International Trade

Question 1

Protectionism

Answer 1

Policies to protect businesses and workers in a country by restricting/regulating trade with foreign nations.

Question 2

Trade Barrier

Answer 2

A barrier to free trade that restricts it or makes it harder.

Question 3

Tariff

Answer 3

A tax imposed on imports

Question 4

Quota

Answer 4

a limit on the quantity of a good a country allows into the country.

Question 5

Subsidy

Answer 5

Financial assistance to a domestic business by government to make it more competitive against foreign competition (or to save it from collapse).

Question 6

Free trade

Answer 6

A policy where a government does not interfere with trade (imports or exports) by using tarrifs, subsidies or quotas.

Question 7

Foreign Direct Investment

Answer 7

Investment by a foreign business into a foreign enterprise.

Question 8

Trans National Corporation

Answer 8

A company that operates beyond just one national border.

Question 9

How has free trade facilitated globalisation?

Answer 9

• More TNC’s invest and trade and so become more interconnected
• government take away barriers that make it much more difficult and costly
• Astride barriers are removed, trade becomes cheaper, causing more trade between nations, especially TNC’s.
• The TNC’s trade and FDI will also help the economy develop, increasing their demand for foreign products.

Question 10

Background details of World Trade Organisation (WTO)

Answer 10

• Established in 1995
• 162 member nations
• Based in Geneva, Switzerland.

Question 11

what is the WTO?

Answer 11

An organisation which supports the removal of trade barriers, has drawn up rules for international trade, and it intends to remove government interference in international trade.

Question 12

What does the WTO ask of countries?

Answer 12

to remove tariffs/taxes on foreign imports and subsidies on domestic products so that trade is free and without barriers.

Question 13

what must a country do to receive international loans (WTO)?

Answer 13

Must agree to the rules of WTO

Question 14

Disadvantages of international trade?

Answer 14

• exposes home grown products to foreign competition
• If foreign goods are cheaper and of high quality, local firms go out of business.
• this reduced local employment.
  e. g. Ghana with Italian tomatoes and India with American rice.

Question 15

what is the World Bank

Answer 15

The world bank lends money on a global scale and its headquarters are based in the US.
- in the 1970s and 80s the world bank developed a bad reputation for funding environmentally damaging projects and lending money to countries who could not pay back.

Question 16

example of world bank loan

Answer 16

in 2014, a US$470M loan was granted to the philippines for a poverty reduction programme.

Question 17

does the world bank impose conditions on its loans and grants

Answer 17

yes.

Question 18

controversial fact about WB

Answer 18

all presidents have been American.

Question 19

what is the voting system based in in the World Bank?

Answer 19

How much money each country has been contributed. The USA has 16% of the votes and power lies within the hand of the wealthiest nations.

Question 20

What is the IMF?

Answer 20

The IMF is a fund that could be loaned out to help countries in debt, thus helping stabilize their currencies and economies with the intention of preventing communism.

Question 21

how is the voting system

Answer 21

Like the World Bank e.g. USA has 17% voting rights
the EU combined has 25.7%
Africa = 1%

Question 22

Advantages of free trade

Answer 22

• lower prices for consumers
• free trade can help increase global economic growth
• increases competition e.g. domestic monopoly may now face competition from foreign firms

Question 23

Disadvantages of WTO

Answer 23

• Often criticised for ignoring the plight of the developing world
• it is argued the benefits of free trade occur mostly to the developing world.

Question 24

World Trade Organisation

Answer 24

Deal