Chapter 22 International trade 23/11/2018 Chapter 22 International trade This is the Title Slide © Edco 2012    It’s the Business R. DELANEY

What is international trade? 23/11/2018 What is international trade? This involves buying and selling goods and services beyond the boundaries of our domestic economy. This is the Title and Content Slide © Edco 2012    It’s the Business R. DELANEY

23/11/2018 Imports Importing involves the purchase of goods and services from other countries. Visible imports = goods purchased from abroad e.g. Oranges from Spain. Invisible imports = services purchased from abroad e.g. Irish citizens holidaying in Spain. In the case of all imports money leaves the Irish economy as we pay for goods and services from abroad. This is a comparison slide © Edco 2012    It’s the Business R. DELANEY

23/11/2018 Exports Exporting occurs when Irish producers sell goods and services to other countries. Visible exports = goods sold to customers abroad e.g. Irish cheese sold to France. Invisible exports = services purchased by overseas customers e.g. French citizens holidaying in Ireland. In the case of all exports money flows into the Irish economy as overseas customers pay for Irish produced goods and services. © Edco 2012    It’s the Business R. DELANEY

Why trade internationally? 23/11/2018 Why trade internationally? To compensate for limited factors of production To access essential raw materials To improve consumer choice To earn foreign currency To gain access to larger markets © Edco 2012    It’s the Business R. DELANEY

Measuring international trade 23/11/2018 Measuring international trade Balance of Trade: Visible Exports – Visible Imports Balance of Invisible Trade: Invisible Exports – Invisible Imports Balance of Payments: Total Exports – Total Imports © Edco 2012    It’s the Business R. DELANEY

Measuring international trade 23/11/2018 Measuring international trade A surplus refers to a situation where the value of exports is greater than the value of imports. A deficit refers to a situation where the value of imports is greater than the value of exports. © Edco 2012    It’s the Business R. DELANEY

Protectionism Protectionism requires the government to 23/11/2018 Protectionism Protectionism requires the government to limit or prohibit free trade Arguments in favour: Job creation Industry protection Self-sufficiency Balance of payments Arguments against: Retaliation Limited factors of production Costly and inefficient Small scale operations © Edco 2012    It’s the Business R. DELANEY

Barriers to trade Tariffs Quotas Subsidies Regulations Embargoes 23/11/2018 Barriers to trade Tariffs Quotas Subsidies Regulations Embargoes © Edco 2012    It’s the Business R. DELANEY

Opportunities for Irish business as a result of international trade 23/11/2018 Opportunities for Irish business as a result of international trade Free trade/market access Economies of scale Balance of payments Public procurement Foreign direct investment Technology/world class manufacturing © Edco 2012    It’s the Business R. DELANEY

Challenges for Irish business as a result of international trade 23/11/2018 Challenges for Irish business as a result of international trade Increased competition Dominant firms Language/cultural issues Distribution problems © Edco 2012    It’s the Business R. DELANEY

Factors in the growth and development of world trade 23/11/2018 Factors in the growth and development of world trade Growth in transnational companies Emergence of trade blocs Improved transport Deregulation Emerging markets Impact of ICT © Edco 2012    It’s the Business R. DELANEY

World Trade Organisation (WTO) 23/11/2018 World Trade Organisation (WTO) The WTO currently has 140 member countries who account for almost 97% of global trade. It aims to deregulate the international trading environment and ensure that international trade operates efficiently, equitably and predictably. The WTO also helps resolve trade disputes between member countries. © Edco 2012    It’s the Business R. DELANEY