptions, eg countries can give special access to members of their trade bloc
  • Countries should promote free trade, eg. by removing as many barriers to trade as possible
  • Countries should act predictably in their trading, eg. by not raising tariffs on particular products once a deal has been reached
  • There should be fair competition-one company or country shouldn't get an unfair advantage over rivals
• Trading Blocs


  Agreements Between Governments About Trade
• Trading blocs remove barriers between members, while keeping common barriers to countries who are not part of the bloc
• Many trading blocs are formed between neighboring countries to increase trade between them
• Some trading blocs are based around specific industries Eg some of the main oil-exporting countries in Saudi Arabia are members of the Organisation of the Petroleum Exporting Countries (OPEC) which aims to standardise prices to prevent countries undercutting one another with cheaper prices
• Special Economic Zones (SEZs)


  Areas that have different trade and investment rules to the rest of a country eg companies investing there may pay lower taxes on land and goods. SEZs increase trade while keeping barriers in the rest of the country
• Membership of trade blocs can change Eg the UK left the EU in 2020, and Venezuela was suspended from Mercosur in 2016
• Most trade in the world takes place between developed countries in 2013, imports and exports between the United States (US) and European Union (EU) accounted for over 30% of the global products trade. Most of the products, eg machinery or chemical, require a lot of money and expertise to make.
• Less developed countries trade mainly with emerging economies and developed countries Eg Bangladesh mainly exports to the US and EU and imports for China and India, rather than from less developed countries
• Trade between emerging and less developed countries is increasing t China's manufacturing sector relies on lots of raw materials so it needs of eg from Angola
• China has become the EU's second largest trading partner after US, and the EU imports more goods from China than from anywhere else in the world
• Emerging economies like China and India are increasingly important to global trade. China's manufacturing sector has grown rapidly, and a highly educated population has grown India's service sector,
• Access to markets


  How easy it is for countries and companies to trade with one another. International access to markets is determined by the extent of export and import barriers between two countries.
• Access is affected by wealth Developed countries often put higher tariffs on goods imported from less developed countries-this makes it harder for less developed countries to access the market. Developed countries also have more money to invest, so they can avoid high tariffs imposed by developing countries by opening factories within them. Less developed countries may also rely on loans that depend on the removing trade barriers and increasing access to their markets.
• Access is also increased by being a member of a trading bloc-member countries have access to the markets of all the other member countries. Trade blocs of developed countries have access to lots of wealthy buyers However, less developed counties outside the trade bloc may have to pay high tariffs to export their goods to those markets. This puts less developed countries at a disadvantage.
• SDT Agreements Give Less Developed Countries Greater Market Access
• Differential Access to Markets has Economic and Social Consequences
• Trade benefits developed countries more than developing countries-eg many developing countries export mostly primary products leg copper ore, which are processed in developed countries (eg into electronic component and exported at a higher price. The developed country makes more profit than the developing country so wages are higher
• Trade and high levels of market access also mean that a wide range of goodh are available in developed countries. This further increases people's standard of living
• Trade also creates more interdependence between countries-if something goes wrong, other countries are affected Eg the financial crisis in 2008 increased cates of unemployment in many countries.