Trading BLocks

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  • Created by: markalex
  • Created on: 13-01-15 10:49
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  • World Trade and Trading Blocks
    • Why has trade increased?
      • Better transport and communications
        • More efficient transport systems means that goods can be shipped more quickly and cheaply
      • Relaxing of trade barriers
        • Since the 1930s countries have realised that protectionism does not help economic growth
      • Development of multinationals
        • A lot of world trade has been driven by large multinationals
        • Their aim is to increase sails around the world and produce Goods in locations which minimises their costs
      • Travel and Consumer awarness
        • Due to an increase in ravel, consumers are more prepared to buy goods from other countries
        • They welcome greater choice and recognise that imports can satisfy a growing number of needs and wants
    • Advantages
      • Belonging to a Trading Block brings much the same benefits as those which result from free trade anywhere
      • If members of the Block  abolish all trade barriers, goods will be cheaper
      • It is argued that the formation of trading blocs invites foreign direct investment .
        • This may be because Foreign firms are keen to locate operations within a trading block to get access to a larger - barrier free market
      • The formation of a Trading Block should result in closer cooperation between members.
        • For example
          • Countries may share resources, help each other out and introduce common standards, laws and customs
    • Disadvatntages
      • Members
        • Those in favour of worldwide free trade generally oppose trading blocs
        • By their nature trading blocs encourage regional as opposed to global free trade.
        • One problem with belonging to a trade bloc is the financial cost to the government and therefore the tax payer
      • Non- members
        • Countries that do not belong to trading blocs will face common trade barriers when selling goods to other any other member inside the  Block
        • They will obviously be at a disadvantage and may be forced to find a new market
    • What is a Trading Block
      • These are groups of countries situated in the same region that join together and make a free trade area
    • Examples of Trading Blocks
      • The EU
        • (European Union)
          • This is made up of 27 European countries
      • NAFTA
        • (North American Free Trade)
          • MAde up of three countries The USA, Canada and Mexico
      • CARICOM
        • (The Carribean Community)
          • This is made up of 15 members in and around the Carribean

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