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Topic 5: International Trade and Policy Issues - Coggle Diagram
Topic 5: International Trade and Policy Issues
Trade Evidence and Structural Impacts
21st century ushered in unprecedented interconnectedness
reshaped economies + industries
fulls entrepeneurship
Investment + Capital: Foreign Direct Investment
can be influential factor in countries productive capabilities
Brownfield vs Greenfield
Immigration and People Movement
addresses labour shortages
Trade Theory and Practice
countries specialise in producing specific goods and services, and then trade these products with each other
Comparative Advantage
crucial to establish A beneficial trade ratio, e. g. 2:1
specialising and trade result in mutual benefits for countries
Importance of Trade
: Significance of Exports and Imports
Exports
they generate foreign exchange, vital for international trade
increased efficiency through competition
allows for economies of scale through larger production quantities because of expanding market
attract expertise
promote innovation and new tech
Exports play A role in boosting growth ( GDP formula)
Imports
Cater to domestic demand
encourages competi tion and innovation within domestic market
imports indirectly support growth of export sector
enhances consumer welfare, improves overall standard of living
Trade dependence Ratio
( exports / GDP + imports / GDP ) /2
29% global average
Gives insights on country's reliance on international) trade relative to economy s12e
often involve implementation of
tariffs
makes imports less competitive 11 domestic market
non -tariff barriers
quotas, licensing, technical specification
Trade Portfolio
Trade Liberalisation
However, can impede on the groath of local production capabilities
result will be winners and losers. Potential need to compensate
significant emphasis on trade liberalisation and reduction in government intervention. leads to lower tariffs and non-tariff barriers
Protectionism
involves measures like anti dumping duties, and tariffs to protect local industries
fundamental question if determining appropriate level of protection
need to determine optimal timing Of withdrawal of such measures. a challenge
reduces competition and efficiency levels, creating higher prices
doesn't guarantee enhancements in productive capabilities
Extent of Trade
Trade restrictions and their impact on international trade
trade barriers Impedes to free flow of goods and services across borders
liberalisation vs protectionism
libera lisation driving force behind globalisation
safeguards domes tic jobs, in dustries and national security interests
finding right balance is complex
Export Composition and Diversification
Export composition can be categorised by
product and trading partners
Diversification a strategic approach that broadens a country's economic portfolio, reducing vulnerability to external economic growth
2 modes of Diversification
Horizontal
establish new industries
Vertical
ascending value chain by enhancing value of existing products
Dutch Disease
resource-rich countries having a decline in not resource related
countries natural resource exports surges -> exchange rate appreciates -> makes exports less competitive,
Resource Curse
natural resource - abundant countries often lag in economic development and governance