PowerPoint 5: Balanced trade or trade balance: is the balance right?

Balanced trade or trade balance: is the balance right? Trade balance: the difference in value between a country’s imports and its exports The figures below show the balance of trade for six countries in 2008. What conclusions can you draw from these figures? Country Net trade in goods (billions of US$) in 2008 China 24.62 Germany 21.38 Japan 1.75 Indonesia 0.73 United Kingdom -14.22 United States -68.02 Source: http://stats.oecd.org/Index.aspx?QueryId=166

Objectives Know what is meant by ‘balance of trade’ Understand that a country’s role in the global division of labour will influence its balance of trade

Task You are to take part in a trade simulation There has been an amazing breakthrough in nano-technology. It has been used to make the Sunbrella! This amazing new product has a clear top with built-in ultra-violet filters to protect you from the sun’s rays on sunny days. But on rainy days the Sunbrella turns opaque and shelters you from rain. Your aim is to own as many Sunbrellas as possible by the end of the simulation

The brilliant Sunbrella!

Design specification for a Sunbrella Top = Protractor shape Handle = 10cm x 1cm

A finished Sunbrella Photo: Catherine Owen

Country groups Thailand, Vietnam, Turkey and Bangladesh each have three or four members China has five members Bulgaria has three members The Philippines, the UK and Greece each have two members

Equipment needed Thailand and Vietnam – scrap paper, 2 pencils, 2 pairs of scissors, 2 rulers, 4 paper clips per group Turkey and Bangladesh – scrap paper, 2 protractors, 2 pencils, 2 pairs of scissors, 4 paper clips per group China and Bulgaria – 2 glue sticks, 2 red felt pens, 2 brown felt pens, 20 paper clips per group Philippines and Greece – 8 paper clips per group UK – 100 paper clips

Thailand and Vietnam Your job is to make handles for the Sunbrellas Cut strips of paper 10cm long and 1cm wide Sell your handles to China or Bulgaria – you will be paid 1 paper clip for each Sunbrella handle you produce You must use the services provided by the Philippines or Greece to transport your handles You must not leave your seats

Turkey and Bangladesh Your job is to make tops for the Sunbrellas Cut protractor shapes out of paper Sell your tops to China or Bulgaria – you will be paid 2 paper clips for each Sunbrella top you produce You must use the services provided by the Philippines or Greece to transport your handles You must not leave your seats

Philippines and Greece Your job is to agree transport costs and transport goods between countries You are the only people allowed to move around the room You should negotiate how much you will charge the different countries for each delivery You must pay 2 paper clips to the UK for each delivery, as they insure your container ships

China and Bulgaria Your job is to apply the nano-technology coating and assemble the Sunbrellas Colour the handle brown and the top in red. Glue the two parts together You must pay the UK 1 paper clip for each Sunbrella, as they own the license for the nano- technology Sell your Sunbrellas to all the other countries and keep some for your domestic market (you don’t have to pay for the ones you keep because you have made them) You must use the services provided by the Philippines or Greece to transport your Sunbrellas You must not leave your seats

UK You earn paper clips by insuring the cargo ships used by the Philippines and Greece – they will pay you 2 paper clips for each delivery they make You also hold the patent license for the nano- technology, so China and Bulgaria must pay you 1 paper clip for each Sunbrella they make You must not leave your seats.

Record your income and outgoings on Activity sheet 4 as you play Recording your trade Record your income and outgoings on Activity sheet 4 as you play   Example This column is cumulative

Aim of the simulation Aim: to own as many Sunbrellas as possible by the end of the simulation Each country needs to buy as many Sunbrellas as possible by the end of the simulation The price of a Sunbrella is 10 paper clips You have __________ minutes to carry out this simulation Good luck!

News Flash!  The UK has decided to give favourable treatment to Bulgaria, as it is a member of the European Union  The UK will only buy from China if Bulgaria doesn’t have any Sunbrellas to sell  The UK will now pay 12 paper clips for each Sunbrella produced in Bulgaria Photo: istock/David Martyn

News Flash!  The cargo ship owned by the Philippines has sunk, meaning that the current load of Sunbrellas is lost  The Philippines claims the value of the cargo from the UK via its insurance policy and must refund any countries involved in the shipment Photo: istock/ Ollo

News Flash!  Thailand and Vietnam hold trade negotiations. They are worried that their forests are being destroyed  They decide to adopt sustainable forestry practices, planting 1 new tree for each 1 cut down  This means that the charges will increase from 1 paper clip to 2 paper clips per Sunbrella handle