INTERNATIONAL TRADE 1. Define the term international trade. 2. Explain the rationale for international trade 3. Explain the advantages and disadvantages of international trade. 4. Explain factors that influence imports and exports.

Are these all products we use? Toyota Mitsubishi Honda Dell Apple Hewlett Packard Nokia Iphone Blackberry Samsung

Trade Buying and selling goods and services from other countries The purchase of goods and services from abroad that leads to an outflow of currency from Trinidad and Tobago – Imports (M) The sale of goods and services to buyers from other countries leading to an inflow of currency to Trinidad and Tobago – Exports (X)

Name three countries that Trinidad and Tobago Trades with

Rationale for International Trade

Activity Govt lifeline to used car dealers By Clint Chan Tack and Sasha Harrinanan Friday, July Newsday Minister of Trade Steven Cadiz at the post Cabinet news briefing held at the Office of the Prime Minister, St Clair.... “GOVERNMENT yesterday threw a lifeline to the domestic foreign used car industry by extending the age limit of the cars from four to six years.” QUESTION FOR DEBATE: Can the TT government improve standard of living for locals by passing legislation that increases trade in foreign car imports? Group 1 – Local new car industry Group 2 – Foreign used car industry Group 3 – Citizens looking for ‘cheap car’ alternatives Group 4 – Citizens who already own cars Group 5 – Maxi Taxi Association

Advantages of Trade More variety of goods and services Much larger market for your products Economies of Scale Increased employment Increased foreign exchange earnings More efficient allocation of resources Improved political ties and international relations All of these advantages lead to improved quality of life for residents of a country

Disadvantages of International Trade Creates Dependency Unfair foreign competition Depletion of mineral resources

What would make you buy foreign goods?

Factors that determine ‘M’ and ‘X’ Imports Domestic income levels The exchange rate Domestic product prices vs. foreign product prices Quality of domestic goods Influence of the media and changing tastes of consumers Exports Foreign income levels The exchange rate Domestic product prices vs. foreign Quality of imported goods Changing tastes of consumers in the rest of the world

Evaluation 1. What is a disadvantage of international trade? (a) The world is a market for your product. (b) There is a larger variety of goods available. (c) A country is able to earn foreign exchange. (d) A country may become dependent on other countries for vital products.

Q2 If an economy is closed, which benefits will it enjoy? (a) The benefits of a larger variety of goods (b) The benefits of self-sufficiency (c) The benefits of the world as a market (d) The benefits of improved international relations

Q3 Which of the following factors influence the level of exports? (a) The exchange rate (b) Domestic income levels (c) The type of goods imported (d) The quality of imported goods