'Commerce with all nations, alliance with none, should be our motto.' (Thomas Jefferson)
- Created by: jenny_mckay
- Created on: 10-05-17 09:02
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- 'Commerce with all nations, alliance with none, should be our motto.' (Thomas Jefferson)
- Some social and economic groupings and why they exist
- EU (1945-1950)
- Developed to prevent issues associated with the past world wars, e.g. food shortages and political instability
- Open market, free of barriers and movement of resources, e.g. labour.
- Economic Union due to adoption of common economic policy, E.g. most use Euro
- NAFTA (1994)
- removal of trade barriers between US, Canada and Mexico
- Unlike EU, less common laws, no common external trade policy so far less integrated
- Free Trade Area
- EU (1945-1950)
- Role of Trade and Commerce as a development influence
- Every country involved in trade in some way
- Many argue it is the best way of developing as it gives economic independence (not reliant on trade)
- Also how many NICs (e.g. Asian tigers and China's exports of steel etc.) and all MEDCs developed (but arguably couldn't be repeated as they exploited poor countries during colonialism)
- Many LDCs and LEDCs struggle with this due to natural disasters, high prevelance of AIDS etc., such as Malawi or Haiti, so are more reliant on aid
- Fair trade suggested as the best compromise between trade and aid
- Idea of microcredit beginning trade for small businesses to encourage the economic development and trade in an area which, in turn, increases standard or living and quality of life
- Developed countries export goods of a much higher Tec, e.g. medicines and aircrafts, so therefore have a far greater GDP than the developing countries that export raw materials or low cost products, e.g. crude oil or plastic products
- Protectionist Policy (putting up high trade barriers) often hurts the economy by limiting the desirability to export there and decreasing competition between countries
- Globalisation's influence on trade
- TNCs, e.g. Walmart encourage mixing of cultures and investing (FDI) into many countries, generally encouraging development
- Trade increasing due to increased interconnection since the end of WWII, increased communications etc.
- Increased use of Mobile Phones (leapfrogging of tec) allows increased banking, education, and helps farmers get best price for crops- this is much cheaper than installing phone lines
- some of the least developed countries excluded from trade agreements etc. and are simply exploited by TNCs without receiving benefits as profits go to MEDC
- Multiplier effect of increased trade in developing countries allows te economy to grow, increased jobs leads to more business with local industry etc.
- Groupings in relation to development continuum
- Trade=higher GDP and therefore economic stimulus so LEDCs/NICs desire trade agreements with MEDCs
- MEDCs are more able to pick and choose trade agreements so enter them with countries with desirable trade items
- It's argued that this means that MEDCs can exploit the poorer countries which are more vulnerable
- By entering into something like the WTO, the import and export of goods is regulated and certain standards (e.g. regarding the environment) have to be met so trade is more reliable
- It's been argued that this has led to the exploitation of LEDC/NIC as the desires of MEDCs are prioritised due to their greater influence
- Consequences of groupings
- Increased trade within the trade bloc
- Decreased trade with those outside of the trade bloc
- Common policies can protect the economies of member countries
- A greater chance of peace due to international understanding
- Possibility of developing common currency, e.g. euro, which will prevent large fluctuations and simplifies trade
- Increased economic development for nations involved
- Remote regions and areas with declining industry may receive support , e.g. EU Regional Development Fund
- Greater democratic function and better global representation via working with larger countries
- Improved global security, e.g. NATO is an international force of soldiers who carry out various duties inc. peacekeeping in conflict zones
- Particular sectors of an economy can be protected, e.g. agriculture protected by Common Agricultural Policy in the EU
- Presure to adopt central legislation means a loss of power to make decisitons to a central alliance
- Richer countries may find that they put more in than they get out, e.g. UK contributed £4 billion to portugals bailout in 2011
- Trade with nations outside the alliance will possibly be reduced, this is especially damaging to LEDCs
- some financial controls will go to a central authority so lose control over their economy
- Some social and economic groupings and why they exist
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