Theme 3 - Trade and growth
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- Created by: becky.65
- Created on: 12-02-18 10:18
How have exports and imports grown so substantially since 1950?
It has become easier to trade internationally
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In the past, why did government restrict trade?
They feared imports might reduce demand for their own products so they used tariffs to make imports dearer and discourage people from buying them
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Why did governments start to reduce tariffs?
They saw that trade restrictions were discouraging sales of their own exports, so if they all reduces trade barriers together then prices would fall so there would be more economic growth and spending power would increase
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What is trade liberalisation?
Reducing barriers to trade so that economies can move gradually closer to free trade
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When was the World Trade Organisation formed?
1995
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What is the aim of the WTO
To oversee and regulate the international trading environment
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What is the WTO main objective?
To help trade flow smoothly, promote free trade and encourage economic growth by reducing trade barriers
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What does the WTO do to help developing nations?
It helps with technical matters and training programmes
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How does the WTO help with trade disagreements?
It provides a dispute resolution mechanism for member countires
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What does the WTO not do?
It is not a global policeman and it cannot force countries to co-operate
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How has the WTO been criticised?
It can been accused of favouring the richer countries at the expense of the developing ones and some doubt that free trade is the best solution for developing nations
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What is specialisation?
Producing more of the goods and services that have a competitive advantage
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How can specialisation help to increase total output?
If countries specialise in products in which they have a competitive advantage and export as much as they can, and increase imports from other economies that have a competitive advantage in other products, then increase trade will increase total outp
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What does specialisation lead to?
Enhanced economic growth; GDP and personal incomes increase
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How does specialisation help create a competitive advantage?
Individuals specialise and become more competent in their work so fewer employees are needed. The availability of finance for investment allows businesses to use the best technologies so productivity of capital and labour increases so over time
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What does trade liberalisation help with?
Increased exports, finding new markets to specialise and have economies of scale because businesses can expand faster
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What does trade liberalisation encourage to develop?
Different supply chains; particularly business to business
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Why might businesses choose the business to business supply chain?
They choose other businesses as they are the most efficient and have a competitive advantage in whatever process they supply so it is cheaper for the main company
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What has outsourcing and offshoring helped to do?
Cut costs and given many emerging economies faster economic growth
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What is outsourcing?
Buying in goods or services from other businesses
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What is supply chain management?
Organising the sequences of processes that leads to the sale of the final product. Managers must locate the supplier with the greatest competitive advantage so that costs are minimised
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How can complex supply chains create opportunities for new businesses to grow?
They minimise the resource costs of production, open up new markets and make it easy to expand across many locations
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As trade barriers are reduced, what is increased?
The flow of FDI as businesses set up factories or other production or distribution facilities abroad
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What might FDI also be associated with?
The offshoring of production to countries with lower input costs, or with production for foreign markets
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Why do all governments welcome FDI?
It provides finance for investment and helps to create jobs
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Other cards in this set
Card 2
Front
In the past, why did government restrict trade?
Back
They feared imports might reduce demand for their own products so they used tariffs to make imports dearer and discourage people from buying them
Card 3
Front
Why did governments start to reduce tariffs?
Back
![Preview of the front of card 3](https://getrevising.co.uk/revision-tests/theme-3-trade-and-growth/2/b/preview.png)
Card 4
Front
What is trade liberalisation?
Back
![Preview of the front of card 4](https://getrevising.co.uk/revision-tests/theme-3-trade-and-growth/3/b/preview.png)
Card 5
Front
When was the World Trade Organisation formed?
Back
![Preview of the front of card 5](https://getrevising.co.uk/revision-tests/theme-3-trade-and-growth/4/b/preview.png)
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